MBS 1st Semester Managerial Economics Model Question

MBS 1st Semester Managerial Economics Model Question
MBS 1st Semester Managerial Economics Model Question

We have TU MBS 1st Semester Managerial Economics Model Question with all the answer. It is one of the Subject of MBS 1st Semester.

Subject: Managerial Economics

Subject Code: ECO 512

Full Marks: 100

Pass Marks: 50

University: TU

MBS 1st Semester Managerial Economics Model Question

Following are the detail informations.

Candidates are required to give their answers in their own words as far as practicable. The figures in margin indicate full marks.

Group A

Case Study/ Situation Analysis Questions                                                           [ 2*15=30 ]

1. Carefully read the case given below, critically analyze it, and answer the questions that follow:

In a free enterprise market economy, excess demand for a commodity is automatically eliminated by price rise and excess supply is eliminated by price decline. Markets clear by quantity responses to price changes resulting from a disequilibrium. Some real-world markets, however, do not clear and do not seem to move toward clearing. Financial markets (especially credit markets) often do not clear.

We often observe excessive demand or excessive supply of credit that persists over time. A non-clearing market may also exist in labour, commodities, and other markets. For example, ticket prices for concerts by a superstar, such as Amrit Gurung or Jennifer Lopez, are often deliberately set below the equilibrium price so as to create a shortage (i.e., excess demand) for tickets. Long lines in front of ticket booths long before tickets go on sale, and all available tickets are quickly sold out as soon as they do go on sale.

The news media report on the long lines to get tickets and interview some of the people camped outside ticket booths days before the tickets go on sale, fans talk about the hot concert coming up, and an aura of anticipation and success is created. Promoters play this price game in expectation that such type of sensational act and skillfully campaigned publicity will lead to much greater sales of the star’s recordings, and that these spillovers will more than a make up for the loss of revenue by pricing concert tickets below the equilibrium level.


a. Why would a firm set a price for the product or service it sells below equilibrium with reference to the content in the case?

b. What determines if the event organizers such as that of the concert or any other firms offering similar services gain to set the price below the equilibrium? If firms playing the game of setting price below the equilibrium level anticipating future benefit, why would your firm or any firm also adopt this strategy to earn a higher profit?

c. If your firm could set the price of the product below the equilibrium price and increases its profit, would you, as a CEO of the firm, adopt this strategy? What should be the role of government in such practices?

2. The demand and supply functions of wheat grain are depicted by the following equations. Qd = 1500 – 25P, Qs = -750 + 25P

The government announces a program to support a price increase of Rs 10 per kg of this grain, which imposes a price floor of Rs 55.

a. What are the equilibrium price and the quantity of wheat before price support policy?

b. What quantity of wheat is purchased by the consumers, supplied by the producers and purchased by the government under the price support policy?

c. What is the change in consumer surplus, producer surplus and total surplus? What is the cost of the government to implement the price support policy?

d. As per the suggestions of economic advisors, the government changes the price support policy and provides subsidy of Rs 4.50 per kg sold. What is the price paid by consumer, price received by sellers, change in consumer surplus, change in producer surplus and government cost?

e. Interpret the results obtained from both policies.       [2+2+4+4+3]

Group B

Problem Solving/ Critical Analysis Oriented Questions.

Attempt Any 3 questions

3. Demand function of a firm is given by Qd = 400 – 4Px + 0.5Y +5Py- 3Pz.

               Where, Qd        = Quantity demand for X good.

Px      = Price of X good Y          

= Consumer’s income

                                 Py      = Price of Y good

                                Pz       = Price of Z good

a. Find the quantity demanded if Px = Rs 15, Y = Rs 3000, Py = Rs 10 and Pz = Rs 20.

b. Using elasticities, estimated demand when price of X good decreases by 20%, income increases by 25%, price of Y good increases by 12% and price of Z good decreases by 18%.

c. Explain the significance of demand forecasting in business decision making.

d. What types of pricing policy would you suggest to increase the revenue for elastic and inelastic products? Give reasons.            [2+5+5+3]

4. Consider the following total revenue and total cost functions for a biscuit factory.

P = 30 – 0.3Q, C = 210 + 6Q

a. Compute profit maximizing output, price, TR and maximum profit

b. Compute sales maximizing output, price, profit and maximum total revenue.

c. Compute sales maximizing output, price and TR under profit constraint of Rs 255 thousands.

d. Which objective will be more effective to achieve business growth with stability? Give your critical comments.           [ 4+3 +4 +4 ]

More Questions

5. a).What is production function? How does it help in the business decision making? [ 4+4 ] For Answer: CLICK HERE

b) Let, production function, Q=100, C = Rs 2000, r = Rs 100, w = Rs 80, P = Rs 4. Compute optimal employment of two variable inputs, maximum output and profit. What will be the optimal employment of inputs, maximum output and profits when total cost outlay increases to Rs 4000? [ 4 + 3 ]

6. Describe the process of measuring demand interrelationships for a multi -product firm. How can a firm determine the best level of output and price for products that are jointly produced in fixed proportions?        [ 3 + (6+6) ]

Group “C”

Concept Based Short Answer Questions(Attempt any FIVE Questions)

7. What is the basic difference between using a subsidy to induce producers to install antipollution equipment and a tax on producers who pollute?

8. Differentiate economic profit and business profit with suitable examples.

9. Describe the scope of managerial economics.

10. How can demand be forecasted by moving average method? Explain with suitable examples.

11. Consider the following demand and cost functions for the oligopolist. (3+2)
Q1 = 210-30P1, Q2 = 90-10P2 and TC = 3.5Q + Q2 /60
a. Compute equilibrium price, output and profit at the point of kink.
b. Is this model applied in Nepalese market? Give Examples.

12. Explain the behavior of consumer towards risk and uncertainty with suitable example.

Hence, these are the MBS 1st Semester Managerial Economics Model Question.

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