Final Term - 30 Marks
Date24th feb 2021
Managerial Economics BBA -5th
Attempt All the Questions, each carries Equal Marks
Q1. Answer the following
a) Collect relevant data and derive a supply curve of an organization. (5)
b) List out the major factors of production (input factors used) in a cement factory.
(5)
Q2. A manager makes the statement that output should be expanded as long as average revenue exceeds average
cost. Does this strategy make sense? Explain. (10)
Q3. a) Does optimal use of an input (such as labor) mean maximizing average output (per unit of input)? Explain. (5)
b) Discuss the managerial uses of production function. (5)
Q4. (a) Comment on the following statement: “Average cost includes both fixed and variable costs, whereas marginal
cost only includes variable costs. Therefore, marginal cost is never greater than average cost” (5)
(b) List out the factors that cause economies and diseconomies of scale. (5)
Q5. Demand for microprocessors is given by P = 35 – 5Q , where Q is the quantity of microchips (in millions) (10)
The typical firm’s total cost of producing a chip is Ci = 5qi, where qi is the output of firm i.
(a) Under perfect competition, what are the equilibrium price and quantity?
(b) Does the typical microchip firm display increasing, constant, or decreasing returns to scale? What would you
expect about the real microchip industry? In general, what must be true about the underlying technology of
production for competition to be viable?
(c) Under perfect competition, find total industry profit and consumer surplus