Assignment for Pan African Network
Managerial Economics
Please visit www.distpub.com/AmityAfrica.htm for buy this solved assignments
Assignment - A
Q.1: What are indifference curves? Explain the consumers’ equilibrium under the assumptions of ordinal approach.
Q.2. Examine the concept and relationship of Total, Average and marginal costs with the help of suitable diagram.
Q.3. Differentiate and elaborate the concepts of returns to scale and law of variable proportions.
Q.4. Why is demand forecasting essential? What are the possible consequences if a large scale firm places its product in the market without having estimated the demand for its product?
Q.5. Discuss the various steps involved in a managerial decision making process. Explain, in detail, any two group decision making techniques.
Assignment - B
Q.1. Why a firm is price taker and not a price maker under perfect market conditions?
Q.2. Profit maximization is theoretically the most sound but practically unattainable objective of business firms. In the light of this statement critically appraise the Baumol’s sales revenue maximization theory as an alternative objective of the firm.
Q.3. Distinguish between skimming price and penetration price policy. Which of these policies is relevant in pricing a new product under different competitive conditions in the market?
CASE STUDY
Introduction
Michael Wolfson, a computer programmer had a decent job with the financial powerhouse Bear, Stearns & Co. Now, he refurbishes computers at the basement in his house and sells it through e-bay. He plans to join as a school teacher. Michael lost his job in 2003. He was told that his job is being outsourced to
There is growing dissent among the Americans against the increasing practice of outsourcing. It has become an electoral issue in the coming presidential elections in the
There are numerous reasons for the growing apathy towards outsourcing. The prevailing economic situation and the increasing joblessness in the
Moreover, according to the U.S.-India Business Council, the increasing unemployment is also due to corporate restructuring and just a quarter of the job loss is due to outsourcing. Since, the beginning of 2001, the real job loss in US is estimated to be 2.3 million. In comparison, the actual job loss due to outsourcing is estimated to be only 200,000. Thus, it can be said that there are various other reasons for joblessness in the
Outsourcing forms a small proportion of the jobs that are regularly churned in the
The Economics of Outsourcing
But is outsourcing so bad for the
There are many influential groups in the
In an article, "Why Your Job Isn't Moving to
Professor Bhagwati is also critical about politicizing the whole issue. He says that outsourcing will strengthen the competitiveness of the
Jane Linder of Accenture's Institute for Strategic Change says that companies outsourcing the traditional back-office work have more control and discipline over their operations. Moreover, employees of the company can concentrate on framing strategies. Further, outsourcing also results in greater efficiency and lowering costs. This allows companies to offer better services to customers. A study done by McKinsey Global Institute reveals that for every dollar of work outsourced by the
| |||
Benefits for US | Benefits for | ||
Savings to US investors or customers | 0.58 | Labor | 0.1 |
Imports of US goods and services by providers in | 0.05 | Profits retained in | 0.1 |
Transfer of profits by US based providers in | 0.04 | Suppliers | 0.09 |
| | | |
Net direct benefit retained in US | 0.67 | Central government taxes | 0.03 |
| | | |
Value for | 0.45-0.47 | State government taxes | 0.01 |
| | | |
Potential net benefit for US | 1.12-1.14 | Net benefit to | 0.33 |
Source: Mckinsey Global Institute |
There is a definite cost advantage in off-shoring work to
Offshoring allows companies to work round the clock. It gives ample time to the companies to think about their IT problems. Recently, American Express paid $5,000 to a group of software programmers in
The benefits of outsourcing go much beyond the cost advantage. An article in Mckinsey quarterly suggests that the companies need to look beyond cost savings. The article says that "Companies are merely replicating what they do at home, where labor is expensive and capital is relatively cheap, in countries in which the reverse is true."
Alan Greenspan, US Federal Reserve Chairman, is a staunch supporter of outsourcing. He is of the opinion that any move to curb outsourcing of work to countries like
Not all companies have taken full advantage of outsourcing. According to Harris Miller, president of the Information Technology Association of America (ITAA), a lobby group, so far only 3-4 % of all American companies outsource their processes. The remaining still rests with American firms. A report published by Forrester, in December 2003, says that 60% of the Fortune 1000 companies have a negligible or near nil presence in off-shoring. Report also suggests that 40% of the work of these companies could be outsourced. Thus, the potential for growth in outsourcing is still immense.
Advancement in the technology can give a further push to the off-shoring activity. The inflexible architecture of the current technologies is acting as a hindrance in off-shoring, says Simon Heap of Bain & Co, a consultancy firm. The advancement in software and hardware would enable the companies to off-shore even small activities. Firms would be able to off-shore the activities of the entire department, say billing of customers.
However, not everyone seems to agree with the supporters of outsourcing. Stephen Roach, the chief economist at Morgan Stanley, says that it is only the wage difference that is encouraging companies to outsource work to
Many analysts also feel that companies should take some concrete steps to minimize the affects of outsourcing. Companies should make the process of job transfers to offshore destinations more smooth. British Telecom exhibited a process of outsourcing that can be used as a model by other companies.
