Examination Paper of
Managerial Economics
IIBM Institute of Business Management
IIBM Institute of Business Management
Subject Code-B106
Examination Paper
Managerial Economics
MM.100
Section A: Objective Type & Short Questions (30 marks)
Part one:
Multiple choice:
I.Demand is determined by
(1)
a) Price of the product
b) Relative prices of other goods
c) Tastes and habits
d) All of the above
II. When a firm’s average revenue is equal
to its average cost, it gets (1)
a) Super profit
b) Normal profit
c) Sub normal profit
d) None of the above
III. Managerial economics generally refers to
the integration of economic theory with business
(1)
a) Ethics
b) Management
c) Practice
d) All of the above
IV. Which of the following was not
immediate cause of 1991 economic
crisis (1)
a) Rapid growth of population
b) Severe inflation
c) Expanding Fiscal deficit
d) Rising current account deficit
V.Money functions refers to : (1)
a) Store of value
b) Medium of Exchange
c) Standard of deferred payments
d) All of the above
VI. Given the price, if the cost of production
increases because of higher price of
raw materials, the supply
(1)
a) Decreases
b) Increases
c) Remains same
d) Any of the above
· This section consists of multiple choices and Short Notes type questions.
· Answer all the questions.
· Part one questions carry 1 mark each & Part two questions carry 5 marks each.
Examination Paper of Managerial Economics
IIBM Institute of Business Management
VII. Total Utility is maximum when
(1)
a. Marginal Utility is maximum
b. Marginal Utility is Zero
c. Both of the above
d. None Of The Above
VIII. Cardinal approach is related
to (1)
a. Equimarginal Curve
b. Law of diminishing returns
c. Indifference Curve
d. All of the above
IX. Marginal Utility curve of a consumer is also
his (1)
a) Supply Curve
b) Demand Curve
c) Both of above
d) None of above
X. Government of India has replaced
FERA by (1)
a) The competition Act
b) FRBMA
c) MRTP Act
d) FEMA
Part Two:
1. What is Managerial Economics? What is its relevance to Engineers/Managers?
(5)
2. “Managerial Economics is economics that is applied in decision making”
IIBM Institute of Business Management
IIBM Institute of Business Management
Subject Code-B106
Examination Paper
Managerial Economics
MM.100
Section A: Objective Type & Short Questions (30 marks)
Part one:
Multiple choice:
I.Demand is determined by
(1)
a) Price of the product
b) Relative prices of other goods
c) Tastes and habits
d) All of the above
II. When a firm’s average revenue is equal
to its average cost, it gets (1)
a) Super profit
b) Normal profit
c) Sub normal profit
d) None of the above
III. Managerial economics generally refers to
the integration of economic theory with business
(1)
a) Ethics
b) Management
c) Practice
d) All of the above
IV. Which of the following was not
immediate cause of 1991 economic
crisis (1)
a) Rapid growth of population
b) Severe inflation
c) Expanding Fiscal deficit
d) Rising current account deficit
V.Money functions refers to : (1)
a) Store of value
b) Medium of Exchange
c) Standard of deferred payments
d) All of the above
VI. Given the price, if the cost of production
increases because of higher price of
raw materials, the supply
(1)
a) Decreases
b) Increases
c) Remains same
d) Any of the above
· This section consists of multiple choices and Short Notes type questions.
· Answer all the questions.
· Part one questions carry 1 mark each & Part two questions carry 5 marks each.
Examination Paper of Managerial Economics
IIBM Institute of Business Management
VII. Total Utility is maximum when
(1)
a. Marginal Utility is maximum
b. Marginal Utility is Zero
c. Both of the above
d. None Of The Above
VIII. Cardinal approach is related
to (1)
a. Equimarginal Curve
b. Law of diminishing returns
c. Indifference Curve
d. All of the above
IX. Marginal Utility curve of a consumer is also
his (1)
a) Supply Curve
b) Demand Curve
c) Both of above
d) None of above
X. Government of India has replaced
FERA by (1)
a) The competition Act
b) FRBMA
c) MRTP Act
d) FEMA
Part Two:
1. What is Managerial Economics? What is its relevance to Engineers/Managers?
(5)
2. “Managerial Economics is economics that is applied in decision making”
|
Explain?
3. Differentiate b/w, Micro economics vs. macroeconomics? |
(5)
(5) |
4.
Factors Affecting Price Elasticity of Demand? (5)
Section B: Caselets (40 marks)
END OF SECTION A
· This section consists of Caselets.
· Answer all the questions.
· Each Caselet carries 20marks.
· Detailed information should form the part of your answer (Word limit 150 to 200 words).
