Page 21 - DECO405_MANAGERIAL_ECONOMICS

Managerial Economics

Notes Microeconomics: It is concerned with the study of individuals firm or unit.
Recession: It is defined as a period of two or more successive quarters of decreasing production.
Stagnation: It is a period of many years of slow growth of gross domestic product, in which the
growth is, on the average, slower than the potential growth in the economy.
1.9 Self Assessment

1. Fill in the blanks:
(a) Managerial Economics is a discipline that combines economic theory with
............................... .

(b) Inflation is a ............................... in the general level of prices of goods and services.
(c) ............................... studies aggregates in the economy.
(d) Fixing ............................... for the products of the firm is an important part of the
decision making process.
(e) Capital Budgeting is related to ............................... investment.
2. State true or false for the following statements:
(a) Supply theory guides the manager in the selection of goods and services of
production.
(b) Managerial economics involves selection of inputs and techniques of production.
(c) Firm's third basic question related is to segmentation of market.
(d) The development of a product for a particular section of society consider question
for how to produce.
(e) A choice has to be made between ends (unlimited wants) and means (limited
resource).

(f) Scarcity and efficiency does not go hand to hand in a society.
(g) The study of managerial economics does not involve capital budgeting.
(h) Recession os a macro economic problem.
(i) Inflation is a hidden tax on nominal balances.
3. Choose the appropriate answer:

(a) Which is not type of unemployment?
(i) Cyclical (ii) Structural
(iii) Frictional (iv) Variable
(b) The following are the sign of inflation, except

(i) increased prices (ii) increased purchasing power
(iii) decreased savings (iv) decreased investment

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