Basic Concepts of Economics: Introduction to Economics , Basic Economic Problem, Circular Flow of Economic Activity , Adam Smith and Invisible Hand. Nature of the firm - rationale, objective of maximizing firm value as present value of all future profits, maximizing, satisficing, optimizing, principal agent problem, Accounting Profit and Economic Profit , Role of profit in Market System Demand Analysis and Forecasting: Determinants of Market Demand at Firm and Industry level – Elasticity of Demand - Market Demand Equation – Use of Multiple Regression for estimating demand – Case study on estimating industry demand (formulating equation and solving with the aid of software expected) Demand and Supply: Market Equilibrium – Pricing under perfect competition, monopolistic competition, Case study on pricing under monopolistic competition , Oligopoly - product differentiation and price discrimination; price- output decision in multi-plant and multi-product firms. Cost Concepts: Cost Concept, Opportunity Cost, Marginal, Incremental and Sunk Costs, Cost Volume Profit Analysis, Breakeven Point, Case Study on marginal costs. Risk Analysis and Decision Making: Concept of risk, Expected value computation, Risk management through Insurance, diversification, Hedging, Decision Tree Analysis, Case Study on Decision tree Technique. Money and Capital Markets in India: Role and Functions of Money Markets, Composition of Money Market, Money Market Instruments , Reserve Bank of India – Functions , Regulatory Role of RBI w.r.t. Currency, Credit and Balance of Payment, Open Market Operations. Role and Functions of Capital Markets, Composition of Capital market, Stock Exchanges in India, Role of SEBI, understanding of stock market quotations in financial press expected. Public Finance Infrastructure: Familiarity with important terms/agencies/approaches/practices related to National Income (such as GDP, PPP, Growth Rate), Foreign Trade (such as GATT, WTO) Union budget (such as Revenue Account, Capital Account, Revenue Deficit, Fiscal Deficit, Plan and Non-plan expenditure) is expected. Understanding of Summarize

1. QUESTIONS BANK
FOR
MASTER OF BUSINESS
ADMINISTRATION (M.B.A)
(FIRST YEAR-Semester-I)
SUBJECT CODE & SUBJECT:
(102)-ECONOMIC ANALYSIS FOR
BUSINESS DECISIONS
BY:
Dr. Rakesh Bhati

2. QUESTIONS FOR DISCUSSION ON ALL CHAPTERS
Q1 ‘Economics is often used to help business students integrate the knowledge of
economic theory with business practice.’ How is this integration accomplished?
What role does the subject play in shaping managerial decisions?
Q2 Explain the relation between scarcity and opportunity cost. How do they
influence business decisions?
Q3 Discuss the fundamental nature of Management Economies with respect to the
three choice problems of the economy.
Q4 What is constrained optimisation? How do constraints impose restrictions on
the operations of a firm?
Q5 What is the importance of management decision-making?
Q6 What is the difference between marginalisms and incrementalism? State the
significance of marginal analysis in decision-making.
Q7 What are equi-marginal principle and time perspective principle? Describe their
use in allocation of resources of a firm.
Q8 Write short notes (about 200 words) on the following:
a. The marginal concept
b. The incremental concept
c. Opportunity cost
Q9 Distinguish between micro economics, macro economics and
managerial economics.
Q10 What is managerial economics? Why does study managerial economics?
Q11 Describe the circular flow of economic activity of India.
Q12 Discuss the nature of the firm.
Q13 List out the major objectives of the firm.
Q14 How does managerial economics relate with other disciplines for propounding
its theories?
Q15 Identify the areas of decision making where managerial economics prescribes
specific solutions to business problems.
Q16 Discuss the role and responsibilities of a managerial economist.
Q17 Define demand.
Q18 State the law of demand.
Q19 Prepare a demanding schedule for an apple i-pad in the Indian market.
Q20 Distinguish between the shift in demand and a movement along a demand
curve.
Q21 List out the factors which determine market demand for a commodity of your
choice.
Q22 What is the importance of demand analysis? What are the different types of
demand?
Q23 Distinguish between increase and extension of demand.

