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AEREN
FOUNDATION’S Maharashtra Govt. Reg.
No.: F-11724
SUBJECT :FINANCE AND ECONOMICS
Total
Marks-80
All questions are compulsory.
All questions carry equal marks
Question.1. Explain nature and scope of
Managerial Economics
Answer:Managerial economics is a discipline which deals with the application of
economic theory to business management. It deals with the use of economic
concepts and principles of business decision making. Formerly it was known as
“Business Economics” but the term has now been discarded in favour of
Managerial Economics.
Managerial Economics may be defined as the
study of economic theories, logic and methodology which are generally applied
to seek solution to the practical problems of business. Managerial Economics is
thus constituted of that part of economic knowledge or economic theories which
is used as a tool of analysing business problems for
Question.2. Define demand. Explain law of
demand and its exceptions
Answer:In our daily life, it is normally observed that decrease in price of a
commodity leads to increase in its demand. Such behaviour of consumers has been
formulated as ‘Law of Demand’.
Law of demand states the inverse relationship
between price and quantity demanded, keeping other factors constant (ceteris paribus).
This law is also known as the ‘First Law of Purchase’.
Assumptions of Law of demand:
While stating the law of demand, we use the
phrase ‘keeping other factors constant or ceteris paribus’. This phrase is used
to cover the following assumptions on which the law is based:
Question.3. What is theory of production.
Explain in detail.
Answer:Production theory is the study of production, or the economic process of
converting inputs into outputs. Production uses resources to create a good or
service that is suitable for use, gift-giving in a gift economy, or exchange in
a market economy. This can include manufacturing, construction, storing,
shipping, and packaging. Some economists define production broadly as all
economic activity other than consumption. They see every commercial activity
other than the final purchase as some form of production.
Production is a process, and as such it
occurs through time and space. Because it is a flow concept, production is
measured as a “rate of output per
Question.4. Write a note on break-even
analysis
Answer:The break-even point (BEP) in economics, business, and specifically cost
accounting, is the point at which total cost and total revenue are equal: there
is no net loss or gain, and one has "broken even." A profit or a loss
has not been made, although opportunity costs have been "paid", and
capital has received the risk-adjusted, expected return. In short, all costs
that needs to be paid are paid by the firm but the profit is equal to 0.
The break-even level or break-even point
(BEP) represents the sales amount—in either unit or revenue terms—that is
required to cover total costs (both fixed and variable). Total profit at the
break-even point is zero. Break-even is only possible if
Question.5. What is business organization?
Explain different types of business organizations.
Answer:A business is an organization that uses economic resources or inputs to
provide goods or services to customers in exchange for money or other goods and
services.
Business organizations come in different
types and forms.
There are three major types of businesses:
1. Service Business: A service type of business provides
intangible products (products with no physical form). Service type firms offer
professional
Question.6. Explain capital budgeting.
Answer:Capital budgeting, or investment appraisal, is the planning process used
to determine whether an organization's long term investments such as new
machinery, replacement machinery, new plants, new products, and research
development projects are worth the funding of cash through the firm's
capitalization structure (debt, equity or retained earnings). It is the process
of allocating resources for major capital, or investment, expenditures.[1] One
of the primary goals of capital budgeting investments is to increase the value
of the firm to the shareholders.
Question.7. Write a detailed note on ratio
analysis
Answer:Ratio analysis is the process of determining and interpreting numerical relationships
based on financial statements. A ratio is a statistical yardstick that provides
a measure of the relationship between two variables or figures.
This relationship can be expressed as a
percent or as a quotient. Ratios are simple to calculate and easy to
understand. The persons interested in the analysis of financial statements can
be grouped under three heads,
i) owners or investors
Question.8. Write a note on pricing
strategies
Answer:A business can use a variety of pricing strategies when selling a product
or service. The price can be set to maximize profitability for each unit sold
or from the market overall. It can be used to defend an existing market from
new entrants, to increase market share within a market or to enter a new market.
Businesses may benefit from lowering or raising prices, depending on the needs
and behaviors of customers and clients in the particular market. Finding the
right pricing strategy is an important element in running a successful
business.
Dear
students get fully solved assignments
Send
your semester & Specialization name to our mail id :
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