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Ms-9 Question bank (12)
Ms-9 Question bank
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.
Ms-9 Dec 2007
Written by sales@mbaonlinepapers.com sales@mbaonlinepapers.comMS-9 Dec, 2007
MS-9 : Managerial economics
1. What is the basic objective of a firm ? Distinguish between 'Accounting Profit and 'Economic Profit' with the help of an illustration.
2. What do you understand by demand forecasting while describing the regression method of demand forecasting explain why it is important for the firm to forecast demand
3. Distinguish between the following with the help of illustrations :
(a) Fixed costs and Variable costs
(b) Short'run costs and Long-run costs
(c) Direct costs and Indirect costs
(d) Total cost, Average cost and Marginal cost
4. (a) Differentiate between Monopoly and Monopolistic competition giving examples
(b) Explain why profit is maximum at a level where MC = MR. Is profit always maximum when MC =MR ? Comment.
5. (a) What are the different types of statistical analyses used in the estimation of production function ? Explain briefly with the help of examples. Discuss the limitations of different types of statistical analysis.
(b) Briefly explain how the Cobb Douglas production function can be used to determine returns to scale.
6. (a) Which of the following commodities has most inelastic demand ? Give reasohs for your answer.
(i) Soap
(ii) Salt
(iii) Penicillin
(iv) Ice-cream
(v) Cigarettes
(b) Suppose the demand function of a product is given as
Q =500 - 5P. Find the profit maximising price when
i) MC:=0
ii) MC=20
7. Suppose you are a sales manager of an organization. Explain how does the analysis of demand contribute to business decision making, in the light of the responsibilities of a sales manager.
Ms-9 Dec 2008
Written by sales@mbaonlinepapers.com sales@mbaonlinepapers.comMS-9 Dec, 2008
MS-9 : Managerial economics
1. Explain the concept of price elasticity of demand and the relationship between price elasticity, total revenue and marginal revenue
2. Show graphical derivation of MP and AP curves from the total product function. Show also the three stages of production. What economic purpose do the stages
of production serve ?
3. Explain with examples economies and diseconomies of scale. How do economies and diseconomies of scale determine the shape of the LAC ?
4. Write notes on the following :
(a) The Equi Marginal Principle
(b) Elasticity of Substitution
(c) Linear Cost function
(d) Types of markets
5. (a) Under perfect competition average revenue equals average cost in the long run. Why do firms produce under such a condition ?
(b) A monopolist earns super normal profits even in the long run. Discuss
6. (a) Write True or False :
(i) In a firm's short-run production function, the firm's labour and plant are held
constant while its machinery is allowed to vary.
(ii) The law of diminishing returns is unrealistic because it implies that we could feed the world from our back garden.
(iii) The least-cost input combination producing a given level of output always be achieved in the short run.
(iv) The law of eventually diminishing returns describes a short run situation in which labour varies but fixed factors do not.
(v) The greater the cost of storing a good, the greater will be the gap in its price now and 2 years later.
(vi) Scale is a short-run concept.
(vii) When an input's average product exceeds its marginal product, average product is increasing.
(viii) The long-run average cost curve slopes downward over a range of output where a firm experiences a decreasing returns to scale.
(ix) Because consumers like variety, we cannot conclude that monopolistic competition is inefficient.
(x) The theory of the kinked demand curve does not predict the price where the kink will occur.
(b) The market demand function for a product sold by a monopolist is given below :
QD=2500-10P
The monopolist marginal cost function is :
MC=10+Q
Calculate the equilibrium price and quantity
Case study IBM
7. Read the following case and answer the questions given at the end.
LONG-RUN COSTS AT IBM
(LONG RUN COST FUNCTION)
The IBM Corporation is a leading manufacturer of electronic computers. Based on its internal memoranda, IBM's long-run total cost of producing various quantities of its Pisces (370/168) machines was as shown below :
For output levels in the relevant range, the equation
for this total cost function is
C = 28,303,800 + 460,800 Q,
where C is total cost (in dollars) and Q is the number of machines.
A) If the entire market for this type of machine is 1,000 machines, and if all firms have the same long-run total cost function, to what extent would a firm with 50 percent of the market have a cost advantage over a firm with 20 percent of the market ?
b) What is the long-run marginal cost of producing such a machine ? Does marginal cost depend on output ?
c) Do there appear to be economies of scale ?
d) The data presented above are forecasts of costs based largely on engineering data, not on historical record of actual costs. Why would IBM make such forecasts ? What factors might result in errors in these forecasts ?