MS9 Managerial Economics December 2007

MANAGEMENT PROGRAMME
Term-End Examination

MS9 MANAGERIAL ECONOMICS

December 2007

Time: 3 hours
Maximum Marks: 100
(Weightage 70%)

Note : This paper contains two Sections A and B. Attempt any three questions from Section A carrying 20 marks each. Section B is compulsary and carries 40 marks.

SECTION A

1. What is the basic objective of a firm? Distinguish between 'Accounting Profit' and 'Economic Profit' with the help of an illustration. 20

2. What do you understand describing the regression explain why it is important by demand forecasting? While method of demand forecasting, for the firm to forecast demand. 20

3. Distinguish between the following with the help of illustrations : 20

(a) Fixed costs and Variable costs

(b) Short run costs and Long-run costs

(c) Direct costs and Indirect costs

(d) Total cost, Average cost and Marginal cost

4. (a) Differentiate between Monopoly and Monopolistic competition giving examples (10)

(b) Explain why profit is maximum at a level where MC : MR. Is profit always maximum when MC : MR? Comment. 10

5. (a) What are the different types of statistical analyses used in the estimation of production function? Explain briefly with the help of examples. Discuss the limitations of different types of statistical analysis. (10)

(b) Briefly explain how the Cobb - Douglas production function can be used to determine returns to scale. (10)

SECTION B

6. (a) Which of the following commodities has most inelastic demand? Give reasohs for your answer. (10)

(i) Soap

(ii) Salt

(iii) Penicillin

(iv) Ice-cream

(v) Cigarettes

(b) Suppose the demand function of a product is given as Q = 500 - 5P. Find the profit maximising price when (10)

MC=0

MC=20

7. Suppose you are a sales manager of an organization. Explain how does the analysis of demand contribute to business decision making, in the light of the responsibilities of a sales manager. 20