DMBA115 MANAGERIAL ECONOMICS

Description

SESSION	JAN – FEB 2025
PROGRAM	MASTER OF BUSINESS ADMINISTRATION (MBA)
SEMESTER	01
COURSE CODE & NAME	DMBA115 MANAGERIAL ECONOMICS

 

 

Assignment Set – 1

 

 

Q1. What are the key determinants of price elasticity of demand?                     

Ans 1.

Key Determinants of Price Elasticity of Demand

Price Elasticity of Demand

Price elasticity of demand (PED) measures how much the quantity demanded of a good responds to a change in its price. It is a crucial concept in managerial economics as it helps businesses understand how a change in price might affect their total revenue and sales volume. A product is considered elastic if a small price change causes a significant change in quantity demanded, and inelastic if demand remains relatively stable despite price changes.

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Q2. Explain the meaning of the Law of Supply. Also highlight the exceptions to the Law of Supply. 5+5     

Ans 2.

Law of Supply and Its Exceptions

Law of Supply

The Law of Supply is a fundamental concept in microeconomics that states that, all other things being equal, an increase in the price of a good leads to an increase in the quantity supplied. In simple terms, suppliers are more willing to produce and sell a product when its price is higher, as it promises better profitability. This relationship between price and quantity supplied is directly proportional and is typically depicted by an upward-sloping supply curve.

Rationale

 

 

Q3. Classify the various types of costs in economics.        

Ans 3.

Classification of Various Types of Costs in Economics

Cost in Economics

In economics, cost refers to the expenditure incurred in the production of goods and services. Understanding cost is crucial for managerial decision-making as it directly influences pricing, output levels, profitability, and resource allocation. Costs are classified in various ways depending on their behavior, nature, and purpose.

Fixed and

 

Assignment Set – 2

 

 

Q4. Examine the key characteristics of a perfectly competitive market   10       

Ans 4.

Key Characteristics of a Perfectly Competitive Market

Perfect Competition

A perfectly competitive market is a theoretical construct in microeconomics where numerous buyers and sellers interact freely. No individual participant has the power to influence the price. This market structure is ideal for understanding price and output determination in economics and is often used as a benchmark to compare real-world markets.

Large Number of

 

Q5. Illustrate the concept of the consumption function and analyse its relationship with varying income levels.            10       

Ans 5.

Concept of the Consumption Function and Its Relationship with Income Levels

Consumption Function

The consumption function is a key concept in macroeconomics that describes the relationship between household consumption and disposable income. Originally proposed by John Maynard Keynes, the function illustrates how much households plan to spend out of their income on goods and services. It plays a vital role in determining national income and is a foundation of

 

Q6. Interpret the Phillips Curve and assess the trade-off it presents between inflation and unemployment. 

Ans 6.

Interpretation of the Phillips Curve and the Inflation–Unemployment Trade-Off

Phillips Curve

The Phillips Curve is an economic concept that describes the inverse relationship between inflation and unemployment. First introduced by economist A.W. Phillips in 1958, it posits that as unemployment decreases, inflation tends to rise, and vice versa. This trade-off has significant implications for policymakers seeking to balance economic stability with employment