•Part one carries 1 mark each & Part two carries 5 marks each. Part one:
1. It is a study of economy as a whole
2. A comprehensive formulation which specifies the factors that influence the demand for the product
c. Demand function
3. It is computed when the data is discrete and therefore incremental changes is measurable b. Arc elasticity
4. Goods & services used for final consumption is called
b. Consumer goods
5. The curve at which satisfaction is equal at each point
c. The Indifference Curve
Examination Paper Semester I: Managerial Economics
IIBM Institute of Business Management
6. Costs that are reasonably expected to be incurred in some future period or periods a. Future costs
7. Condition when the firm has no tendency either to increase or to contract its output c. Equilibrium
8. Total market value of all finished goods & services produced in a year by a country’s residents is known as
b. Gross national product
9. The sum of net value of goods & services produced at market prices b. Product approach
10. The market value of all the final goods & services made within the borders of a nation in an year c. GDP
1.Define ‘Arc Elasticity’.
The arc elasticity is a measure of average elasticity, that is, the elasticity at the midpoint of the chord that connects the two points on the demand curve defined by initil and new price levels The measure of arc elasticity is an approximation of the true elasticity of the section of the demend curve.
2.Explain the law of ‘Diminishing marginal returns’.
Diminishing marginal returns states that, as more and more of the factor input is employed, all other quantities remaining constant, a point will eventually be reached where additional quantities of varying input will yield diminishing marginal contributions to total product....