Hall Ticket No Question Paper Code: CMB003
INSTITUTE OF AERONAUTICAL ENGINEERING
(Autonomous)
MBA I Semester End Examinations (Supplementary) July, 2017
Regulation: IARE-R16
MANAGERIAL ECONOMICS
(Master of Business Administration)
Time: 3 Hours Max Marks: 70
Answer ONE Question from each Unit
All Questions Carry Equal Marks
All parts of the question must be answered in one place only
UNIT I
1. Managerial economics helps in decision making in the frame work of uncertainty and scarcity of
resources. Discuss the statement and elaborate with an example.
What is the significance of time perspective and discounting principal in business decision making?

2. Explain the equi-marginal principal and its application in business decision making.
Managerial economist tends to rely on the scientific research method in building and empirically
testing business- oriented economics models. Discuss all the steps to be taken to solve a business
problem.
UNIT II
3. Explain Demand and describe its determinants with suitable examples.
What do you understand by a shift in demand curve? Enumerate the three possible reasons for
such shifts.
4. Using the regression technique calculate the trend series and forecast demand for the year 2018
from the historical sales data (in millions) given in Table 1
Table 1
Year 2012 2013 2014 2015 2016
Sales 10 12 15 14 18
What is price elasticity and explain different types of price elasticity with suitable graphs and
example?
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UNIT III
5. Explain Cobb- Douglas production function in detail.
What is law of variable proportion? Explain change in production with change in one variable.

6. Discuss marginal rate of technical substitution?
What is marginal product, total physical product and average physical product of a variable
factor? Show their behavioral relationship giving a production schedule and diagrammatic representation.

UNIT IV
7. Why short run Average cost curve is U shaped?
Discuss the cost-output relationship in long run.
8. Distinguish Economies from diseconomies of scale and suggest two possible cause of each.
The average variable cost is constant at Rs.5.00 per unit. The firm is selling 1000 units a week.
Average fixed cost is also Rs.5 per unit. The market price for the product is Rs.12.00 per unit.
i. Calculate the break-even level of output.
ii. If the firm sets a target of Rs. 3400 as their weekly profit, how many units of output should
it sell?
UNIT V
9. What is meant by price discrimination? State the necessary condition for price discrimination.
Illustrate the three different level of price discrimination with the help of graphs.
"Equilibrium under oligopoly is indeterminate". Comment.
10. Show how the firm's equilibrium, price and output of a monopoly firm are simultaneously determined
in the long run.
Distinguish between
i. Monopoly and Monopolistic Competition
ii. Oligopoly and Monopolistic Competition