In 2003, when BT announced that it is planning to open two call centers in
Sustainability noted that the immediate impact of outsourcing would be job loss for the employees, and the resulting affect on the society. The consultancy firm was of the opinion that before outsourcing, companies should address the negative impact of outsourcing. In order to check the negative impact of off-shoring, firms should consult with employees, trade unions, communities and other key stakeholders. Employees should be involved in the process of any such decision making. Sustainability also suggested that firms should be transparent and make the employees know the services that are being outsourced.
Firms should also make an attempt to redeploy the employees in some other departments. This would minimize layoffs. An attempt should be made to retrain the redundant workers. A part of the savings from off-shoring should be invested for this purpose. As per the suggestion made by McKinsey Global Institute, 4-5% of the resulting savings from off-shoring should be used for insurance policy for employees to cover the lost wages.
US was one of the prime supporters of free trade. US was least bothered about the concerns of many other developing countries when they raised their voices against job losses as a result of the cheap exports. But, this aggressiveness seems to have mellowed down in recent days. It always propagated that inefficient industries should be closed. One of the primary tasks of the U.S. Trade Representative's office was to keep a check on the world markets. It assesses the markets which are opening up and which are getting closed as a result of high tariffs and other quantitative restrictions. Now, with the growing efficiency of developing countries in the service sectors, many jobs in these sectors are being transferred to developing countries (of which a major chunk is coming to
Recently the
Despite no ban from the federal authorities on outsourcing, many States have initiated the process of putting restrictions on outsourcing government work to foreign countries. The lawmakers in the state of
The Indian Response
The Indian BPO industry is not taking the outcry against outsourcing in the
Many analysts feel that the opposition to outsourcing may not end with the
Question for discussion:
Que. 1 Give your opinion on outsourcing and its impact on the prospects of growth of the economy of home Nation and host nation.
Guidelines for the answer: Discuss the issue in the perspective of opportunity and threats faced by developing and developed nations.
Assignment -C
Q.1. A change in quantity demanded refers to
(a) Contraction along a demand curve
(b) Shift of the demand curve
(c) Movement along a demand curve
(d) Expansion along a demand curve
Q.2. A change in demand refers to
(a) Contraction along a demand curve
(b) Shift of the demand curve
(c) Movement along a demand curve
(d) Expansion along a demand curve
Q.3. If two goods are substitutes, the price elasticity of demand is
(a) Negative
(b) Positive
(C) Zero
(d) Not defined
Q.4 If two goods are complementary, the price elasticity of demand is
(a) Negative
(b) Positive
(C) Zero
(d) Not defined
Q.5. Price elasticity of demand is defined as
(a) Absolute change in quantity demanded due to absolute change in price
(b) Percentage change in quantity demanded due to percentage change in price
(c) Relative change in quantity demanded due to change in price
(d) Marginal change in quantity demanded due to marginal change in price
Q.6. Total revenue will increase if
(a) Demand is elastic
(b) Demand is inelastic
(c) Demand is unitary elastic
(d) None of the above
Q.7. An isoquant shows
(a) All combinations of labor and capital
(b) All combinations of good X and good Y
(c) All combinations of labor and capital
(d) All combinations of labor and capital
Q.8. Changes in income are shown by
(a) Parallel shift of isoquant
(b) Movement along the budget line
(c) Parallel shift of budget line
(d) Both (b) & (c)
Q.9. The relationship between elasticity and total revenue
(a)
(b)
(c)
(d) None of the above
Q.10. In case of inferior goods the income elasticity is
(a) Positive
(b) Negative
(c) Zero
(d) None of the above.
Q.11. An indifference curve is the locus of
(a) All the combinations of good X and Y giving different level of satisfaction
(b) All the combinations of capital and labor giving same level of output
(c) All the combinations of good X and Y giving same level of satisfaction
(d) All the combinations of capital and labor giving different level of output
Q.12. Short run in production function refers to
(a) When all factors of production become variable
(b) One factor of production varies keeping all other constant
(c) When all factors of production become variable
(d) None of the above
Q.13. Opportunity cost refers to
(a) The expected return from the use of the resource
(b) The expected return from the second best alternative use of the resource
(C) Accounting cost less of unilateral transfers
(d) None of the above
Q.14 Long run average cost curve is also known as
(a) Envelope curve
(b) Angel curve
(C) Laffer curve
(d) None of the above
Q.15. Internal economies of scale determine
(a) The position of long run average cost curve
(b) The shape of long run average cost curve
(c) The shape of short run average cost curve
(d) The position of short run average cost curve
Q.16. The nature and shape of AFC is
(a) A rectangular Hyperbola
(a) A horizontal Line
(b) It is “U” shaped
(c) A vertical Line
Q.17. Which one of the statement is correct
(a) All costs are variable costs in the long run except LMC
(b) TFC is inverse “S“Shaped reflecting Laws of Returns.
