M.B.A. (Part (Semester (CBCS Pattern) Examination, 2018
managerial economics Paper III
Day and Date Tuesday, 11-12-2018 Total Marks 70
Time 2.30 p.m. to 5.00 p.m.
1. Multiple choice questions 14
Which of the following is a characteristic of a perfectly competitive market
Firms are price setters
There are few sellers in the market
Firms can exit and enter the market freely
All of these
When the cost of production is low, the low cost is a result of what is called
Economies of scale Internal Economies
External Economies Over head Cost
In a planned or command economy, all the economic decisions are taken
by the
Consumers Workers
Government Voters
The total demand for goods and services in an economy is known as
National demand
Economy-wide demand
Gross national product
Aggregate demand
A in Balance of Payments implies greater demand for domestic
currency in a foreign country.
Surplus Deficit
Increase Decrease
Which of the following is not the type of utility
Cardinal Ordinal
Marginal None of them
P.T.O.
Seat
No. Set P
Set P
SLR-CL 3 *SLRCL3*
WTO was formed in
1990 1995
1996 1997
National Income does not include
Service of an actor Profit of a firm
Export earnings Transfer
MRS stands for
Marginal Rate of Substitution Maximum Rate of Supply
Minimum Rate of Supply None of them
10) The cost of producing an extra unit of output is called
Marginal Cost Average Cost
Fixed Cost Variable Cost
11) Hyper inflation is also known as
Walking Inflation Cost-push inflation
Demand-pull inflation Galloping inflation
12) GDP stands for
Gross Domestic Product Gross Deistic Product
Gross dynamic product All of these
13) refers to the want satisfying power of commodity.
Demand S upply
Utility Desire
14) Time series analysis relate to the determination of change in a variable in
relation to time.
True False
2. S hort note 14
Types of Inflation. 7
Industrial Sickness. 7
3. S hort note 14
Characteristics of Perfect competition Market. 7
Importance of Managerial Economics. 7
Set P
*SLRCL3* SLR-CL 3
4. Attempt any one of the following 14
What is Balance of Payment Explain the causes of disequilibrium in BOP.
OR
Define Demand Forecasting. Explain different methods of Demand
Forecasting. 14
5. Case Study 14
ITC Ltd. is a major cigarette manufacturing company of India. Its market share is
50 percent of the total cigarette market in India. Every year in Feb. the company
anxiously waits for the forthcoming proposals fearing that the government
impose tax on cigarettes. The logic behind taxing Cigarettes industry has been
two fold. Firstly the demand for cigarettes is considered inelastic and hence
the government think it will bring revenue. Secondly the government thinks that
is injurious to health and hence by enhancing excise duty on cigarette. It will
be able to discourage smoking. The sales figures for the past several years
recorded that despite excise increases sales have been increasing in those
very years.
When the budget came for the year 2011 the government chose to spare the
cigarette from any hike in excise retaining the old rates the management of
ITC which was fearing on excise hike of ITC of at least 15 per cent this year
heaved a Sigh of relief. The management already faced with the problem of
rising input cost. The demand for cigarettes generally being considered inelastic
the company feared no significant fall in its sales following a price hike and
hence decided to raise the of its brands of cigarettes by 15 per cent.
Following this price hike, the company executives found to their utter surprise
that sales dropped sharply and the demand for cigarettes of the company was
found sensitive to price increases. Within a few months the company has to
withdraw price hike and then found that its sales recorded normal level.
Question.
Was the company right in assuming that the demand for its cigarettes is
inelastic
Why did the company's policy of hiking prices of cigarettes fall miserably
Do you think that the government's policy of discouraging smoking through
excise hike was right