1. Discuss the fundamental nature of Management Economies with respect to the three choice problems of the economy. 2.

The demand function of a product is given as Q = 500-5P. Find out the point price elasticity demand when a) P = Rs. 15 and Q = 200 a) P = Rs. 50 and Q = 200 What inferences do you draw from the results when the price of a commodity increases from Rs. 15 to Rs. 50, the quantity demanded remaining constant? 3. Distinguish between accounting costs and Economics costs. Explain giving suitable examples. 4. Explain the functional forms of cost function giving illustration. 5. "It is believed that a firm under a perfect competition is a price-taker and not a price-maker." Explain giving examples.

6. (A) The following table gives the information regarding the units produced. TE and TC of production of a North Indian Tool's factory. Complete the table: Total Profit Marginal Profit Unit of output 250 251 252 253 254 255 256 257 Total Revenue (Rs.) 1000 1004 1008 1012 1016 1020 1024 1028 Marginal Revenue Total Cost (Rs.) 752 753 755 758 762 767 773 780 Marginal Cost

(i) Determine the profit maximizing output level. (ii) Is profit maximum at the output where marginal profit equals zero? Is this always the case or is this unique to this particular problem?

(iii) Is profit maximum where total revenue equals total cost? Explain. (B) Case: Price cutting at the Times of India The Times of India, is one of the leading newspaper in India. In September 1972, it lower its price from 45 paise to 20 paise while prices of its rivals remained unchanged. The number of newspapers sold by TOI and its rivals was as follows: August 1972 3,55,000 10,24,000 3,92,000 3,25,000 May 1973 5,18,000 9,93,000 4,02,000 2,77,000

TOI Statesman Hindu Hindustan Times

(i) Based on the figures, find the price elasticity of demand or TOI. (ii) Was the cross elasticity of demand between Statesman and TOI positive or negative? (iii) Would you expect it to be positive or negative? Why? 7. What are the various factors which may influence the demand for intermediate goods like cables? Explain the most appropriate method of forecasting the demand for such an item. 8. a) Explain the method of cost-plus pricing and state its limitations. Point out cases where it is suitable. b) Briefly outline the statistical method of estimating cost function. 9. a) Explain the concept of law of diminishing marginal utility with a suitable example. Why is it relevant for managers in taking decisions relating to expansion or diversification? b) A consumer utility function is U = 1 log x1 + log x2. His budget constraint is given by 2x1 + 4x2 = 36. Find out how many units of x1 and x2 should the consumer buy in order to maximize his utility. 10. Why is demand analysis significant for management? Identify various concepts of demand relevant for various functional areas of management. 11. State the assumption underlying the economists' theory of firm. Develop a critique of the theory and suggest the need for alternative models. 12 'Price leadership is an alternative cooperative method used to avoid tough competition'. Comment.

13. Distinguish between short-run production function and long-run production function. The law of diminishing returns is sometimes known as the law of variable proportions. How? Explain the law with example and figure. 14. Distinguish between any four of the following: a) Demand curve and demand schedule b) Implicit and Explicit costs c) Isoquant and Isocost d) Short-run and long run cost functions e) Social cost-benefit analysis and financial analysis f) Price elasticity and income elasticity of demand