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24 x 7 hours
24 x 7 hours
PROGRAM - MBA
SEMESTER 1
SUBJECT CODE & NAME - MB0042 – Managerial
Economics
1. “Most of the firms spend
considerable amounts of money on advertisement”. Explain advertising elasticity of demand and
its practical applications in this context.
Explanation of advertising elasticity of demand
Most of the firms, in the
present marketing conditions, spend
considerable amounts of money
on advertisement and
other such sales
promotional activities with the object of promoting its sales.
Advertising elasticity refers to the
responsiveness of demand
or sales to
change in advertising
or other promotional expenses.
The formula to calculate the advertising
elasticity is as follows:
2. Explain production function in
detail.
Production Function :
The entire
theory of production
centres revolves around
the concept of production function. A
“production function” expresses the technological or engineering
relationship between physical quantity of inputs employed and physical quantity
of outputs obtained by a firm. It specifies a flow of output resulting from a
flow of inputs during a specified period of
3. Explain Marris’ Growth
Maximisation Model in detail.
Marris’ Growth Maximisation Model
Profit-maximisation is
a traditional objective
of a firm.
Sales maximisation objective is explained by Prof. Baumol. On similar
lines, Prof. Marris has developed
an alternative growth
maximisation model. It is
commonly seen that each firm aims at
maximising its growth rate,
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4. Explain Price –output
determination under monopoly.
Assumptions
·
The monopoly firm aims at maximising its total profit.
·
It is completely free from government controls.
·
It charges a single and uniform high price to all
customers.
It is necessary to note that
the price output analysis and equilibrium of the firm and industry is one and
the same under monopoly.
5. “Investment is the second
important component of effective demand”. Explain investment function.
Investment is the
second important component
of effective demand.
In Keynesian economics, the term investment has a different meaning. In the ordinary language, it refers to
financial investment. i.e. purchase of stocks, shares, debentures,
bonds, etc. In this case, there is only transfer of
rights or titles from
one person to
another. It is
an investment by
6. Write short notes on:
a) Monetary Policy
b) Physical policy or direct controls
a) Parameters and objectives
Parameters of monetary policy:
Broadly speaking,
there are three
parameters of monetary
policy of a country.
It is through
these parameters that
the monetary policy
has to operate. They are:
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