(SEM-V) THEORY EXAMINATION 2019-20 MANAGERIAL ECONOMICS

MANAGERIAL ECONOMICS (RAS-501)

B.Tech (SEM-V) – AKTU

SECTION A

(Attempt all questions – 2 × 7 = 14 marks)

Q1 (a) What is called supply in the context of economics?

Supply refers to the quantity of a good or service that producers are willing and able to offer for sale at different prices during a given period of time. Supply depends on factors such as cost of production, technology, and price of the product.

Q1 (b) Write the need of studying economics for engineers.

Economics helps engineers in decision making related to cost, production, pricing, and resource allocation. It enables engineers to analyze alternatives, optimize resources, and improve efficiency in industrial and business environments.

Q1 (c) What is making or buy decision?

The make or buy decision refers to the choice between manufacturing a product internally or purchasing it from an external supplier. This decision depends on cost comparison, capacity utilization, quality, and strategic considerations.

Q1 (d) Define inflation.

Inflation is a sustained increase in the general price level of goods and services in an economy over a period of time, resulting in a decrease in the purchasing power of money.

Q1 (e) What is budget?

A budget is a quantitative plan of income and expenditure prepared for a specific period of time. It helps in planning, controlling, and coordinating financial activities of an organization.

Q1 (f) What is sunk cost?

Sunk cost is a cost that has already been incurred and cannot be recovered. Such costs should not be considered while making future business decisions.

Q1 (g) What do you mean by return to scale?

Returns to scale refers to the change in output when all input factors are increased proportionately. It may be increasing, constant, or decreasing depending on production efficiency.

SECTION B

(Attempt any three – 7 × 3 = 21 marks)

Q2 (a) Describe scarcity definition of economics. Differentiate between scarcity definition and welfare definition.

The scarcity definition of economics states that economics is the study of how society allocates limited resources to satisfy unlimited human wants. Since resources are scarce, choices must be made efficiently.

The welfare definition focuses on economics as a study of material welfare of human beings. The main difference is that scarcity definition emphasizes resource allocation, while welfare definition emphasizes human well-being.

Q2 (b) What is law of demand and supply? Draw demand and supply curve and explain its determinants.

The law of demand states that quantity demanded decreases with increase in price, other factors remaining constant.
The law of supply states that quantity supplied increases with increase in price.

Demand determinants include income, taste, price of substitutes, and population.
Supply determinants include cost of production, technology, and number of sellers.

Q2 (c) Discuss the importance of law of return to scale.

The law of returns to scale helps firms understand how output responds to changes in all inputs. It assists in long-term planning, plant size determination, and cost management. It also helps in achieving economies of scale and competitive advantage.

SECTION C

(Attempt any one part – 7 × 1 = 7 marks)

Q3 (a) What are the main forms of market? Differentiate between perfect and imperfect competition.

The main forms of market are perfect competition, monopoly, monopolistic competition, and oligopoly.

Perfect competition has large number of buyers and sellers, homogeneous products, free entry and exit, and perfect knowledge.

Imperfect competition includes monopoly, monopolistic competition, and oligopoly, where firms have control over price, products are differentiated, and entry barriers exist.