Question 1

What do you mean by managerial economics?

Accepted Answer

Managerial Economics applies economic theory to business decision-making. (Duplicate question).

Question 2

How is disposable income different from personal income?

Accepted Answer

Personal income is total gross income, while disposable income is the net amount left after paying personal direct taxes.

Question 3

What are the determinants of Supply?

Accepted Answer

Supply is determined by the good's own price, factor input prices, technology, government policies, and prices of related goods.

Question 4

What does the shape of an isoquant show?

Accepted Answer

An isoquant is convex to the origin, demonstrating the diminishing marginal rate of technical substitution between inputs.

Question 5

What does opportunity cost mean?

Accepted Answer

Opportunity cost is the value of the next best alternative forgone when making a decision.

Question 6

Write down the steps of operating cycle.

Accepted Answer

The operating cycle involves converting cash to inventory, processing it, selling it, and collecting receivables back into cash.

Question 7

What do you mean by double entry accounting system?

Accepted Answer

The double entry system records every transaction with equal debit and credit entries, keeping the accounting equation balanced.

Question 8

What does break-even point mean?

Accepted Answer

The break-even point is the sales volume where total revenue exactly equals total costs, resulting in zero profit and zero loss.

Question 9

Why is there problem of scarcity and choice in economics?

Accepted Answer

Scarcity exists because human wants are infinite while the resources to satisfy them are limited and have alternative uses.

Question 10

What do you mean by income demand.

Accepted Answer

Income demand shows the relationship between consumer income and the quantity of a good demanded.

Question 11

Explain any one method of measuring National Income.

Accepted Answer

The Value Added Method measures National Income by summing the gross value added by all enterprises across all economic sectors.

Question 12

Explain the concept of elasticity of demand.

Accepted Answer

Elasticity of demand measures the quantitative responsiveness of quantity demanded to changes in price, income, or related prices.

Question 13

Write short note on least cost combination of inputs.

Accepted Answer

Least cost combination is the optimal mix of inputs that minimizes the total cost of producing a specific level of output, occurring where the isoquant is tangent to the isocost line.

Question 14

Discuss the relations between Average Cost and Marginal Cost of a firm.

Accepted Answer

The MC curve physically pulls the AC curve. MC cuts AC at its lowest point. If MC < AC, AC falls; if MC > AC, AC rises.

Question 15

Using suitable diagram, explain the kinked demand curve under Oligopoly.

Accepted Answer

The kinked demand curve explains price rigidity in oligopoly, assuming competitors will match price cuts but ignore price increases.

Question 16

Discuss the various steps in accounting process.

Accepted Answer

The accounting process involves identifying, journalizing, ledger posting, creating a trial balance, and preparing financial statements.

Question 17

Explain the concept of ratio analysis.

Accepted Answer

Ratio analysis uses mathematical relationships between financial statement figures to evaluate a company's liquidity, solvency, profitability, and efficiency.

Question 18

What is demand forecasting? Discuss the qualitative and quantitative methods …

Accepted Answer

Demand forecasting predicts future sales. Methods include qualitative approaches like expert opinions and quantitative approaches like time series and regression analysis.

Question 19

Explain the various types of cost with the help of suitable diagrams.

Accepted Answer

Cost concepts are categorized into fixed, variable, marginal, and average costs, each dictating short-run production decisions and forming specific U-shaped curves.

Question 20

Explain the price and output determination under monopoly.

Accepted Answer

A monopolist maximizes profit where MR equals MC. Due to barriers to entry, they restrict output and charge a higher price, often earning supernormal profit.

Question 21

Discuss the main information given in balance sheet and profit and loss account.

Accepted Answer

The balance sheet details Assets, Liabilities, and Equity on a specific date. The P&L account details Revenue and Expenses over a period to determine net income.

Question 22

Critically examine the various methods of evaluation of capital budgeting pro…

Accepted Answer

Traditional methods like Payback are simple but ignore the time value of money. DCF methods like NPV and IRR are scientifically superior but complex.

Managerial Economics & Financial Accounting