AMITY SCHOOL OF DISTANCE LEARNING Post Box No. 503, Sector-44 Noida – 201303 Managerial Economics Assignment A
Marks 10
Answer all questions. 1. Distinguish between the following: (i ) ) Industry demand and Firm (Company) demand, (ii) Short-run demand and Long run demand, and (iii) Durable goods’ demand and Non-durable goods demand. 2. What are the problems faced in determining the demand for a durable durable good? Illustrate example of demand for households refrigerator or television set.
with
3. Analyse the method by which a firm can allocate the g iven advertising budget between different media of advertisement. 4. What kind of relationship would you postulate between short-run and long-run average cost curves when these are not U-shaped as suggested by the modern theories? 5. How do demand forecasting methods for new products vary from those for established products?
AMITY SCHOOL OF DISTANCE LEARNING Post Box No. 503, Sector-44 Noida – 201303 Managerial Economics Assignment B Marks 10
Answer all questions.
1. What are are the differen differentt methods methods of measurin measuring g national national income? income? Which Which methods methods have have been followed in India? 2. What do you you understand understand by the the investment investment multi multiplier plier? ? In what way way does it defend defend the the policy of public works on the part of the state during business depression? 3. Discu Discuss ss the the various various phase phases s of busine business ss cycle: cycle: (i) (i) Are Are cycl cyclic ical al flfluctu uctuat atio ions ns nec neces essa sary ry for for eco econo nomi mic c grow growth th? ? (ii) (ii) Sugg Suggest est appr appropr opria iate te fis fisca call and and mone moneta tary ry pol polic icie ies s for for depr depres essi sion on..
4.
Case Study
Please read the case study given below and answer questions given at the end. Electron Control, Inc., sells voltage regulators to other manufacturers, who then customize and distribute the products to quality assurance labs for their sensitive test equipment. The yearly volume of output is 15,000 units. The selling price and cost per unit are shown below: Selling price Costs: Direct material Direct labor Variable overhead Variable selling expenses Fixed selling expenses Unit profit before tax
$200 $35 50 25 25 15
150 $ 50
Management is evaluating the alternative of performing the necessary customizing to allow Electron Control to sell its output directly to Q/A labs for $275 per unit. Although no added investment is required in productive facilities, additional processing costs are estimated as: Direct labor Variable overhead Variable selling expenses Fixed selling expenses
$25 per unit $15 per unit $10 per unit $100,000 per year
Question : A.
Calculate Calculate the the increment incremental al profit profit Electron Electron Control Control would would earn earn by customizi customizing ng its instrume instruments nts and marketing directly to end users.
AMITY SCHOOL OF DISTANCE LEARNING Post Box No. 503, Sector-44 Noida – 201303 Managerial Economics Assignment C (Objective Questions) Marks 10 Answer all questions Tick Marks (√) the most appropriate answer. 1. Econometrics is a. A moder modern n name name for for eco econo nomi mics cs b. A specialized specialized branch of economics economics which applies applies the tools tools of statistics statistics to the the economic problems c. A branch of economics which combines combines macroeconomic macroeconomic principles with welfare welfare economics d. A branch of economics which which combines microeconomic microeconomic principles principles with international international trade e. A specialized specialized branch of economics which describes describes neo-classical microeconomics 2. Which of the following comes under the broad definition for factors of production? a. Technolo ology b. Obso Obsole lete te mac machi hine nery ry c. Innovati ations ons d. Capital e. Patent tent righ ights 3. Which of the following statements is true? a. When the the supply increas increases, es, both the the price price and the quantit quantity y will increas increase. e. b. When the the supply supply increases, increases, the supply supply curve curve shifts shifts towards towards the left left c. A shift shift in the the supply supply curve curve towards towards the the right right results results in in a fall in the price price d. A decrease decrease in the quantity quantity supplie supplied d results results in shifting shifting of the supply supply curve curve towards towards the left. left. e. An increase increase in the quantit quantity y supplied supplied leads to a fall fall in the price price resulting resulting in the shiftin shifting g of the supply curve towards the left. 4. Which of the following statement(s) is/are false? a. If the the demand demand fall falls, s, the the price price will will fall fall.. b. As the the price price rises rises the quanti quantity ty demand demanded ed will will fall. fall. c. If demand demand rises, rises, the the demand demand schedul schedule e shifts shifts to to the left. left. d. Both Both (a) (a) and and (b) (b) abo above ve.. e. Both Both (a) (a) and and (c) (c) abo above ve.. 5. Which of the following statements is false? a. An increase increase in in tax will will affect affect the customers customers more more than the the producers producers if the the supply supply schedule schedule is inelastic. b. An increase increase in tax will will affect affect the the customers customers more than than the the producers producers ifif the demand demand schedule is inelastic. c. An increase increase in tax will will affect affect the the customers customers less than than the the producers producers if the supply supply schedul schedule e is inelastic. d. An increase increase in tax will will affect affect the the customers customers less than than the the producers producers if the demand demand schedule is inelastic. e. Both oth (a) (a) and and (d) (d) abov above. e. 6. Which of the following statements is true?
