201408 Semester I MB0042 Managerial Eco Essay

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Q.No 1- Inflation is a global Phenomenon which is associated with high price causes decline in the value for money. It exists when the amount of money in the country is in excess of the physical volume of goods and services. Explain the reasons for this monetary phenomenon. Inflation is commonly understood as a situation of substantial and rapid increase in the level of prices and consequent deterioration in the value of money over period of time. It refers to the advantage rise in the general level of prices and fall in the value of money. Inflation is upward movement in the average level of prices. Cause of Inflation 1. Demand Side increase in aggregative effective demand is responsible for inflation. In this case, aggregate demand …show more content…

This type of price discrimination is called perfect discrimination Discrimination of the Second Degree – In case of discrimination of second degree, the monopolist charges different prices for markets of the same commodity, but not at a maximum possible rate but at a lower rate. The monopolist will leave a certain amount of consumer’s surplus with the consumers. This is done to keep the consumers satisfied and prevent the entry of potentials rivals. This method is adopted by railway companies. Discrimination of the Third Degree – In case of discrimination of the third degree, the markets are divided into many sub-markets or Sub-groups. The price charged in each case roughly depends on the ability to pay of different subgroups in the market. This is the most common type of discrimination followed by a monopolist. Q.No-3 Define monopolistic competition and explain its characteristics It is a market structure in which a large number of small sellers sell differentiated products which are close, but not perfect substitutes for one another. Under this market, the products produced and sold are different, but they are close substitutes for one another. This leads to competition among different sellers. Thus, in this

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