Description

SESSION JAN-FEB’24
PROGRAM MASTER OF BUSINESS ADMINISTRATION
(MBA)
SEMESTER 4
COURSE CODE & NAME DMBA105 – MANAGERIAL ECONOMICS
Assignment Set – 1
1. Why demand curve slopes downwards? What are its exceptions? 4+6
Ans 1.
The demand curve, a fundamental concept in economics, typically slopes downward. This
pattern reflects the inverse relationship between the price of a good or service and the
quantity demanded by consumers. In other words, as the price of a product decreases, the
quantity demanded generally increases, and vice versa. This downward slope can be
attributed to several economic principles and behavioral responses, which include the
substitution effect, the income effect, and diminishing marginal utility.
Substitution Effect
The substitution effect occurs when a decrease in the price of a good makes it more attractive
relative to its substitutes. As the price of a product drops, consumers are likely to switch from
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2. Why demand curve for a firm in perfectly competitive market is horizontal whereas
it is downward sloping in imperfectly competitive market. 5+5
Ans 2.
In the realm of economics, understanding why demand curves differ in shape between
perfectly competitive and imperfectly competitive markets is fundamental. This exploration
sheds light on the differing market dynamics and the strategic positioning of firms within
these markets.
Demand Curve in Perfectly Competitive Markets
In a perfectly competitive market, the demand curve for an individual firm is horizontal,
3. Explain the different types of cost with suitable example. 10
Ans 3.
In economics and business management, the concept of cost is multifaceted, reflecting
various aspects of spending incurred by organizations or individuals. These costs are
categorized based on their characteristics and the context in which they occur. Below are
some key types of costs, each illustrated with examples to facilitate a clearer understanding:
1. Fixed Costs
Fixed costs are expenses that do not change with the level of production or sales. They are
Assignment Set – 2
4. Write down the ways to control inflation of a country. 10
Ans 4.
Strategies to Control Inflation in an Economy
Inflation, characterized by a sustained increase in the general price level of goods and
services in an economy, can have a significant impact on economic stability and purchasing
power. Governments and central banks use various strategies to control inflation. These
measures are crucial for maintaining economic stability and can be broadly categorized into
5. Summarize the different objectives of pricing policies.10
Ans 5.
Pricing policies are fundamental for businesses as they directly impact revenue generation,
market positioning, and overall strategic goals. Different pricing objectives guide how a
company sets its prices, and these objectives can vary based on the company’s market,
product life cycle, and competitive environment. Here are several key pricing objectives that