IIBM Institute of Business Management
Examination Paper of Managerial Economics
Caselet1
Dabur is among the top five FMCG companies in India and is positioned successfully on the
specialist herbal platform. Dabur has proven its expertise in the fields of health care, personal care,
home care and foods. The company was founded by Dr. S. K. Burman in 1884 as small pharmacy in
Calcutta (now Kolkata), India. And is now led by his great grandson Vivek C. Burman, who is the
Chairman of Dabur India Limited and the senior most representative of the Burman family in the
company. The company headquarter is in Ghaziabad, India, near the Indian capital New Delhi,
where it is registered. The company has over 12 manufacturing units in India and abroad. The
international facilities are located in Nepal, Dubai, Bangladesh, Egypt and Nigeria. S.K. Burman, the
founder of Dabur, was trained as a physician. His mission was to provide effective and affordable
cure for ordinary people in far-flung villages. Soon, he started preparing natural remedies based on
Ayurveda for diseases such as Cholera, Plague and Malaria. Due to his cheap and effective remedies,
he became to be known as ‘Daktar’ (Indian izedversion of ‘doctor’). And that is how his venture
Dabur got its name—derived from Daktar Burman. The company faces stiff competition from many
multinational and domestic companies. In the Branded and Packaged Food and Beverages segment
major companies that are active include Hindustan Lever, Nestle, Cadbury and Dabur. In case of
Ayurvedic medicines and products, the major competitors are Baidyanath, Vicco, Jhandu, Himani
and other pharmaceutical companies.
Vision statement of Dabur says that the company is “dedicated to the health and wellbeing of every
household”. The objective is to “significantly accelerate profitable growth by providing comfort to
others”. For achieving this objective Dabur aims to:
· Focus on growing core brands across categories, reaching out to new geographies, within
and outside India, and improve operational efficiencies by leveraging technology.
· Be the preferred company to meet the health and personal grooming needs of target
consumers with safe, efficacious, natural solutions by synthesizing deep knowledge of
Ayurveda and herbs with modern science.
· Be a professionally managed employer of choice, attracting, developing and retaining
quality personnel.
· Be responsible citizen with a commitment to environmental protection.
· Provide superior returns, relative to our peer group, to our shareholders.
Chairman of the company
Vivek C. Burman joined Dabur in 1954 after completing his graduation in Business Administration
from the USA. In 1986 he was appointed as the Managing Director of Dabur and in 1998 he took
over as Chairman of the Company.
IIBM Institute of Business Management
Examination Paper of Managerial Economics
Under Vivek Burman’s leadership, Dabur has grown and evolved as a multi-crore business house
with a diverse product portfolio and a marketing network that traverses the whole of India and
more than 50 countries across the world. As a strong and positive leader, Vivek C. Burman had
motivated employees of Dabur to “do better than their best”—a credo that gives Dabur its status as
India’s most trusted nature-based products company.
Leading brands
More than 300 diverse products in the FMCG, Healthcare and Ayurveda segments are in the product
line of Dabur. List of products of the company include very successful brands like Vatika, Anmol,
Hajmola, Dabur Amla Chyawanprash, Dabur Honey and Lal Dant Manjan with turnover of Rs.100
crores each.
Strategic positioning of Dabur Honey as food product, lead to market leadership with over 40%
market share in branded honey market; Dabur Chyawanprash is the largest selling Ayurvedic
medicine with over 65% market share. Dabur is a leader in herbal digestives with 90% market
share. Hajmola tablets are in command with 75% market share of digestive tablets category. Dabur
Lal Tail tops baby massage oil market with 35% of total share.
CHD (Consumer Health Division), dealing with classical Ayurvedic medicines, has more than 250
products sold through prescription as well as over the counter. Proprietary Ayurvedic medicines
developed by Dabur include Nature Care Isabgol, Madhuvaani and Trifgol.
However, some of the subsidiary units of Dabur have proved to be low margin business; like Dabur
Finance Limited. The international units are also operating on low profit margin. The company also
produces several “me – too” products. At the same time the company is very popular in the rural
segment.
Questions
1. What is the objective of Dabur? Is it profit maximisation of growth maximisation? (10)
2. Do you think the growth of Dabur from a small pharmacy to a large multinational company is an
indicator of the advantages of joint stock company against the proprietorship form? Elaborate.
(10)
Caselet2
The Regina Company„ one of the largest inakets of vacuum cleaners recent') had scv cfc ptollkins
with the quality of its products. The market responsc to this 1ak of quality caused financial
problems for Ow company. in late 1995. Regina began having return rates as high as 30 to 50
percent on some of its Housekeeper and Housekeeper Plus models. These models were sold
primarily through discount stores. Further, Regina's Spectrum vacuum cleaner, an upgraded
version sold in specialty stores, was introduced in 1995 with many quality problems. ef The specific
problems identified for the Housekeeper and Housekeeper Plus models were associated with faulty
belts and weak suction. In the Spectrum model, the agitator was melting; and making a loud noise,
the foot pedals were breaking, and the steel-encased motor (which had been advertised as the
IIBM Institute of Business Management
Examination Paper of Managerial Economics
power source for the vacuum cleaner) had been replaced with a less desirable. less reliable motor.
