CONFIDENTIAL
JANUARY 2023/MBA3301 MANAGERIAL ECONOMIC-SET A
MALAYSIA UNIVERSITY of
SCIENCE and TECHNOLOGY
MASTER IN BUSINESS ADMINISTRATION
FINAL EXAMINATION
COURSE
COURSE CODE
DATE
TIME
DURATION
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MANAGERIAL ECONOMICS
MBA 3301
15TH JANUARY 2023
10.00 AM TO 01.00 PM
3 HOURS
INSTRUCTIONS TO CANDIDATES:
1. This question paper consists of ONE (1) part: PART A
2. Answer ALL FOUR Questions in PART A.
3. All answers are to be written in the answer booklets provided.
ANSWER BOOKLET
Student’s ID No
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……………………………….
Lecturer
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PROFESSOR GEOFFREY WILLIAMS
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CONFIDENTIAL
JANUARY 2023/MBA3301 MANAGERIAL ECONOMIC-SET A
Answer Question 1
The management of labour is one aspect of management where economic theories are
very helpful. Understanding economic ideas may help us better understand the labour
market, including how companies and employees behave and what influences earnings
and employment.
For instance, the idea of marginal revenue product (MRP) may be utilized to comprehend
how changes in the amount of labour used by an organization can impact the
organization's income. The marginal revenue product (MRP) of labour is the additional
income produced by an additional unit of labour, and it is calculated as the sum of the
MPP of labour and the output price. Managers may decide how many employees to hire
and how much to pay them by using the MRP to guide their decisions.
The idea of human capital is another economic idea that is pertinent to labour
management. The knowledge, skills, and talents of employees that are acquired via
training and experience are referred to as human capital. Managers may create training
and development plans to assist employees to become more productive by identifying the
most productive and valued employees and by taking into account their human capital.
The idea of labor market efficiency may also be utilized to comprehend labor market
circumstances and the elements that influence employment and pay. Efficiency in the
labor market is the capacity of the labor market to allocate resources to the most
advantageous uses. Employers are able to hire the people they need at competitive pay
when the labor market is functioning effectively, matching workers with the occupations
that best suit their abilities.
In conclusion, economic theories may help with labor management by illuminating the
actions of both employers and employees as well as the variables influencing
employment and pay levels. Managers may use the ideas of marginal revenue product,
human capital, and labor market efficiency as a framework for comprehending the labor
market, determining hiring and compensation levels, and creating training and
development plans that are efficient. Understanding the dynamics of the labor market and
the incentives that influence both employers' and employees' behavior may be done
thoroughly using economics.
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CONFIDENTIAL
JANUARY 2023/MBA3301 MANAGERIAL ECONOMIC-SET A
Answer Question 2
Lessening the negative consequences of the Covid-19 pandemic on management,
business, and industry has been the focus of the government's policy response to the
problem. Examples of significant policy reactions include the following:
Governments have implemented a number of public health measures to slow the spread
of the virus, including lockdowns, social isolation, testing, and monitoring systems. These
policies are based on the public health approach, which prioritizes the security and wellbeing of the general population.
Governments have also used trade measures such as tariffs and import restrictions to aid
local industries and protect domestic jobs that have been negatively harmed by the
pandemic.
To increase economic activity and stabilize the economy, governments have
implemented fiscal stimulus packages that include cash giveaways to consumers and
small businesses, tax relief measures, and infrastructure investments. These policies are
based on Keynesian economic theory, which emphasizes the ability of government
spending to offset the deflationary impacts of a slump.
Two monetary policy tools that central banks have employed to boost the economy and
calm the financial markets are interest rate lowering and monetary stimulus. The
employment of monetary policy in economic management is highly valued by the
macroeconomics of modern economics, which serves as the foundation for these
initiatives.
Government programs like loan guarantees and subsidies are only two examples of the
actions taken to help small businesses deal with the pandemic.
To sum up, the government's response to the Covid-19 outbreak is to mitigate the crisis's
detrimental consequences on management, business, and entrepreneurship. In order to
implement its economic policies, the government applies Keynesian economic theory,
Monetarist economic theory, the Public health approach, and protectionism. These steps
were made to stop the epidemic's further spread and to rescue the businesses and
employment that were already in jeopardy.
