DMBA115 MANAGERIAL ECONOMICS JULY AUG 2025

Description

SESSION	JULY-AUGUST 2025
PROGRAM	MASTER OF BUSINESS ADMINISTRATION (MBA)
SEMESTER	I
COURSE CODE & NAME	DMBA115 MANAGERIAL ECONOMICS

 

 

Assignment Set – 1

 

Q1. The price elasticity of demand depends on several factors. Discuss these factors in detail with suitable examples. 10  

Ans 1.

Price elasticity of demand measures the responsiveness of quantity demanded to a change in the price of a product. It indicates how sensitive consumers are to price variations. Elasticity helps businesses, economists, and policymakers understand market behavior and set prices strategically. The elasticity value depends on various factors that influence consumer preferences, availability of substitutes, and product necessity.

1. Availability of Substitutes

The presence of close substitutes greatly affects elasticity. If several alternatives exist,

 

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Q2. Describe the different objectives of pricing policies with examples. 10        

Ans 2.

Pricing policy is a strategic decision that determines how a firm sets prices for its products or services. A well-designed pricing policy aligns with company goals such as profit maximization, market share expansion, or customer retention. The objectives of pricing vary across industries depending on competition, cost structures, and consumer demand.

1. Profit Maximization

The primary objective for most firms is to maximize profit. Companies determine the price

 

 

Q3. Define Perfect Competition. Summarize the different features of perfect competition along with reasons to study perfect competition. 2 + 8      

Ans 3.

Perfect Competition

Perfect competition refers to a market structure characterized by a large number of buyers and sellers dealing in homogeneous products, where no single participant can influence the market price. In such a market, the price is determined purely by the forces of demand and supply.

Features of Perfect Competition

1. Large Number of Buyers and Sellers

The market consists of numerous buyers and sellers, each contributing only a small share of

 

 

Assignment Set – 2

 

 

Q4. Define GDP and discuss its components in detail. 2 + 8        

Ans 4.

GDP

Gross Domestic Product (GDP) is the total monetary value of all final goods and services produced within a country’s borders during a specific period, typically a year. It serves as a comprehensive measure of a nation’s economic performance and is often used to compare the economic strength of different countries. GDP reflects the health of an economy by indicating its production, consumption, and investment levels.

Components of GDP

GDP can be calculated through the expenditure approach, which adds up spending on all final

 

 

Q5. Formulation of policies is very important for the planned economy; consumption function plays a very important role. Justify the statement by outlining the importance of consumption function.   10       

Ans 5.

In a planned or mixed economy, the government formulates economic policies to achieve objectives such as full employment, growth, and equitable income distribution. The consumption function, which shows the relationship between income and consumption expenditure, plays a vital role in shaping these policies. Developed by John Maynard Keynes, it explains how changes in disposable income affect consumer spending and savings

 

 

Q6. Describe the different types and causes of inflation. 5 + 5    

Ans 6.

Inflation refers to the sustained rise in the general price level of goods and services over time, leading to a decline in the purchasing power of money. Moderate inflation is often associated with economic growth, but high or uncontrolled inflation can destabilize an economy. Understanding the types and causes of inflation is essential for designing appropriate monetary and fiscal control measures.

Types of Inflation

1. Demand-Pull Inflation

This occurs when aggregate demand exceeds aggregate supply in the economy. Increased