Ms-9 Question bank (11)
Ms-9 Question bank
Ms-9 june 2008
Written by sales@mbaonlinepapers.com sales@mbaonlinepapers.comMS-9 June , 2008
MS-9 : Managerial economics
1. Explain why the average cost curve is U-shaped. The long run average cost curve is always an envelope of short run average cost curves. Discuss.
2. Explain the equilibrium of a firm by using the marginal cost and marginal revenue curves. Why is the firm under perfect competition described as a price taker ?
3. Explain break-even analysis on the basis of its concept, use, drawbacks and advantages.
4. Write notes on the following :
(a) Discounting principle
(b) The Equi-marginal principle
5. Distinguish between the following :
(a) Economies of scale and Economies of scope
(b) Demand curve and Demand schedule
6 . Choose the correct answer.
(i) The responsiveness or sensitivity of a firm's profits to changes in output is measured by a firm's
(a) operating leverage
(b) contribution margin
(c) degree of operating leverage
(d) returns to scale
(ii) The contribution margin per unit is equal to the
(a) price'of a good
(b) difference between total revenue and total cost
(c) difference between price and average total cost
(d) difference between price and average variable cost ,
(iii) Which type of market structure does not typically
have a negatively-sloped market demand curve ?
(a) Monopoly
(b) Perfect competition
(c) Oligopoly
(d) all of the above typically have negatively-stoped market demand curves
(iv) The restaurant industry has a market structure that comes closest to
(a) Monopolistic competition
(b) Oligopoly
(c) Perfect competition
(d) Monopoly
(v) If marginal revenue is greater than marginal cost, increasing output would
(a) reduce profits
(b) increase profits
(c) have no impact on profits
(d) reduce the rate of growth in profits
8. Read the following text and answer the questions that follow :
THEORY AND REAL WORLD MARKETS
The theory of perfect competition describes how firms act in a market structure where (1) there are many buyers and sellers, none of which is large in relation to
total sales or purchases; (21 sellers sell a homogeneous product; (3) buyers and sellers have all relevant information; (a) there is easy entry and exit. These assumptions are closely met in very few real world markets. These assumptions may however be approximated in some real' world markets. In such markets, the number of sellers may not be large enough for every firm to be a price taker, but the firm's control over price may be negligible. The amount of control may be so negligible, in fact, that the firm acts as if it were a perfectly competitive firm.
Similarly, buyers may not have all relevant information concerning price and quality, but they may still have a great deal of information and the information
they do not have may not matter. The products that the firms in the industry sell may not be homogeneous, but the differences may be inconsequential. In short, a market that does not meet the assumptions of perfect competition may nonetheless approximate those assumptions to such a degree that it
behaves as if it were a perfectly competitive market. If so, the theory of perfect competition can be used to predict the market's behaviour.
Questions ;
(a) A price taker does not have the ability to control the price of the product it sells. What does this mean ?
(b) Why is a perfectly competitive firm a price taker ?
(c) The horizontal demand curve for the perfectly competitive firm signifies that it cannot sell any of its products for a price higher than the market equilibrium price. Why can't it ?
(d) Suppose the firms in a real world market do not sell a homogeneous product. Does it necessarily follow that the market is not perfectly competitive ?
Ms-9 june 2010
Written by sales@mbaonlinepapers.com sales@mbaonlinepapers.comMS-9 June , 2010
MS-9 : Managerial economics
1. (a) Discuss the Laws of Returns to scale and describe the three stages of returns to
scale.
(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 :
Q=100-5P
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 .
Ms-9 june 2011
Written by sales@mbaonlinepapers.com sales@mbaonlinepapers.comMS-9 June , 2011
MS-9 : Managerial economics
1. "The opportunity cost of anything is the return that can be had from the next best
alternative use". Elucidate the statement with reference to the opportunity cost principle
applied in agricultural sector.
2.The demand function is written as Qd= F (Po, Pc, Ps, Yd, T, A, CR, R, E, N, 0) Describe each of this variables separately giving examples.