a. b. c. d. e.
Elastici Elasticity ty of demand demand is consta constant nt throughout throughout the demand demand curve. curve. Elastici Elasticity ty of demand demand increas increases es as one goes down down the the demand demand curve. curve. Elastici Elasticity ty of demand demand decreases decreases as one goes down down the the demand demand curve. curve. The slope of the the demand demand curve equals equals its its elastic elasticity. ity. The price price and total total revenue revenue move in in the same same direction direction when when demand demand is elastic. elastic.
7. For complementary goods, the cross elasticity of demand will be a. Zero. b. Infinity. c. Posi Positi tive ve,, but but less less tha than n infi infini nity ty.. d. Negative. e. None of the abov above. e. 8. When the income elasticity of demand for a good is negative, the good is a. Normal good. od. b. Luxury ury go good. c. Infer nferiior good good.. d. Giffen go good. e. Necessity. 9. If both income and substitution-effects are strong, this region of the demand curve must be a. Relatively price elastic. b. Rela Relati tive vely ly pric price e inel inelas asti tic. c. c. Unit-elastic. d. Perfe erfect ctly ly inel inelas asti tic. c. e. Perf erfect ectly ela elast stic ic.. 10. If a good has close substitutes, a. Its Its deman demand d curve curve wil willl be rela relati tive vely ly ela elast stic ic.. b. Its Its dema demand nd curve curve will will be relati relativel vely y inel inelast astic. ic. c. Its Its dema demand nd curve curve coul could d be unit unit-e -ela last stic ic.. d. Either (a (a) or or (c (c). e. Either (b (b) or or (c (c). 11. The demand for most products varies directly with the change in consumer income. Such products are known as a. Normal goods. b. Prestigious goods. c. Complementary go goods. d. Inferior goods. e. Substitute go goods. 12. Which of the following statements is true with regard to price elasticity of demand? a. Elas Elasti tici city ty rema remain ins s const constan antt thr throu ough ghou outt the the dema demand nd curv curve. e. b. Elas Elasti tici city ty incr increa ease ses s wit with h inc incre reas ase e in in qua quant ntit ity y demand demanded ed.. c. Elas Elasti tici city ty incr increa ease ses s as the the pri price ce decr decrea ease ses. s. d. Elas Elasti tici city ty is equa equall to to the the slop slope e of the the dem deman and d cur curve ve.. e. Higher Higher the elast elastici icity, ty, more more resp respons onsive ive the demand demand is for a give given n chan change ge in pri price. ce. 13. Which of the following goods can be considered substitutes? a. Pen and Paper. b. Car and Petrol. c. Bread and Butter. d. Tea and Coffee.
e.
Keyboard and Monitor.