As a result of these problems, Target stores discontinued Regina's Housekeeper Plus model after
reporting that "at least half of those sold were returned." At Starmart, which accounts for about a
quarter of the Housekeeper sales, I. out of every 5 machines sold was returned. To help service
customer complaints, Regina set up an 800 telephone number for customers to contact the firm.
directly. The sales returns caused Regina's shareholders to question the 1995 fiscal earnings report.
Furthermore, both inventories and accounts receivable doubled during the 1995 fiscal year. At the
end of that period, Regina's chairman and 40 percent stockholders
Resigned. The chairman’s resignation was closely followed by a company announcement stating
that the financial results reported for the 1995 fiscal year were materially incorrect and had been
withdrawn. This announcement brought a suit from shareholders who had bought Reoina stock on
the basis of the 1995 camings report. It also prompted an audit of the 1995 results and a request to
another accounting organization to work on Regina's business and accounting controls. A few
months later, Regina 'agreed to be acquired by a unit of Magnum, a vacuum cleaner and Waterpurification Company. Under Magnum, Regina shut down production while engineers worked to
solve the problems inherent in the Housekeeper and Housekeeper Plus vacuums, particularly the
suction difficulties. In September 1998, Magnum and Regina decided to separate the two companies
again. Since then, Regina has been regaining market share with its Housekeeper models. The
'vacuums are popular because they carry on-board tools.
Questions:
1. What type of controls would you have established to preclude the major returns
experienced by Regina? (10)
2. How would you have controlled the finished-goods -inventory to avoid its growing to twice
the size that it was in the previous year. (10)
Section C: Applied Theory (30 marks)
1. What is the importance of demand analysis in business decision? (15)
2. Explain individual demand function and market demand function. (15)
S-2-010619
· This section consists of Applied Theory Questions.
· Answer all the questions.
· Each question carries 15marks.
· Detailed information should form the part of your answer (Word limit 200 to 250
words).
END OF SECTION C
END OF SECTION B
Section B: Caselets (40 marks)
END OF SECTION A
· This section consists of Caselets.
· Answer all the questions.
· Each Caselet carries 20marks.
· Detailed information should form the part of your answer (Word limit 150 to 200 words).
IIBM Institute of Business Management
Examination Paper of Managerial Economics
Caselet1
Dabur is among the top five FMCG companies in India and is positioned successfully on the
specialist herbal platform. Dabur has proven its expertise in the fields of health care, personal care,
home care and foods. The company was founded by Dr. S. K. Burman in 1884 as small pharmacy in
Calcutta (now Kolkata), India. And is now led by his great grandson Vivek C. Burman, who is the
Chairman of Dabur India Limited and the senior most representative of the Burman family in the
company. The company headquarter is in Ghaziabad, India, near the Indian capital New Delhi,
where it is registered. The company has over 12 manufacturing units in India and abroad. The
international facilities are located in Nepal, Dubai, Bangladesh, Egypt and Nigeria. S.K. Burman, the
founder of Dabur, was trained as a physician. His mission was to provide effective and affordable
cure for ordinary people in far-flung villages. Soon, he started preparing natural remedies based on
Ayurveda for diseases such as Cholera, Plague and Malaria. Due to his cheap and effective remedies,
he became to be known as ‘Daktar’ (Indian izedversion of ‘doctor’). And that is how his venture
Dabur got its name—derived from Daktar Burman. The company faces stiff competition from many
multinational and domestic companies. In the Branded and Packaged Food and Beverages segment
major companies that are active include Hindustan Lever, Nestle, Cadbury and Dabur. In case of
Ayurvedic medicines and products, the major competitors are Baidyanath, Vicco, Jhandu, Himani
and other pharmaceutical companies.
Vision statement of Dabur says that the company is “dedicated to the health and wellbeing of every
household”. The objective is to “significantly accelerate profitable growth by providing comfort to
others”. For achieving this objective Dabur aims to:
· Focus on growing core brands across categories, reaching out to new geographies, within
and outside India, and improve operational efficiencies by leveraging technology.
· Be the preferred company to meet the health and personal grooming needs of target
consumers with safe, efficacious, natural solutions by synthesizing deep knowledge of
Ayurveda and herbs with modern science.
· Be a professionally managed employer of choice, attracting, developing and retaining
quality personnel.
· Be responsible citizen with a commitment to environmental protection.
· Provide superior returns, relative to our peer group, to our shareholders.
Chairman of the company
Vivek C. Burman joined Dabur in 1954 after completing his graduation in Business Administration
from the USA. In 1986 he was appointed as the Managing Director of Dabur and in 1998 he took
over as Chairman of the Company.
