Amity MBA Hospital management 1st Semester

Economics for Managers

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Any Three
Assignment – A
Q1.Discuss the fundamental nature of Management Economies with respect to the three choice problems of the economy.
Q2. 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?
Q3. Distinguish between accounting costs and Economics costs. Explain giving suitable examples.
Q4. Explain the functional forms of cost function giving illustration.
Q5. “It is believed that a firm under a perfect competition is a price-taker and not a price-maker.” Explain giving examples.
Q6. 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.
Q7. State the assumption underlying the economists’ theory of firm. Develop a critique of the theory and suggest the need for alternative models.
Q8. ‘Price leadership is an alternative cooperative method used to avoid tough competition’.
Case Detail:
Electron Control, Inc., sells voltage regulators to other manufacturers, who then customize and distribute the products to quality assurance labs for their sensitive test equipment. The yearly volume of output is 15,000 units. The selling price and cost per unit are shown below:

Selling price $200
Costs:
Direct material $35
Direct labor 50
Variable overhead 25
Variable selling expenses 25
Fixed selling expenses 15 150
Unit profit before tax $ 50

Management is evaluating the alternative of performing the necessary customizing to allow Electron Control to sell its output directly to Q/A labs for $275 per unit. Although no added investment is required in productive facilities, additional processing costs are estimated as:

Direct labor $25 per unit
Variable overhead $15 per unit
Variable selling expenses $10 per unit
Fixed selling expenses $100,000 per year

Question: Calculate the incremental profit Electron Control would earn by customizing its instruments and marketing directly to end users. 
Assignment – C
Q1: Increase in demand is shown by:
a. Upward movement on the demand curve
b. Downward movement on the demand curve
c. Rightward shift of the demand curve
d. Leftward shift of the demand curve

Q2: Coefficient of elasticity of demand is negative. It means:
a. Consumers sometimes buy negative units of commodity
b. Price and quantity demanded move in same capital
c. Law of demand holds
d. The two goods are complimentary to each other

Q3: This is an assumption of law of demand:
a. Price of the commodity should not change
b. Quantity should not change
c. Supply should not change
d. Income of consumer should not change

Q4: Which of the following statements is NOT TRUE of indifference curves?
a. They exhibit higher levels of utility as you move from the origin
b. They could intersect
c. They are downward sloping
d. They are convex to the origin

Q5: Ostentation means goods purchased not for _______ but for snob appeal.
a. Utility
b. Direct satisfaction
c. Demand
d. None of these

Q6: An indifference curve between two commodities where one is a bad and the other a good would:
a. be vertical to the axis measuring units consumed of the good
b. remain downward sloping
c. be vertical to the axis measuring units consumed of the bad
d. be upward sloping

Q7: “In the case of a Giffen good, the demand curve will be:”
a. Horizontal
b. Downward-sloping to the right.
c. Vertical
d. Upward-sloping to the right

Q8: The situation in which limited resources are being used most effectively is called:
a. efficient
b. economic
c. abundant
d. scarce

Q9: Contraction of demand is shown by:
a. Upward movement on the demand curve
b. Downward movement on the demand curve
c. Rightward shift of the demand curve
d. Leftward shift of the demand curve

Q10: The opportunity cost of a particular activity
a. is the same for everyone pursuing this activity
b. may include both monetary costs and forgone income
c. always decreases as more of that activity is pursued
d. usually is known with certainty e. measures the direct benefits of that activity

Q11: Expansion of demand is shown by:
a. Upward movement on the demand curve
b. Downward movement on the demand curve
c. Rightward shift of the demand curve
d. Leftward shift of the demand curve

Q12: Economics is
a. the study of the markets for stocks and bonds
b. the study of choice under conditions of scarcity
c. exclusively the study of business firms
d. fundamentally the same as sociology e. applicable only when scarcity is not a problem

Q13: People and organizations have to make choices about how to allocate time and money because of
a. government rules and regulations
b. corporate control of our lives
c. scarcity of time and money
d. religious values

Q14: The three fundamental questions of economic organization are:
a. “when, for whom, and how”
b. “how, what, and for whom”
c. “who, how, and when”
d. “what, who, and why”

Q15: Law of demand shows relation between:
a. Income and price of commodity
b. Price and quantity of a commodity
c. Income and quantity demand
d. Quantity demanded and quantity supplied

Q16: “In our model of decision making under different conditions, what is the difference between risk and uncertainty?”
a. “Under risk, there is a well defined problem; under uncertainty, the definition is unclear”
b. “Under risk, information is reliable; under uncertainty, it is not”
c. “Under risk, probabilities can be measured; under uncertainty, they cannot”
d. “Under risk, choices are clear and the chances of different outcomes can be measured; under uncertainty, neither applies”

Q17: “Customers will be ready to purchase a specified quantity of a product, at a specified price, if marginal utility of further spending is equivalent to the”
a. Cost
b. opportunity cost
c. revenue
d. product cost

Q18: Tastes & first choices are determinants of
a. supply
b. demand
c. demand curve
d. elasticity

Q19: “Demand Function, X = f (P) where X = demand of a commodity; P = Price of the commodity”
a. Demand is directly related to price
b. Price is inversely related to demand
c. Price is directly related to demand
d. None of the above

Q20: An indifference curve shows combinations of two goods that:
a. could be available to the consumer in a given time period
b. would provide the consumer with the same level of satisfaction
c. could provide the consumer with similar levels of satisfaction
d. a consumer could buy with their given income.

