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## Ms-9 Dec 2007

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MS-9   Dec, 2007

MS-9 : Managerial economics

1. What is the basic objective of a firm ? Distinguish between 'Accounting Profit and 'Economic Profit' with the help of an illustration.

2. What do you understand by demand forecasting while describing the regression method of demand forecasting explain why it is important for the firm to forecast demand

3. Distinguish between the following with the help of illustrations :

(a) Fixed costs and Variable costs

(b) Short'run costs and Long-run costs

(c) Direct costs and Indirect costs

(d) Total cost, Average cost and Marginal cost

4. (a) Differentiate between Monopoly and Monopolistic competition giving examples

(b) Explain why profit is maximum at a level where MC = MR. Is profit always maximum when MC =MR ? Comment.

5. (a) What are the different types of statistical analyses used in the estimation of production function ? Explain briefly with the help of examples. Discuss the limitations of different types of statistical analysis.

(b) Briefly explain how the Cobb Douglas production function can be used to determine returns to scale.

6. (a) Which of the following commodities has most inelastic demand ? Give reasohs for your answer.

(i) Soap

(ii) Salt

(iii) Penicillin

(iv) Ice-cream

(v) Cigarettes

(b) Suppose the demand function of a product is given as

Q =500 - 5P. Find the profit maximising price when

i) MC:=0

ii) MC=20

7. Suppose you are a sales manager of an organization. Explain how does the analysis of demand contribute to business decision making, in the light of the responsibilities of a sales manager. 