Part B Answer any FOUR (4) questions of the SIX (6) questions. 1. Managerial economic decisions are an important component in achieving the objectives of the organization. The success or failure of a business depends upon the decisions made by managers. Define the importance of managerial economics in the context of business organization. 2. Monopolies are firms who dominate the market. A monopoly tends to set higher prices than a competitive market, leading to a lower consumer surplus. However, on the other hand, monopolies can benefit from economies of scale, leading to lower average costs, which can, in theory, be passed on to consumers. Distinguish between monopoly, pure monopoly and bilateral monopoly by providing specific support for your claim. 3. In a market economy, the compensation of labour is determined by the interaction of demand and supply in each labour market, relative compensation by the interaction of relative demand and supply. A higher price for labour leads to a higher quantity of labour supplied, a lower price leads to a lower quantity supplied and prices and wages help coordinate economic activities. Do you agree this statement if so Why? Perfect competition is a hypothetical market form associated with neo- classical economic theory. A number of assumptions are made which provide the key components of the definition, including: the existence of perfect knowledge, no barriers to entry and homogeneous output. Critically analyze the perfect competition and pure competition from the viewpoint of economics. 4. (10 5. The theory of price adjustment has been dominated by the idea that prices rise in the presence of excess demand and fall in the presence of excess supply. Discuss the two adjustments of long period monopoly price in the current scenario. 6. Monetary policy is an economic policy that manages the size and growth rate of the money supply in an economy. It is a powerful tool to regulate macroeconomic variables such as inflation and unemployment. In your answer please provide three examples of tools and objectives of monetary policy.

Part B Answer any FOUR (4) questions of the SIX (6) questions. 1. Managerial economic decisions are an important component in achieving the objectives of the organization. The success or failure of a business depends upon the decisions made by managers. Define the importance of managerial economics in the context of business organization. 2. Monopolies are firms who dominate the market. A monopoly tends to set higher prices than a competitive market, leading to a lower consumer surplus. However, on the other hand, monopolies can benefit from economies of scale, leading to lower average costs, which can, in theory, be passed on to consumers. Distinguish between monopoly, pure monopoly and bilateral monopoly by providing specific support for your claim. 3. In a market economy, the compensation of labour is determined by the interaction of demand and supply in each labour market, relative compensation by the interaction of relative demand and supply. A higher price for labour leads to a higher quantity of labour supplied, a lower price leads to a lower quantity supplied and prices and wages help coordinate economic activities. Do you agree this statement if so Why? Perfect competition is a hypothetical market form associated with neo- classical economic theory. A number of assumptions are made which provide the key components of the definition, including: the existence of perfect knowledge, no barriers to entry and homogeneous output. Critically analyze the perfect competition and pure competition from the viewpoint of economics. 4. (10 5. The theory of price adjustment has been dominated by the idea that prices rise in the presence of excess demand and fall in the presence of excess supply. Discuss the two adjustments of long period monopoly price in the current scenario. 6. Monetary policy is an economic policy that manages the size and growth rate of the money supply in an economy. It is a powerful tool to regulate macroeconomic variables such as inflation and unemployment. In your answer please provide three examples of tools and objectives of monetary policy.

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter16: Public Goods And Public Choice

Section: Chapter Questions

Problem 4.10P

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