Description

SESSION JUL – AUG 2024
PROGRAM MASTER OF BUSINESS ADMINISTRATION (MBA)
SEMESTER I
COURSE CODE & NAME DMBA111 MANAGERIAL ECONOMICS

1. Define the term ‘managerial economics’. Explain significance of the study of
managerial economics. (2+8)
Ans 1.
Definition of Managerial Economics
Managerial Economics is a branch of economics that applies microeconomic and
macroeconomic theories, principles, and methodologies to solve practical problems in
business and management. It bridges the gap between economic theory and managerial
practice, helping decision-makers in understanding and solving real-world challenges to
maximize organizational goals. Managerial economics focuses on demand analysis,
production, cost management, pricing strategies, and profit maximization to ensure sound
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2. Define production function. State types and uses of production function.(2+4+4)
Ans 2.
Definition of Production Function
The production function is a mathematical relationship that explains the output produced by a
firm as a function of its input factors, such as labor, capital, land, and raw materials. It
illustrates the maximum output that can be achieved with a given combination of inputs,
assuming efficient utilization of resources and a specific state of technology. The production
function is typically expressed as:
Q=f(L,K,R,T)
where Q is the quantity of output, L is labor, K is capital, R is raw materials, and T is
3. Explain different types of cost.(10)
Ans 3.
Different Types of Cost
Costs are the expenses incurred by businesses in the process of producing goods and services.
Understanding the types of costs is crucial for effective decision-making, pricing, and profit
maximization. Costs can be classified based on their behavior, traceability, and function.
Below are the primary types of costs:
1. Fixed Costs
Fixed costs remain constant irrespective of the level of production or output. These costs do
not vary in the short run and must be paid even if no production occurs. Examples include
4. Explain causes of inflation in detail.(10)
Ans 4.
Causes of Inflation
Inflation is the sustained rise in the general price level of goods and services in an economy
over a period of time. It reduces the purchasing power of money and affects individuals,
businesses, and governments. Understanding the causes of inflation is vital for implementing
effective policies to manage it. The primary causes of inflation can be broadly categorized
into demand-pull, cost-push, and structural factors.
1. Demand-Pull Inflation
Demand-pull inflation occurs when aggregate demand in an economy exceeds aggregate
5. Explain different objectives of pricing policies.(10)
Ans 5.
Different Objectives of Pricing Policies
Pricing policies refer to the strategies and methods businesses adopt to set the prices of their
products or services. These policies are influenced by a company’s overall objectives, market
dynamics, competition, and customer expectations. Effective pricing policies play a crucial
role in achieving financial and strategic goals. Below are the key objectives of pricing
policies:
1. Profit Maximization
One of the primary objectives of pricing policies is to maximize profit. Businesses aim to set
6. Define monetary policy. State the objectives of monetary policy in developing
countries. (2+8)
Ans 6.
Definition of Monetary Policy
Monetary policy refers to the process by which a central bank, such as the Reserve Bank of
India (RBI), controls the money supply, interest rates, and credit availability to achieve
specific economic objectives. It is a critical tool for managing inflation, unemployment,
economic growth, and financial stability.
Instruments of Monetary Policy: These include quantitative tools like open market