JNTU
JNTU B.Tech II MANAGERIAL ECONOMICS AND FINANCIAL ANALYSIS Previous Question Paper (October - 2020 - R15)
Answer any five questions. All questions carry equal marks.
Main
Define Economics and Managerial Economics. And explain the scope of Managerial Economics.
Answer
Economics is the social science concerned with the production, distribution, and consumption of goods and services, focusing on how individuals and societies allocate scarce resources to satisfy unlimited wants. Managerial Economics is the application of economic theories, principles, and quantitative methods to the process of managerial decision-making, bridging the gap between abstract economic theory and practical business problems.
The scope of Managerial Economics includes:
- Demand Analysis and Forecasting: Understanding consumer behavior and predicting future demand for products to plan production.
- Cost and Production Analysis: Analyzing cost functions and production functions to optimize resource utilization and minimize costs.
- Pricing Decisions, Policies, and Practices: Determining optimal pricing strategies under various market structures like perfect competition, monopoly, or oligopoly.
- Profit Management: Measuring and managing profits, including break-even analysis and profit planning.
- Capital Management: Evaluating investment decisions, capital budgeting, and cost of capital to ensure long-term profitability.
Define Elasticity of Demand. And explain its types and importance.
Answer
Elasticity of Demand measures the responsiveness of the quantity demanded of a good to a change in one of its determinants, such as price, income, or the price of related goods.
The types of Elasticity of Demand are:
- Price Elasticity: The ratio of the percentage change in quantity demanded to the percentage change in price.
- Income Elasticity: The responsiveness of quantity demanded to a change in consumer income.
- Cross Elasticity: The responsiveness of quantity demanded of one good to a change in the price of another related good (substitute or complement).
The importance of elasticity lies in its role in:
- Pricing Strategy: Helping firms decide whether to increase or decrease prices to maximize total revenue.
- Government Policy: Assisting in taxation decisions and fixing minimum support prices for agricultural products.
- International Trade: Determining the impact of currency devaluation on exports and imports.
- Production Planning: Aiding firms in forecasting sales and managing inventory based on demand sensitivity.
Explain the significance of Demand Forecasting. And explain its governing factors.
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Briefly explain different methods of Demand Forecasting.
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Explain the significance of Production Function. And explain MRTS and least cost combination of inputs.
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Describe the importance of Internal and External Economics of Scale.
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Explain the salient features Monopolistic Competition and Perfect Competition.
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Briefly explain the methods of Pricing.
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Briefly explain the different types of Public Enterprises.
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Explain the salient features of Private and Public Limited Companies of Joint Stock Companies.
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Rank the following investment projects in order of the profitability according to (a) Payback method and (b) Net present value, assuming cost of capital to be 10 %.
| Project | Initial outlay (Rs.) | Annual cash inflows (Rs.) | Life (years) |
|---|---|---|---|
| X | 40,000 | 8,000 | 8 |
| Y | 20,000 | 8,000 | 5 |
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What is Journal? And explain the differences between Journal and Ledger.
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Explain the interpretation of liquidity and activity ratios.
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Prepare Manufacturing, Trading and Profit and Loss Account from the following figures relating for the year 1998:
| Item | 01.01.98 (Rs.) | 31.12.98 (Rs.) |
|---|---|---|
| Finished Goods | 33,000 | 27,500 |
| Raw Materials | 16,000 | 18,300 |
| Work-in-progress | 11,100 | 9,400 |
Purchase of Materials: 1,50,900; Carriage on Purchases: 4,100; Wages: 65,000; Factory Salaries: 26,000; Office Salaries: 18,000; Repair and Maintenance (Machinery): 8,300; Repair and Maintenance (Office Equipment): 1,700; Depreciation (Machinery): 25,000; Depreciation (Office Equipment): 8,100; Sundry Expenses (Factory): 5,300; Sundry Expenses (Office): 17,800; Sales: 3,60,000.
It is firm’s practice to transfer goods from the Factory to Sales godown at cost plus 10%.
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