3. Q24 Define price elasticity of demand and distinguish its various types.
Q25 Discuss the role of price elasticity of demand in managerial decisions.
Q26 Is the price elasticity of demand typically greater if computed for an industry
or for a single firm in the industry? Why?
Q27 When is use of the arc elasticity concept valid as compared with the use of the
point elasticity concept?
Q28 Distinguish between the following:
i. Industry demand and firm (company) demand.
ii. Short-run and long-run demand.
iii. Durable goods demand and non-durable goods demand.
Q29 “Cost Concepts and Analysis have a wide range of application for managerial
uses” With aid of relevant examples discuss the relevance of this statement.
Q30 Explain why long-run average cost first falls, then rises.
Q31 Why does short-run average variable cost first falls, then rises?
Q32 Explain the concepts of Deductive and Inductive Methods of economic
analysis. Discuss their merits and demerits.
Q33 Examine the factors which explain why the average cost of producing a
commodity declines with an expansion in the scale of production.
Q34 Show the relation between short-run average cost and long-run average cost.
Q35 Explain with diagrams price determination under perfect competition.
Q36 What are the main features of monopolistic competition?
Q37 Discuss the assumptions of Chamberlin’s group behaviour model.
Q38 Explain the key differences between perfect competition and monopolistic
competition.
Q39 Explain the price and output determination of a firm under monopolistic
competition.
Q40 Explain the efficiency of monopoly and competition in terms of price, output
and cost. Should monopolies be controlled?
Q41 Show graphically the price-output determination in case of discriminating
monopoly.
Q42 Show that under monopoly P > MC at equilibrium.
Q43 Discuss the meaning and features of oligopolistic form of market.
Q44 Compare between cournot is model of duopoly and Bertrand’s duopoly
model.
Q45 What is cartel? Explain, with the help of diagram, the price and output
determination under market sharing cartel.
Q46 Discuss price leadership model by a low cost firm.
Q47 Explain price rigidity in sweezy’s kinked demand curve model.
Q48 Distinguish between accounting costs and Economics costs. Explain giving
suitable examples.
Q49 Explain the functional forms of cost function giving illustration.

4. Q50 "It is believed that a firm under a perfect competition is a price-taker and not
a price-maker." Explain giving examples.
Q51 What is Money Market? What are the important functions performed by it?
Q52 Explain the structure or components of Indian Money Market.
Q53 What are the principal constituents of Indian Money Market?
Q54 Explain the main features of Indian Money Market.
Q55 State the drawbacks / defects of Indian Money Market?
Q56 Analyse the policy options available to a government that is experiencing both
moderate levels of unemployment and inflation.
Q57 Distinguish between tight (contractionary) and loose (expansionary) monetary
policy
Q58 Explain the reforms introduced by RBI to strengthen the money market in
India.
Q59 Explain how a government can use monetary policy to expand aggregate
demand.
Q60 Discuss the measures to strengthen the Indian Money Market?
Q61 What is Capital Market ? Explain the structure and constituents of Capital
Market in India.
Q62 Explain the role and importance of capital market in India.
Q63 Write note on Importance /Significance of Capital Market in Economic
Development.
Q64 Discuss / Explain the growth of Capital Market in India.
Q65 Explain the factors contributing /responsible for the growth and development
of Capital Market in India.
Q66 Explain the recent reforms introduced in Indian Capital Market.
Q67 What measures have been initiated by Government of India to strengthen the
capital market ?
Q68 Explain the role of SEBI in developing capital market.
Q69 Evaluate the role and performance of SEBI.
Q70 Explain policy measures introduced by SEBI?
Q71 State the meaning of economic activity. Classify economic activities. Discuss
each one of this Activity
Q72 Give a brief account of the evolution of national income accounting in India.
Q73 Briefly explain the system of National Income Accounts and their relationship
with circular flow of income.
Q74 Explain that National Income Accounts has a system of double entry.
Q75 How is government sector treated in the National Income Accounting? What
are the issues involved in it?
Q76 What do you mean by value-added? How will you measure it? What is the
relationship between value-addition and income-generation

5. Q77 Highlight the characteristics of consolidation of accounts of a nation. How is
this done in India?
Q78 With reference to public expenditure and using suitable examples, distinguish
between current, capital and transfer expenditure.
Q79 A government can fund public spending through taxation and/or borrowing.
Discuss the possible consequences of its decisions.
Q80 When a government's budget deficit increases, this may lead to a worsening of
the trade deficit. Explain why this might be the case.
Q81 Explain two reasons why there may need to be controls on the growth of
government spending.