3. What do you understand by 'Price discrimination' and the various types of price discrimination ? I-low is the optimal quantity to be supplied in different markets determined ? Elucidate your answer with suitable examples.
4. Write short notes on the following :
(a) Kinked demand curve.
(b) Time Series Analysis of Demand Forecasting.
5. Define elasticity of demand. How are the price, income, cross elasticities measured ?
Explain their role in business decisions.
6. Read the following case and answer the questions given at the end.
TAKE THE BULL BY THE HORN
Through its relatively brief history, the Reliance group has specialised in taking gambles, sometimes huge ones. A pattern repeated time and again - such as when it set up capacities for Polyester Staple Fibre (PSF) which was the same size as the domestic market or when it put up a 27 million tonne refinery in Jamnagar, which is close to a third of India's demand for petroleum products.
There's no gamble quite so audacious as the one that's underway. The Rs. 25,000 crore Reliance Infocom project that's currently taking shape aims at no less than a complete remake of India's telecom landscape to emerge as India's number one telecommunications company, ahead of the state-owned behemoth Bharat Sanchar Nigam l td.
It's also an attempt to realign Reliance's revenues and profits - which today originate entirely from manufacturing - with India's economic profile, in which services account for over 40 per cent of GDP. "Reliance's revenues will have to become diversified with
a larger proportion originating from services which would be in keeping with the changing structure of India's economy," says Mukesh Ambani, vice chairman of Reliance
Industries. Rs. 8000 crore will be invested over a three - year period. As of now, it's full steam ahead for Reliance's Infocom plans. As it had done earlier in oil and gas. Reliance plans to emerge as an integrated player, focusing on the entire range of telecom services
ranging from high - speed internet access for business and consumers, call centres, data centres, cellular phone services and domestic and international long distance telephony. Apart from the gamut of telecom services, Reliance's integration plans are in one respect unique in the telecom industry. If senior group officials are to be believed, the company has plans to assemble cellular phones and set-top boxes.
At the core of the Infocom project is a 115,000 km fibre optic backbone covering 115 cities across 12 States, accounting for over 50 per of India's GDP. The company plans to become what the industry jargon refers to as a carriers' carrier, where it hires out infrastructure to other telecom operations. Here Reliance, along with the Bharti group, has obtained a licence for providing domestic long-distance services. In fact, these are the only two companies to do so. The total domestic long-distance market is worth Rs. 6,000 crore. Of this, the market available to the long distance operator is likely to be Rs. 2,400 crore, according to a December 2000 Merrill Lynch report. This is based on a 30 : 40 : 30 revenue share between the originator, the carrier and the last-mile access provider. However, Reliance would hope for a larger share since it plans to fill all the three roles. Merrill Lynch estimates that the domestic long-distance revenues accruing to the carrier would amount to Rs. 2760 crore in 2002 - 03, of which Reliance is expected to garner 20 per cent - or Rs. 620 crore.
As part of its plans to enter international long-distance telecommunication, Reliance has already submitted an expression of interest for international long-distance operator VSNL. The total international long-distance market in India right now is Rs. 4,900 crore.
Reliance's own estimates for revenue and profitability have not been made publicly available. However, internal estimates reportedly project revenues of Rs. 30,000 crore, which is roughly a third of the total telecommunication market of around Rs. 1,00,000 crore estimated for fiscal year 2004 - 05. The annual total telecommunications market is around Rs. 42,000 crore. These estimates are of course based on the assumptions of a rapid take-off in traffic, particularly data traffic. Check out some figures: out of the 30 million households that have an income over Rs. 4000, an estimated 20 million are in the urban market and 10 million in the rural market. Out of the urban people, 13 million already have fixed-line connections. And out of the 10 million rural customers, 6.5 million already have fixed lines.
In the light of the above: "what kind of growth can one really expect" for the telecommunication sector in India as such and Reliance lnfocom in particular ?
Questions :
(a) Is there such a market in India for all the huge plans that they have ?
(b) Can you support it as a case of economies of scope ?
(c) Does it not lend to monopolistic conditions ? Give reasons.
