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 .