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Ms-9 june 2010

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MS-9   June , 2010

MS-9 : Managerial economics


1. (a) Discuss the Laws of Returns to scale and describe the three stages of returns to


(b) Explain why Marginal Product (MP) is greater than (less than) Average Product

(AP) when AP is rising (falling).

2. Write notes on any four :

a) Tastes and preferences as determinants of demand.

b) Economies of scale.

(c) Breakeven output level.

d) Equimarginal principle.

e) Kinked demand curve.

3. Explain the concept of law of demand. What causes the market demand curve for a commodity to increase (shifting up) and decrease (shifting down) ? Explain.

4. Write five important characteristics of monopoly. Establish the profit maximising output of a monopoly firm.

5. (a) Discuss the relationship between marginal cost, average cost and total cost.

(b) Explain Profit Maximization under cartel condition. Plot necessary graph.

6. State True or False and justify. Attempt any five :

a) The demand for a commodity is inversely related to price of its substitutes.

b) When income increase, the demand for essential goods increases more than proportionately.

c) Decrease in input prices causes a leftward shift in supply curve.

d) In the long run, there are no variable costs.

e) Retail trade is an example of monopolistic competition.

f) The profit will be maximum where MC = MR in general.

g) In a firm's short-run production function, the firms labour and plant are held

constant while its machinery is allowed to vary.

h) The Law of Diminishing returns is unrealistic because it implies that we could

feed the world from our kitchen garden.

i) Even if there are many buyers, imperfect competition can exist in a market.

j) A monopolist will never produce at the elastic portion of the demand curve.

7. Explain decision under risk. Describe strategic decisions based on decision tree.

MS-9   June , 2009

MS-9 : Managerial economics

1. a) Explain in brief the opportunity cost principle. Give examples in support of your answer.

b) What is a Production Possibility Curve (PPC) ? Explain how it reflects the opportunity cost principle.

2. Explain briefly the following give examples :

a) Expert opinion

b) Surveys

c) Market experiments

3.One of the decision problems that concerns aproduction process Manager is, which input combination to use'. Keeping this in mind explain with the help of examples, what is the optimal combination of inputs ? You may use the ISO cost

isoquant framework in your answer.

4.Market selection process includes firms entry,   then its survival and finally the exit process'. Critically examine the statement in view of barriers to entry with suitable examples from the sector of your choice.

5.Write short notes on any four of the following :

a) Peak Load Pricing

b) Law of Demand

c) Oligopoly

d) Objective of the firm

e) Economies of scope

f) Accounting and Economic Costs.

6. a) Suppose that a linear demand function is given as :


Calculate the price elasticity of linear demand function given when P =10 and

when P =8. Also find the slope of the demand curve.

b) .Explain the concept of break-even analysis with the help of examples. What strategic decisions can a manages take on break-even analysis ?

c) What are the limitations of break-even analysis ? Explain .

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