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Winter-2014
Master of Business Administration- MBA Semester 1
MB0042Managerial Economics-4 Credits
(Book ID: B1625)
Assignment (60 Marks)
Note: Answer all questions (with 300 to 400 words each) must be
written within 6-8 pages. Each Question carries 10 marks 6 X
10=60
Q1. What is production function and its uses? Explain the two
types of production functions.
Answer: Production function and its uses:
Production function relates physical output of a production process to
physical inputs or factors of production. The production function is one of
the key concepts of mainstream neoclassical theories, used to define
marginal product and to distinguish allocative efficiency, the defining
focus of economics.

Q2. Monopoly is the situation there exists a single control over the
market producing a commodity having no substitutes with no
possibilities for anyone to enter the industry to compete. In that
situation, they will not charge a uniform price for all the customers in
the market and also the pricing policy followed in that situation.
Answer: Monopoly
Monopoly means existence of a single seller in the market. Monopoly is that
market form in which a single producer controls the whole supply of a single
commodity which has no close substitutes. Monopoly may be defined, as a
condition of production in which a single firm has the power to fix the price of the
commodity or the output of the commodity. It is a situation there exists a single
control over the market

Qus:3 A cost-schedule is a statement of variations in costs resulting

from variations in the levels of output and it shows the response of
costs to changes in output. If we represent the relationship between
changes in the level of output and costs of production, we get different
types of cost curves in the short run. Define the kinds of cost concepts
like TFC, TVC, TC, AFC, AVC, AC and MC and its corresponding curves
with suitable diagrams for each.
Answer: Total fixed cost and output:
TFC refers to total money expenses incurred on fixed inputs like plant,
machinery, tools & equipments in the short run. Total fixed cost corresponds to
the fixed inputs in the short run production function. TFC remains the same at all
levels of output in the short run. It is the same when output is nil. It indicates
that whatever may be the quantity of output, whether 1 to 6 units, TFC remains
constant. The TFC curve is horizontal and parallel to OX-axis, showing that it is
constant
Qus:4 Inflation is a global Phenomenon which is associated with high
price causes decline in the value for money. It exists when the amount
of money in the country is in excess of the physical volume of goods
and services. Explain the reasons for this monetary phenomenon.
Answer:
Inflation
Inflation has become a global phenomenon in recent years. Development
economics is very much associated with inflation. An in-depth study of inflation is
of paramount importance to a student of managerial economics. The term
inflation is used in many senses and hence it is very difficult to give a generally
accepted, universally agreeable, and precise definition to the term inflation.
Popularly, inflation is associated with
Q5. Discuss the practical application of Price elasticity and Income
elasticity of demand.
Answer: Practical application of price elasticity of demand
Q6. Discuss the scope of managerial economics.
Answer: Managerial Economics
Managerial economics is a science that deals with the application of various
economic theories, principles, concepts and techniques to business management
in order to solve business and management problems. It deals with the practical
application of economic theory and methodology in decision-making problems
faced by private, public and non-profit making organisations.

Get solved assignments at nominal price of

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