JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY HYDERABAD
JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY HYDERABAD B.Tech II MANAGERIAL ECONOMICS AND FINANCIAL ANALYSIS Previous Question Paper (March - 2022 - R15)
Answer any five questions. All questions carry equal marks.
Main
Discuss the nature and scope of Managerial Economics.
Answer
Managerial Economics is the application of economic theory and quantitative methods to business decision-making. Its nature is characterized as being microeconomic in focus, pragmatic and normative in approach, and goal-oriented. It bridges the gap between abstract economic theory and the practical problems faced by managers.
The scope of Managerial Economics includes: 1) Demand Analysis and Forecasting, which helps in production planning; 2) Cost and Production Analysis, essential for determining optimal input combinations and minimizing costs; 3) Pricing Decisions, Policies, and Practices, which involve setting prices under different market structures; 4) Profit Management, focusing on profit planning and control; and 5) Capital Management, which involves investment decisions and resource allocation under risk and uncertainty.
Explain the Law of Demand and describe the types of elasticity of demand.
Answer
The Law of Demand states that, other factors remaining constant (ceteris paribus), there is an inverse relationship between the price of a commodity and the quantity demanded. As price increases, quantity demanded decreases, and vice versa.
The types of elasticity of demand measure the responsiveness of quantity demanded to changes in determinants:
- Price Elasticity of Demand: Measures the percentage change in quantity demanded due to a percentage change in the price of the commodity itself.
- Income Elasticity of Demand: Measures the responsiveness of quantity demanded to a change in the consumer's income.
- Cross Elasticity of Demand: Measures the change in quantity demanded of one good in response to a change in the price of a related good (substitutes or complements).
- Advertising (Promotional) Elasticity of Demand: Measures the responsiveness of demand to changes in advertising expenditure.
Bring out the importance of Demand forecasting in business planning and discuss some of the techniques of forecasting demand for a company’s product.
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What are the characteristics of Isoquants and explain the Law of Returns to Scale.
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Define MRTS and brief on the impact of MRTS on production determination.
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Distinguish between Opportunity cost and Marginal cost. What is their practical usefulness?
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Illustrate Break-Even analysis with the help of Break-even chart and discuss its managerial significance.
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Explain the salient features of Perfect Competition, monopoly and how is price determined under these market conditions.
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What are the objectives of Pricing? Explain Market Skimming and Market Penetration pricing.
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State the features of Joint Stock Company and brief on the types of public enterprises.
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Define Capital. Discuss the significance and need for capital.
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Evaluate the Traditional methods of capital budgeting.
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From the following Trail Balance of Joe and Bros, prepare Trading, Profit and Loss A/C for the year ended 31-03-2019 and Balance Sheet as on that date.
| Debit Balance | Rs. | Credit Balance | Rs. |
|---|---|---|---|
| Sundry Debtors | 52,000 | Sundry creditors | 22,000 |
| Cash in hand | 1,592 | Sales | 2,92,000 |
| Motor Car | 22,000 | Capital | 70,000 |
| Furniture | 3,500 | ||
| Purchases | 1,95,000 | ||
| Sales Returns | 2,600 | ||
| Patents | 8,420 | ||
| Opening Stock | 7,000 | ||
| Motor Car Exp | 11,400 | ||
| Rent, Rates and Taxes | 6,108 | ||
| Insurance Premium | 2,400 | ||
| Machinery | 28,000 | ||
| Wages | 23,600 | ||
| General Expenses | 2,680 | ||
| Carriage Inwards | 2,040 | ||
| Carriage Outwards | 1,130 | ||
| Discount | 500 | ||
| Fuel | 6,430 | ||
| Drawings | 8,000 | ||
| Total | 3,84,000 | Total | 3,84,000 |
Closing Stock: Rs. 35,000.
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