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CONFIDENTIAL
JANUARY 2023/MBA3301 MANAGERIAL ECONOMIC-SET A
Answer Question 3
Imperfect Information
When consumers or businesses do not have access to full or accurate details about the
products or services on the market, market failure results. There are a number of ways this
might cause the market to fail.
When there is a discrepancy in the amount of information held by buyers and sellers on
the quality of the products or services being sold, adverse selection occurs. In the secondhand automobile market, for instance, both buyers and sellers can be in the dark about the
vehicle's true condition; sellers might be aware of a serious technical issue but choose not
to report it. This might cause a market imbalance in which only low-quality vehicles are
purchased.
Monopolies
The government can utilize a variety of policies and laws to correct market failures due to
limited knowledge and monopolies. A few examples of this are as follows.
Governments can employ legislation and disclosure requirements to make sure people
have access to complete and up-to-date details about the products and services they want
to purchase. The government can mandate, for instance, that food manufacturers list their
components and nutritional information, or that automobile manufacturers list their vehicles'
fuel economy.
Regulations, such as those mandating firms to declare their refund and return procedures,
are one tool governments may employ to protect consumers against fraud and deception.
Governments may increase consumer awareness of their rights and business
competitiveness through education and information programs.
Governments can utilize competition policy to discourage monopolies and encourage more
healthy market competition by blocking mergers and acquisitions that would lessen
competition and by strictly enforcing anti-monopolization legislation. The government, for
instance, might examine planned mergers and acquisitions to make sure they won't lessen
competition.
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CONFIDENTIAL
JANUARY 2023/MBA3301 MANAGERIAL ECONOMIC-SET A
Monopolies that charge exorbitant prices can be broken up by governments that regulate
prices. Public utilities, such as those that provide electricity and water, may have their
pricing capped by the government in some jurisdictions.
In severe circumstances, governments can dismantle monopolies by ordering the
corporation to spin off divisions or sell off assets.
In conclusion, the government's ability to intervene can be a potent instrument in avoiding
market failure due to incomplete knowledge and monopoly. By enforcing transparency
guidelines, consumer protection laws, consumer education, competition policies, price
controls, and the breakup of monopolies.
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CONFIDENTIAL
JANUARY 2023/MBA3301 MANAGERIAL ECONOMIC-SET A
Answer Question 4
Two global megatrends that are likely to have a significant impact on the economy are the
escalating temperature of the planet's atmosphere and the increasing average age of its
population.
Climate change: Climate change can have a number of different effects on the economy,
including increased costs for businesses as a result of natural disasters and changes in
weather patterns, decreased agricultural productivity, and increased costs for both energy
and water. Additionally, the transition to an economy with lower carbon emissions will result
in the creation of new job opportunities in fields such as energy efficiency and renewable
energy.
Population aging: An aging population can have a number of impacts on the economy,
including increased costs for healthcare and pensions, reduced economic growth due to a
smaller workforce, and increased demand for goods and services that cater to older
consumers. Some examples of these impacts are listed below. In addition, a population
that is getting older may cause a shift in consumer preferences, which may result in an
increase in demand for goods and services that are associated with healthcare, retirement,
and leisure.
These megatrends present both challenges and opportunities for managers to address in
their organizations. The changing economic conditions that are the result of climate change
and an aging population will require businesses to adapt in order to survive. It is possible
that they will need to make investments in new technologies and products in order to
reduce their carbon footprint. Additionally, they will need to find new ways to cater to the
ever-evolving requirements of older consumers. On the other hand, companies that are
able to adjust to these megatrends and make the most of them may find themselves in a
strong position for future expansion.
In a nutshell, climate change and an aging population are two global mega trends that are
likely to have a significant impact on the economy. Both of these trends are expected to
have an effect on the global economy over the next few decades. An aging population will
increase costs for healthcare and pensions, reduce economic growth, and change
consumer preferences, while climate change will increase costs for businesses and shift
towards a low-carbon economy. Climate change will also shift towards a low-carbon
economy. In order for businesses to be successful in the future, they will need to adjust to
these changes and make the most of the opportunities that they create.
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