DMBA115 MANAGERIAL ECONOMICS

Description

SESSION	JULY AUGUST 2026
PROGRAM	MASTER OF BUSINESS ADMINISTRATION (MBA)
SEMESTER	I
COURSE CODE & NAME	DMBA115 MANAGERIAL ECONOMICS

 

 

Assignment Set 1

 

Q.1. Explain the law of demand and discuss the major assumptions underlying it. Describe the key factors that influence price elasticity of demand and compare the elasticity of demand for different types of goods. How can businesses apply the concept of price elasticity while determining prices in competitive markets? (3+3+4 = 10 Marks)

Ans 1.

Law of demand and the assumptions of the law of demand

The law of demand indicates that as a product’s own price decreases, the quantity demanded increases and vice versa, with other factors remaining constant. A price change thus results in a movement on a demand curve. Another determinant affects the position of the curve.

The law assumes that the income of the consumer, his tastes, his expectations and the prices of related goods are unchanged

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Q.2. Describe the law of supply and discuss the situations in which it may not hold. Explain how changes in demand and supply influence the equilibrium of a market. With the help of suitable diagrams, illustrate the effects of simultaneous changes in demand and supply on equilibrium price and quantity. (3+3+4 = 10 Marks)

Ans 2.

Law of supply

According to the law of supply, the quantity supplied of a commodity tends to increase with an increase in the price of the commodity and vice-versa, ceteris paribus. When the production of additional units causes the MC to rise, higher prices can make that output worthwhile.

It assumes that technology, prices of inputs, taxes, etc., remain constant. Any change in these factors would cause the supply curve to move and not just move along it. The impact of the current price needs to be

 

Q.3. Distinguish between short-run and long-run production functions and explain the law of variable proportions and returns to scale. Analyze the relationship between cost and output and explain the derivation and interrelationship of the major short-run cost curves. (6+4 = 10 Marks)

Ans 3.

The concepts of short run and long run production

A production function illustrates the maximum output possible with a given state of technology, set of inputs. At least one factor of production is fixed in the short run. A manufacturer could change the amount of labour and materials, but there would be no change in the capacity of the factory. Long run is a period of production where all factors are variable including plant.

It’s a difference in

 

Assignment Set 2

Q.4. Explain the process of price and output determination under perfect competition. How does it differ from price and output determination under monopoly? Discuss the implications of these two market structures for efficiency, consumer welfare, and resource allocation. (5+5 = 10 Marks)

Ans 4.

Perfect competition

Perfect competition is where there are many buyers and sellers selling a homogeneous product, free entry and exit and information in the market. Market price is established by the industry demand and supply curves. The individual firm takes the price as a given since the firm has a negligible output in comparison to the market.

Hence, average revenue and

 

Q.5. Discuss the objectives and major instruments of monetary policy and fiscal policy. Analyze how these policies can be used to control inflation, unemployment, and fluctuations in economic activity, highlighting their relative effectiveness under different economic conditions. (5+5 = 10 Marks)

Ans 5.

Objectives of economic policy

Monetary and fiscal policies affect demand, financial conditions and economic activity. They aim to achieve price stability, sustainable growth and high employment. They also have the potential to dampen the impact of business cycles, though their impact will vary based on the origin of the economic

 

Q.6. Discuss the major causes and different types of inflation and deflation. Explain the relationship between inflation and unemployment through the Phillips Curve and examine its significance for macroeconomic policy formulation in modern economies. (5+5 = 10 Marks)

Ans 6.

Causes of Inflation

Inflation is an ongoing increase in the overall price level that decreases the value of money. Demand pull inflation is inflation that is caused by an increase in aggregate spending that exceeds the production of goods and services in the economy. It can be due to strong credit expansion, strong