14. Which of the following statements concerning indifference curves is true? a. An indi indiffe fferen rence ce curve curve is is the locus locus of poin points ts descr describi ibing ng propo proporti rtiona onall price price leve levels ls of the two goods. b. Indiff Indiffere erence nce curv curves es pre-s pre-supp uppose ose the the measu measurem rement ent of total total util utility ity and and margi marginal nal util utility ity.. An indifference curve is the locus of points representing various combinations of two c. goods about which the consumer is indifferent. d. Indiff Indiffere erence nce curve curve pre-s pre-supp uppose ose the the vali validit dity y of “the “the law law of dimini diminishi shing ng retu returns rns”” e. None of the above 15. If a change in all a ll inputs leads to a proportional change in the output, it is a case of a. Increas easing re returns to sc scale b. Constant returns to scale c. Diminishing returns to to sc scale d. Variabl able returns to scale e. Inefficient return urns to to sc scale 16. Isoquants are a. Equal cost lines b. Equal product lines c. Equal revenue lilines d. Equal qual total utility lines e. Equal qual marginal ut utility lilines nes 17. When average product is highest a. Total pr product is is ma maximum b. Margi argina nall pr produc oductt is is max maxiimum c. Margin ginal product is is zero d. Margi argina nall pr produc oductt is is ne negati gative ve e. Marg Margin inal al prod produc uctt is is equ equal al to aver averag age e pro produ duct ct 18. If marginal product is negative, it means that the a. Tota Totall pro produ duct ct is at maxi maximu mum m b. Aver Averag age e produ product ct is at maxi maximu mum m c. Avera verage ge pr produc oductt is fal falli ling ng d. Tota Totall pro produ duct ct is incr increa easi sing ng e. Aver Averag age e pro produc ductt is is neg negat ativ ive e 19. Which of the following curves is called envelope curve? a. Long Long run run tot total al cost cost curv curve e b. Long Long run run ave avera rage ge tot total al cos costt curv curve e c. Long Long run run marg margin inal al cost cost curv curve e d. Long Long run run aver averag age e varia variabl ble e cost cost curv curve e e. Long Long run run ave avera rage ge fix fixed ed cos costt curv curve e 20. Which of the following costs remain constant as the output increases? a. Marginal co cost b. Avera verage ge vari variab able le cost cost c. Avera verag ge fix fixed cost cost d. Total otal varia ariabl ble e cos costt e. None of of th the ab above 21. In perfect competition, a firm maximizing its profits will set its output at that level where a. Aver Averag age e var varia iabl ble e cos costt = pric price e
b. c. d. e.
Marg Margiinal nal cost cost = pric price e Fixe ixed cos cost = pric price e Avera verage ge fix fixed ed cos costt = pri price ce Total otal cost ost = pri price
22. Which of the following curves resembles supply curve under perfect competition in the short run? a. Avera Average ge cost cost curv curve e above above break break even even point point b. Margin Marginal al cost cost curve curve abov above e shut shut down down point point c. Marg Margiinal nal util utilit ity y cur curve ve d. Avera verage ge util utilit ity y cur curve ve e. Aver Averag age e var varia iabl ble e cos costt cur curve ve 23. Which of the following is not a feature of perfect pe rfect competition? a. Large Large numb number er of sell seller er and buyers buyers b. No one one is large enough to influe influence nce the the market market price price c. Homo Homoge gene neou ous s produ product cts s d. A hori horizo zont ntal al dem deman and d curv curve e e. Low price 24. In the long run, a perfectly competitive firm earns only normal profits because of a. Prod Produc uctt homog homogen enei eity ty b. Large number number of seller seller and and buyer buyer in the industry’ industry’ c. Free Free entr entry y and and exit exit of of indus industry try d. Both Both (a) (a) and and (b) (b) abo above ve e. Both Both (b) (b) and and (c) (c) abov above e 25. The horizontal demand curve for a firm is one of the characteristic features of a. Oligopoly b. Monopoly c. Mono Monopo polilist stic ic com compet petit itio ion n d. Perf Perfec ectt comp compet etit itio ion n e. Duopoly 26. A perfectly competitive firm can increase its sales by a. Reducing the price b. Increasing the price c. Increasing the production d. Increasing the expenditure of advertisement e. Increasing the sales force 27. Which of the following is not a source of market imperfection? a. Tech echnolo ology b. Size Size of the the fir firm c. Prod Produc uctt diff differ erent entia iati tion on d. Avai Availa labi bilility ty of res resour ource ces s e. Forc Forces es of of sup suppl ply y and and dema demand nd 28. The maximum profit condition for a monopoly firm is a. Tota Totall cos costt shou should ld be mini minimu mum m b. Tota Totall rev reven enue ue shou should ld be max maxim imum um c. Margin Marginal al revenu revenue e is is equal equal to margin marginal al cost cost d. Quan Quanti tity ty shoul should d be be maxi maximu mum m e. Pric Price e sho shoul uld d be be max maxim imum um 29. “Four-firm concentration” refers to
a. b. c. d. e.
