Managerial Economics – 1 (Prof H Mankad)
Question 1 - By enacting minimum wage laws, the governments have
Answer - Artificially raised wages
Question 2 - In BCG Matrix, intensity of competition between firms is high in
Answer - Upper half
Question 3 - Oligopoly is a dominant form of market structure mainly because
Answer - Technology and high capital cost make very large scale of operations inevitable
Question 4 - With very high tax rates, the revenues collection of the government
Answer - Shrinks
Question 5 - The kinked demand curve for oligopoly pricing has a kink where objective (actual) demand curve intersects subjective demand curve
Answer - At the monopoly price level
Question 6 - One of the reasons for financial meltdown in 2008 was that investment banks, hedge funds and private equity firms
Answer - Were highly leveraged
Question 7 - The Prisoners’ Dilemma case focuses on importance of
Answer - Communication
Question 8 - Dead weight loss due to tax is the highest when
Answer - Demand is relatively elastic and supply is also relatively elastic
Question 9 - Large investment in fixed assets and capital intensity
Answer - Reduces return on equity
Question 10 - High skimming price is recommended for new products if
Answer - The firm is operating under condition of increasing return and reducing cost
Question 11 - In a competitive market with elastic demand consumers’ surplus at equilibrium is
Answer - Is neutral to elasticity of supply
Question 12 - Higher efficiency and reduced cost have become necessary in recent times because
Answer - In competitive environment, margins are under pressure
Question 13 - Strong Brand equity gives greater competitive advantage to firms because
Answer - All of the above
Question 14 - Applying Porter’s Five Force Model to traditional businesses, the impact of information technology on competitive advantage is
Answer - Generally negative
Question 15 - Due to low switching costs rivalry between firms
Answer - Intensify
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