1.

State and explain the law of demand and state the reasons of the negative slope of a demand curve. [10

Model Ans: Define Demand Define and Explain the Law of Demand Explain Substitution effect and Income Effect as the reason Discuss Individual and Market Demand Schedule Give a brief description on demand function Discuss the reasons for negative slope of the demand curve, such as : 1. Law of diminishing marginal utility. 2. Income effect of price change 3. Substitution effect 4. Exception to the law and conclusion

2.

Given the firms demand equation Q = 4200 10P and its Price elasticity at that point of sale is -2.5, find price output combination at this point on the demand curve. [10

Model Ans:

Given production function Q = 4LK 4L2 2K2 where Q, L and K are output, labour units and capital units respectively, find the marginal products of labour and capital when L = 10 and K = 5 and find the maximum output (Q) when L + K = 50 [10 3. How price and output are determined under the conditions of monopolistic competition ? [10
Model Ans: Define a monopolistic market through its features. Explain how price and output of a firm are determined in short run and long run by a monopolistic firm diagrammatically. Finally explain group equilibrium condition for a monopolistic firm through diagram.

4.

State and explain the circular flow of income in an economy. [10

Model Ans:

Define what is circular flow of income? Explain circular flow in a two factor model (between households and firms) and four factor model (among household, firm, government, and Financial Institutions) through diagram. With its advantages and disadvantages. 5. Describe the various phases of trade cycles and suggest measures to control and regulate the business cycle. [10
Model Ans:

Define a business cycle. Explain its various phases with its typical features through a diagram. b) Recovery c) Prosperity d) Recession e) Depression Explain the factors causing swings in business activity in various stages.

 Explain the preventive , curative and government measures to control business fluctuations. Short Notes: a) Short run cost function

Briefly explain TC, TFC, TVC, ATC, AVC, MC,AFC through the diagram. b) New Economic Policy and its implications LPG reforms through new economic policy and its

Explain the

implications for business. c. Controllable Vs Uncontrollable costs. Refer the book P.L.Meheta. d. ) Determinants of consumption and savings. Average price level, Average income level, Population growth, etc are the determinants of consumption whereas interest rates, proportion of the consumption and investment etc are the determinants of savings. 2. Managerial Economics is an integration of economic theory, decision science and business management comment. [10 Model Ans: Define managerial economics and how it is different from traditional economics.

 Discuss the various economic concepts like demand analysis, cost theories, pricing theories, marginal analysis, Incremental theories, production theories etc are used for taking various economic decisions such as Investment decisions, capital budgeting decisions, sales promotion decisions, and market strategy decisions. Discuss how managerial economics is forward looking in character. 3. a) Explain Price-Elasticity of demand ? [4 b) Discuss the managerial implication of price elasticity of Demand.[6 Define elasticity . Then explain price elasticity, its formula various types with diagram. Explain the applications of price elasticity to the , 1. Businessman 2. Government and finance minister 3. Policy makers 4. Trade unionists 5. International trade. 4. a) b) Discuss the utility of demand forecasting. [4 What are the criteria of a good forecasting method ? [6 and its

 Define demand forecasting and its various levels such as micro level, industry level and macro level. Explain the utility of demand forecasting in: 1. Production planning 2. Sales forecasting 3. Inventory control 4. Long term investment programmes 5. Determining price policy 6. Manpower planning 7. Economic planning 5. a) How do you derive Equilibrium Price under the conditions of Perfect competition. [5 b) Suppose parameters of the demand and supply equations have been estimated and that the equations are Q d = 14 2P and Qs = 2 + 4P. Determine the equilibrium price and quantity. [5 Briefly discuss the nature of perfectly competitive market. Discuss the conditions of equilibrium for a firm and industry in both short run and long run 6. a) b) What is Inflation ?[2 What are its effects on the various classes of people ? [8

 Define Inflation How it is measured. What are its different types? Demand pull vrs cost push inflation Explain the various effects of inflation on: a) cost b) standard of living c) supply of goods d) Wage-Price spiral e) Social disparities f) Investment decisions 7. a) b) What is National Income ? [2 Discuss the various methods of measurement of National income. [8 Define national income Differentiate between GNP,GDP,NNP and GNI. Discuss the various methods, such as: a) Income method b) Expenditure method

c) Value added method Short Notes: a) Fiscal Policy

Brief discussion should be made on different instruments and their objectives, such as: 1. Taxation policy 2. Public expenditure policy 3. Public debt management policy b) Balance of Payments

Defining Balance of Payments Distingishing Balance of Payment from Balance of Trade Dis-equilibrium in Balance of Payments c) Circular flow of Income

Circular Flow of income between households and firms. Circular flow of income among firm, households, capital and money market and government. d) Oligopoly.

Nature and characteristics

3. Distinguish between a shift in demand and a movement along a demand curve[10 Define the law of demand Draw the demand curve Briefly discuss the determinants of demand Explain why there is a shift in demand curve What are the factors responsible for it? Explain the movement along a demand curve through expansion and contraction. 4. How does foreign capital play an important role in the economic development of a country ? [10 Define foreign capital. Discuss the various sources of foreign capital Explain the role of foreign capital, such as: 1. Foreign investment 2. Technology transfer 3. External financing 4. Merger and acquisition of firms 5. Liberalization, privatization and Globalization of markets

6. Mobility of labour
7. Create a more competitive business environment 8. Enhances enterprise development 9. Increases total factor productivity

5. A firm that is facing diminishing returns cannot have a production function that exhibits increasing returns to scale. Do you agree ? Explain. [10 The statement can be argued in favor and against. It depends upon variability of inputs. 6. Describe why does excess savings in a system lead to a surplus on the balance of a payment ? [10 First explain that excess of saving implies excess of investment Then have to explain how excess of investment leads to excess of manufacturing and excess of exports Excessive exports brings money and capital inflows to the country which adjusts dis-equilibrium in balance of payments. 7. How is the law of diminishing returns reflected in the shape of the total production curve ? What is the relationship between diminishing returns and stages of production ? [10

 When all factors remaining constant, one factor input changes, we call the production function as the law of variable proportion. The law of variable proportion is otherwise known as the law of diminishing returns. The law of diminishing returns takes place in the 2 nd stage of the production function.