Tribhuvan University

SEND-UP EXIMATION

Level: Masters Subject: Economics

Title: Managerial Economics TIME: 3 hours
Code: 565A Semester: III
Year: II Date: 2018

Candidates are required to answer the questions in their own words as far as practicable.
The figures in margin indicate full marks.

Group A
Attempt ANY TWO questions. [15*2=30]
1. Define demand forecasting. What types of qualitative methods would you follow to forecast
demand? Explain its significance in business decision making.
2. A company has following production function
Q = 100 K0.5L0.5
Where Q is output, K and L are factor inputs. The firm has been operated in efficient
condition by using 100 units of capital and 25 units of labor.
a) Find marginal productivity of capital and marginal productivity of labor.
b) If rental price of capital is Rs. 20 per unit, what is the wage rate?
c) Suppose that rental price of capital is expected to increase Rs. 25, while wage rate
remains unchanged under the terms of contract. What rate of capital will be used when
firm run under the efficient condition?
3. Why does the government regulate Nepal Telecom, Nepal Electricity Authority and Nepal Oil
Corporation if the profit motive services such an important function in the operation of a free
enterprise system?

Group B
Attempt ANY SEVEN questions. [7*10=70]
4. What are the determinants of price elasticity of demand? Explain its uses in business decision
making.
5. What is meant by optimum employment of inputs? Explain the condition of optimum
employment of one variable input.
6. The Royal Furniture produces 1000 wood cabinets and 500 wood desks per months with total
cost Rs. 30000. If the industry produces cabinets only the cost would be Rs. 23000 and cost for
producing 500 wood desks only would be Rs. 11000. Calculate degree of economies of scope.
Why does it exist?
7. How time series analysis is used for demand forecasting?
8. Explain the price output determination under aiming at joint profit maximization.
9. What is learning curve? Explain its significance in formulating business strategies.
10. How does the theory of the firm provide an integrated framework for the analysis of managerial
decision making across the functional areas of business?
11. What is the difference between unethical and unlawful behavior? What does an ethical manager
do?
12. Why is it critical to introduce an international dimension into managerial economics?