(b) Over a very long range of Operation, AFC is Zero.
(c) None of the above is correct.
Q.18. Explicit cost is also known as –
(a) Imputed Cost
(b) Implied Cost
(c) Accounting Cost
(d)
Q.19. The use of highly structured meeting agenda and restricted discussion or
interpersonal communication during the decision making process is known
as –
(a) Nominal Group Technique,
(b) Brainstorming,
(c) Delphi Group Technique,
(d) Both (b) & (c)
Q.20. Variation in Data occurring due to regularly recurring fluctuations in
economic activity during each year is
(a) Cyclical fluctuations
(b) Seasonal Variations
(c) Random Variation
(d) Irregular Variation
Q.21. In the short run the supply curve of a firm in perfectly competitive market is
(a) Average cost curve
(b) Total cost curve
(c) Marginal cost curve
(d) None of the above
Q.2.2. A firm is price taker in perfect competition market structure because
(a) Single firm supplies significant part of total market supply
(b)Single firm supplies insignificant part of total market supply
(c) Single firm supplies Homogeneous product
(d) Both (b) and (c)
Q.23. Highest degree of allocative inefficiency is the feature of
(a) Perfect competition
(b) Monopoly
(C) Oligopoly
(d) Not defined
Q.24 Cartels and collusion are
(a) Illegal activities
(b) Legal framework
(C) Authorized framework
(d) Not defined
Q.25. As more labor is added to a fixed amount of input, the rate at which output goes
up begins to decrease. This is called
(a) Diminishing marginal utility.
(b) Diminishing marginal productivity.
(b) Diminishing marginal costs.
(c) Diminishing marginal profit.
Q.26. If the cost of sugar rises and sugar is a major ingredient in jelly beans, then the jelly
bean
(a) demand curve shifts to the left.
(a) supply curve shifts to the left.
(b) supply curve shifts to the right.
(c) demand and supply curves both shift to the right.
Q.27. Which one of the following is not the characteristic of Perfect Competition
(a)All firms sell an identical product.
(b)All firms are price takers.
(c)All firms have a relatively small market share.
(d)Buyers do not know the nature of the product being sold and the prices
charged by each firm.
Q.28. Which one of the following is not the characteristic of demand
(a) There should be the willingness to purchase
(b) There should be the capacity to purchase
(c) Specific time frame
(d) Real market place is required
Q.29. For a normal good:
a) The price elasticity of demand is negative; the income elasticity of demand is negative
b) The price elasticity of demand is positive; the income elasticity of demand is negative
c) The price elasticity of demand is negative; the income elasticity of demand is positive
d) The price elasticity of demand is positive; the income elasticity of demand is positive
Q.30. Which of the following is true?
a) If the marginal cost is greater than the average cost the average cost falls
b) If the marginal cost is greater than the average cost the average cost
increases
c) If the marginal cost is positive total costs are maximised
d) If the marginal cost is negative total costs increase at a decreasing rate if
output increases
Q.31. If marginal cost is positive and falling:
a) Total cost is falling
b) Total cost is increasing at a falling rate
c) Total cost is falling at a falling rate
d) Total cost is increasing at an increasing rate
Q.32. To maximise sales revenue a firm should produce where:
a) Marginal cost is zero
b) Marginal revenue is maximised
c) Marginal revenue is zero
d) Marginal revenue equals marginal cost
Q.33. Normal profit occurs when:
a) Average revenue equals average variable cost
b) Marginal revenue equals marginal cost
c) Average revenue equals marginal cost
d) Average revenue equals average cost
Q.34 Barriers to entry:
a) Do not exist in monopoly
b) Cannot exist in oligopoly
c) Do not exist in monopolistic competition
d) Do exist in perfect competition
Q.35. Which best describes price discrimination?
a) Charging different prices for different products
b) Charging the same prices for different products
c) Charging the same prices for the same products
d) Charging different prices for the same products
Q.36. In perfect price discrimination:
a) Consumer surplus is maximized
b) Consumer surplus is zero
c) Producer surplus is zero
d) Community surplus is maximised
Q.37. In perfect price discrimination:
a) The demand curve is the marginal cost curve
b) The average revenue equals the average cost
c) The marginal cost is the average cost curve
d) The demand curve is the marginal revenue
Q.38. If a few firms dominate an industry the market is known as:
a) Oligopoly
b) Competitively monopolistic
c) Duopoly
d) Monopolistic competition
Q.39. In case certain goods are not sold within a reasonable time, the retailer pulls
the price down, it is known as
(a) Adjustment pricing
(b) Administered pricing
(c) Mark-down pricing
(d) Mark-up pricing
Q.40. This pricing strategy acts as a barrier to entry to new firms
(a) Limit Pricing
(b) Administered Pricing
(c) Peak –Load Pricing
(d) Skimming Pricing
No comments :
Post a Comment