IIBM Institute of Business Management
Examination Paper of Managerial Economics
Under Vivek Burman’s leadership, Dabur has grown and evolved as a multi-crore business house
with a diverse product portfolio and a marketing network that traverses the whole of India and
more than 50 countries across the world. As a strong and positive leader, Vivek C. Burman had
motivated employees of Dabur to “do better than their best”—a credo that gives Dabur its status as
India’s most trusted nature-based products company.
Leading brands
More than 300 diverse products in the FMCG, Healthcare and Ayurveda segments are in the product
line of Dabur. List of products of the company include very successful brands like Vatika, Anmol,
Hajmola, Dabur Amla Chyawanprash, Dabur Honey and Lal Dant Manjan with turnover of Rs.100
crores each.
Strategic positioning of Dabur Honey as food product, lead to market leadership with over 40%
market share in branded honey market; Dabur Chyawanprash is the largest selling Ayurvedic
medicine with over 65% market share. Dabur is a leader in herbal digestives with 90% market
share. Hajmola tablets are in command with 75% market share of digestive tablets category. Dabur
Lal Tail tops baby massage oil market with 35% of total share.
CHD (Consumer Health Division), dealing with classical Ayurvedic medicines, has more than 250
products sold through prescription as well as over the counter. Proprietary Ayurvedic medicines
developed by Dabur include Nature Care Isabgol, Madhuvaani and Trifgol.
However, some of the subsidiary units of Dabur have proved to be low margin business; like Dabur
Finance Limited. The international units are also operating on low profit margin. The company also
produces several “me – too” products. At the same time the company is very popular in the rural
segment.
Questions
1. What is the objective of Dabur? Is it profit maximisation of growth maximisation? (10)
2. Do you think the growth of Dabur from a small pharmacy to a large multinational company is an
indicator of the advantages of joint stock company against the proprietorship form? Elaborate.
(10)
Caselet2
The Regina Company„ one of the largest inakets of vacuum cleaners recent') had scv cfc ptollkins
with the quality of its products. The market responsc to this 1ak of quality caused financial
problems for Ow company. in late 1995. Regina began having return rates as high as 30 to 50
percent on some of its Housekeeper and Housekeeper Plus models. These models were sold
primarily through discount stores. Further, Regina's Spectrum vacuum cleaner, an upgraded
version sold in specialty stores, was introduced in 1995 with many quality problems. ef The specific
problems identified for the Housekeeper and Housekeeper Plus models were associated with faulty
belts and weak suction. In the Spectrum model, the agitator was melting; and making a loud noise,
the foot pedals were breaking, and the steel-encased motor (which had been advertised as the
IIBM Institute of Business Management
Examination Paper of Managerial Economics
power source for the vacuum cleaner) had been replaced with a less desirable. less reliable motor.
As a result of these problems, Target stores discontinued Regina's Housekeeper Plus model after
reporting that "at least half of those sold were returned." At Starmart, which accounts for about a
quarter of the Housekeeper sales, I. out of every 5 machines sold was returned. To help service
customer complaints, Regina set up an 800 telephone number for customers to contact the firm.
directly. The sales returns caused Regina's shareholders to question the 1995 fiscal earnings report.
Furthermore, both inventories and accounts receivable doubled during the 1995 fiscal year. At the
end of that period, Regina's chairman and 40 percent stockholders
Resigned. The chairman’s resignation was closely followed by a company announcement stating
that the financial results reported for the 1995 fiscal year were materially incorrect and had been
withdrawn. This announcement brought a suit from shareholders who had bought Reoina stock on
the basis of the 1995 camings report. It also prompted an audit of the 1995 results and a request to
another accounting organization to work on Regina's business and accounting controls. A few
months later, Regina 'agreed to be acquired by a unit of Magnum, a vacuum cleaner and Waterpurification Company. Under Magnum, Regina shut down production while engineers worked to
solve the problems inherent in the Housekeeper and Housekeeper Plus vacuums, particularly the
suction difficulties. In September 1998, Magnum and Regina decided to separate the two companies
again. Since then, Regina has been regaining market share with its Housekeeper models. The
'vacuums are popular because they carry on-board tools.
Questions:
1. What type of controls would you have established to preclude the major returns
experienced by Regina? (10)
2. How would you have controlled the finished-goods -inventory to avoid its growing to twice
the size that it was in the previous year. (10)
Section C: Applied Theory (30 marks)
1. What is the importance of demand analysis in business decision? (15)
2. Explain individual demand function and market demand function. (15)
S-2-010619
· This section consists of Applied Theory Questions.
· Answer all the questions.
· Each question carries 15marks.
· Detailed information should form the part of your answer (Word limit 200 to 250
words).
END OF SECTION C
END OF SECTION B
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