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S. V. Institute of Management, Kadi

ECONOMICS FOR MANAGERS
Question Bank

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Developed by: Prof. Sushil Mohanty, Kadi
(1) Discuss the following principles in detail (CH- 01)
(a) Government can sometime improve market outcomes
(b) Society faces a short run trade off between inflation and unemployment
(c) Trade can make everyone better off

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(d) Rational people think at margin

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(e) People face trade off
(2) How the efficiency of a nation is explained with the help of the production possibility frontier? Explain
with necessary assumptions and their importance.
(CH- 02)

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(3) Why economy’s income must equal to economy’s expenditure? Explain it with the help of circular
flow of income in detail. (CH- 02)
(4) Explain the equilibrium, shortage and surplus with the help of demand and supply. (CH-04)

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(5) Explain the effect of following on price and quantity with the help of diagrams.
(a) Increase in demand and Decrease in the supply
(b) Decrease in demand and increase in supply (CH- 04)
(6) What are the demand schedule and the demand curve and how they are related? Why does the demand

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curve slop downward? (CH-04)
(7) What is price elasticity of demand? How it is calculated? Explain the following situations of price
elasticity with diagram. (CH- 05)
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(a) elasticity is equal to infinity
(b) elasticity is equal to zero
(c) elasticity is greater than 1.
(d) elasticity is less than 1.
(e) elasticity is equal to 1.
(8) What is elasticity? Explain different types of elasticity with the help of example. (CH- 05)
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(9) What is consumer and producer surplus? Discuss them with respect of market equilibrium. (CH- 07)
(10) Show a consumer’s budget constraints and indifference curve for wine and cheese. Show the
optimum consumption choice to the consumer with the help of diagram. (CH- 07)
(11) What do you mean by profit? Explain how economic profit is different from accounting profit?
(CH- 13)
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(12) What are economies and diseconomies of scale? (CH- 13)

(13) What is relation between a firm’s total revenue, profit and total cost? (CH- 13)
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(14) Under which condition monopolist can discriminate prices of the product? (CH- 14)
(15) Explain P = AR = MR=MC. (CH- 14)
(16) “Even though the firm is suffering loss, some time it feels desirable to continue in the business in
it

perfectly competitive market for short run” Explain. (CH- 14)

(17) “A monopolist can either determine the price or the quantity, not both at same time.” Discuss.
(CH- 15)
(18) “There is always a conflict between self interest and cooperation in oligopoly market. Even though
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cooperation is in favor of the players they give priority to their self interest and ultimately suffer
loss for themselves and market as a whole.” –Comment. (CH-16)
(19) In the long run, monopolistic competitive firm is different from perfectly competitive firm, mainly
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on the bases of two criteria, excess capacity and markup over marginal cost. Draw diagrams
showing comparison between the situations in both of this market structures and explain the reason
for the same. (CH-17)

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SVIM, KADI M.B.A- I / Question Bank- Economics for Managers Page No.1/2
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S. V. Institute of Management, Kadi

(2) What is GDP? Explain the main components of GDP with the example for each component.(CH-23)

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(2) Why do economists use real GDP rather than nominal GDP to gauge economic well-being? (CH-23)
(2) What is inflation? Describe the methods used to calculate the inflation in a country? Which are the
main problems that make the consumer price index an imperfect measure of the cost of living?
(CH-24)
(2) Explain cost push and demand pull type of inflation. Discuss the effects of inflation on the economy.

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(CH- 24)
(2) What is Consumer Price Index? Explain its computation process with hypothetical example.

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(CH- 24)
() Differentiate between national saving, private saving and public saving. Is there any similarity
between these three variables? If it is, discuss it in detail. (CH- 26)

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() What is the role of the financial system in the economy? Briefly describe the structure of the
financial system. (CH- 26)
() How do bank create money by following the fractional reserve system? (CH- 29)
() Explain the meanings of nominal interest rate and real interest rate. How they are related? Give

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suitable examples to explain your answer. (CH- 30)
() According to the Fisher effect, how does an increase in the inflation rate affect the real interest and
the nominal interest rate (CH- 30)

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(3) Describe the economics logic behind the theory of purchasing-power parity. (CH- 31)
(3) What do you mean by nominal and real exchange rate? If a Japanese car costs 500,000 yen, a similar
American car costs $10,000, and a dollar can buy 100 yen, what is the nominal and real exchange
rate? Calculate. (CH- 31)
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(3) What might shift the aggregate- supply curve to the left? Use the model of aggregate demand and
aggregate supply to trace through the short-run and long-run effect of such a shift on output and the
price level. (CH-33)
(3) Give an example of a government policy that act as an automatic stabilizer. Explain why the policy
has this effect. (CH- 34)
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(3) Draw the short-run and long-run trade off between inflation and unemployment. Explain how the
short-run and long-run trade-offs are related. (CH- 35)

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SVIM, KADI M.B.A- I / Question Bank- Economics for Managers Page No.2/2
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