The The numb number er of of firm firms s in an ind indus ustr try y The four four largest largest firm firm in in four differ different ent and import important ant industr industries ies in an an economy economy The number number of industr industries ies in in an econom economy y which which have have only four firms firms The percent percent of of the total total industr industry y output output that that is accounte accounted d for by the the largest largest four four firms firms The percent percent of of the total total industr industry y output output that that is accounte accounted d for by the the largest largest four four firms firms
30. Market inefficiencies can come from a. Extern ernalities b. Monopolies c. Impe Imperf rfec ectt inf infor orma mati tion on d. Entry ba barriers ers e. All of the the above 31. A monopolist who faces a negatively sloped demand curve operates in the region where the elasticity of demand is a. Less than 1 b. Equal to 1 c. Greater than 1 d. between 0 and 1 e. 0 32. In which of the following market structures the entry is least difficult? a. Monopoly b. oligopoly c. duopoly d. regu regula late ted d mono monopo poly ly e. mono monopo polilist stic ic compet competit itio ion n 33. Which of the follow is false in a monopolistic competition? competition? a. Many Many buye buyers rs and and sel selle lers rs b. Ident dentiical cal prod produc uctts c. Easy asy ent entrry and and exi exit d. Price Price of the comp competi etitor tor is is the benchm benchmark ark pri price ce e. Each Each firm firm could could be mark market et leade leaderr in its its produc productt segmen segmentt 34. The term “differentiated product” denotes a. Differ Different ent produc products ts in simil similar ar pack packets ets b. Diff ifferen erentt prod produc ucts ts c. Same Same produ product ct used used in diff differe erent nt appl applica icatio tions ns d. Differ Different ent produ products cts used used by a differ different entiat iated ed set of peop people le e. Produc Products ts whose whose impo import rtant ant char charact acteri eristi stics cs vary vary 35. Which of the following is common feature in both a monopolistic competitive market and oligopoly market? a. Prod Produc uctt diffe differe rent ntia iati tion on b. Interd Interdepe epende ndence nce amon among g membe memberr firm firms s c. Kink Kinked ed dema demand nd curv curve e d. Limi Limite ted d numb number er of of sel selle lers rs e. Entr Entrie ies s bloc blocke ked d 36. The term “collusion” refers to a. A situation situation in in which governm government ent sets price prices s with the the market market leader leader in oligopoly oligopoly b. A situation situation in which which government government jointly jointly sets sets prices prices with the the small players players in an industry industry in the the larger interest of the society c. A situatio situation n in which which all firm firms s in an indust industry ry decide decide the price price and output output
d. A situation situation in which which two powerful powerful groups groups in an industry industry hand hand with governme government nt to rule the the industry e. A situation situation in which which central central and state state government government jointly jointly decide decide price and and output for an an industry 37. Which of the following does not likely to lead to the failure collusive oligopoly? a. Secr Secret et pric price e cutt cuttin ing g b. More More numb number er of firm firms s c. Undi Undiff ffer eren enti tiat ated ed prod produc ucts ts d. Rapi Rapidl dly y changi changing ng tech techno nolo logy gy e. Compet Competiti ition on from from foreig foreign n firm firms s 38. Price leadership refers to a. Pre-emptive pricing made possible by the learning curve b. A for form m of pric price e coll collus usio ion n c. The mainta maintains ins of a monopo monopolis listic tic price price d. Cut Cut thr throa oatt com compet petit itio ion n e. None None of the the abov above e 39. A cartel is a. A group firms which get together and make joint price price and output decisions decisions to maximize joint profits b. Form of tacit collusion c. Type of oligopoly in which curve is kinked d. Duopoly e. None of the above 40. A zero-sum game is one in which a. The gain of one player player equals the loss of another player b. The gain of one player will will not equal the loss of of another player c. The maximin equals the minimax d. The maximin does not equal the minimax minimax e. The equilibrium and the the dominant dominant equilibrium equilibrium are the same same
