MB0042- MANAGERIAL ECONOMICS

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ASSIGNMENT

DRIVE	SPRING 2015
PROGRAM	MBADS/ MBAFLEX/ MBAHCSN3/ MBAN2/ PGDBAN2
SEMESTER	1
SUBJECT CODE & NAME	MB0042- MANAGERIAL ECONOMICS
BK ID	B1625
CREDIT & MARKS	4 Credits, 60 marks

1. Define economies of scale. Discuss the kinds of internal economies.

Answer: Economies of scale are the cost advantages that a business can exploit byexpanding their scale of production. The effect of economies of scale is to reduce the average (unit) costs of production.

There are many different types of economy of scale and depending on the particular characteristics of an industry, some are more important than others.

Internal economies of scale

Internal economies of scale arise from the

                                                               

2. Consumers' interview method is a survey method used for estimating the demand for new

products. This method is very important with regard to collect the relevant information

directly from the consumers with regard to their future purchase plans. Opinion surveys

and direct interview method are the two important techniques among all. Describe these

two methods in detail.

Answer:Primary vs. secondary research methods: There are two main approaches to marketing.  Secondary  research involves using information that others have already put together.  For example, if you are thinking about starting a business making clothes for tall people, you don’t need to question people about how tall they are to find out how many tall people exist—that information has already been published by the U.S. Government.  Primary research, in contrast, is research that you design and conduct yourself.  For example, you may need to find out whether consumers would prefer that your soft drinks be sweater or tarter.

Survey method is one of the most common and direct methods

Q3. 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: The project cost can be monitored by comparing the actual cost of the project with the estimated cost. This shows the areas that are overestimated and those that are underestimated. By carefully monitoring expenses you can ensure the cost of the project is within the amount allowed for in the quote.  Select the numbers in the project cost table to see the types of information required to work out an estimated project cost. A proper understanding of the nature and behaviour of costs is a must for regulation and control of cost of production. The cost of production depends on money forces and an understanding of the

Q 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: In economics, inflation is a sustained increase in the general price level of goods and services in an economy over a period of time. When the price level rises, each unit of currency buys fewer goods and services. Consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy. A chief measure of price inflation is the inflation rate, the annualized percentage change in a general price index (normally the consumer price index) over time. The opposite of inflation is deflation.

Define Inflation- Inflation is commonly understood as

5. Describe perfect competition and its features.

Answer: Perfect Competition is a market structure where there is a perfect degree of competition and single price prevails.

The concept of Perfect Competition was introduced by Dr. Alfred Marshall.

Main Features of Perfect Competition ↓

6. Define revenue. Explain the types of revenue and the relationship between TR, AR and MR

with an example of a hypothetical revenue schedule.

Answer: In business, revenue or turnover is income that a company receives from its normal business activities, usually from the sale of goods and services to customers. In many countries and states, revenue is referred to as turnover. Some companies receive revenue from interest, royalties, or other fees. Revenue may refer to business income in general, or it may refer to the amount, in a monetary unit, received during a period of time, as in "Last year, Company X had revenue of $42 million." Profits or net income generally imply total revenue minus total expenses in a given period. In accounting, revenue is often referred to as the "top line" due to its position on the income statement at the very top. This is to be contrasted with the "bottom line" which denotes net income.

Revenue is the total amount received by a business or

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