Q21: “In a Sweezy Oligopoly, if a firm decreases its prices, a competitor will?”
a. Increase prices
b. Decrease prices
c. Keep their prices constant
d. Either B or C

Q22: “The ‘law of diminishing returns to scale’ refers to the general tendency for ___to eventually diminish as more of the variable input is employed, given the quantity of fixed inputs.”
a. marginal product
b. average total cost
c. marginal cost
d. average product

Q23: “If both average cost (AC) and marginal cost (MC) are U shaped, then”
a. AC will reach a minimum at a level of output that is less than that at which MC reaches a minimum.
b. the total cost curve will be a straight line.
c. AC will reach a minimum at a level of output that is greater than that at which MC reaches a minimum.
d. both AC and MC will reach a minimum at the same level of output

Q24: “If firms compete in a Cournot fashion, then”
a. each firm views the output of the rival as given.
b. each firm views the prices of rivals as given.
c. each firm views the profits of rivals as given.
d. all of the above

Q25: The obligatory condition for the maximization of output given the factor prices:
a. Isoquant line must be tangent to one of the isocosts.
b. Isoquant line must be tangent to all the isocosts.
c. Isoquant line need not be tangent to isocost.
d. Isoquant line needs to be parallel to isocost.

Q26: A monopolistically competitive firm in short-run equilibrium
a. will make negative proit (lose money).
b. will make zero profit (break-even).
c. will make positive profit.
d. Any of the above are possible

Q27: A stable equilibrium in the Prisoner’s Dilemma game is known as a:
a. Baumol equilibrium.
b. Porter equilibrium.
c. Nash equilibrium.
d. Douglas equilibrium.

Q28: “If a firm’s revenues just cover all its opportunity costs, then:”
a. normal profit is zero
b. economic profit is zero
c. total revenues equal its explicit costs
d. total revenues equal its implicit costs

Q29: Marginal cost is computed as
a. Prime cost + All Variable overheads
b. Direct material + Direct labor + Direct Expenses + All variable overheads
c. Total costs All fixed overheads
d. All of the above

Q30: Perfect competition occurs in a market where there are many firms each selling:
a. an identical product
b. a similar product
c. a unique product
d. a competitive product.

Q31: “Q = f (L, K, I, R, E)….. iss considered as”
a. Production Function
b. Production Function with one variable inputs
c. Production Function with two variable inputs
d. Production Function with various inputs

Q32: A long-run is also expressed as a series of short-runs.
a. TRUE
b. FALSE
c. Can t say
d. None of the above

Q33: Game theory is concerned with:
a. How production can be managed at least cost.
b. How individuals make decisions taking into account the actions of others.
c. Managing a financial portfolio to minimize risk.
d. None of the above.

Q34: “In perfect competition, a firm’s marginal revenue equals its:”
a. average revenue
b. price
c. total revenue
d. both a and b

Q35: A monopolistically competitive firm in long-run equilibrium
a. will make negative profit
b. will make zero profit
c. will make positive profit
d. Any of the above are possible

Q36: “The marginal principle asserts that, in general, when net benefit is maximized”
a. total benefit will be equal to total cost.
b. average benefit will be equal to average cost.
c. marginal benefit will be equal to marginal cost.
d. average cost will be above total cost but below average benefit.

Q37: “In the long run, the typical firm:”
a. has all inputs fixed except one.
b. Has only variable inputs
c. May change some but not of all its inputs
d. Is concerned with its variable cost of production

Q38: A cooperative buying group is an example of…
a. A factor leading to internal economies of scale
b. A factor leading to external economies of scale
c. Both A and B
d. None of the above

Q39: “For a firm to maximize it’s profit, the level of output should reach at following two marginals:”
a. MC=MR; Slope of MR
b. MC>MR; Slope of MR= Slope of MC
c. MC=MR; Slope of MR= Slope of MC
d. MC Slope of MC

Q40: Marginal cost (MC) curve intersects the
a. ATC and AFC curves at their minimum points.
b. “ATC, AVC and AFC curves at their minimum points”
c. AVC and AFC curves at their minimum points
d. ATC and AVC curves at their minimum points

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