Page 22 - DECO405_MANAGERIAL_ECONOMICS

Unit 1: Introduction to Managerial Economics

1.10 Review Questions Notes

1. How do you justify the fact that most of the economies in the world have registered
growth even after influenced by the global meltdown?

2. What was the reason for inflation touching a two digit number in India in the first half of
2009?
3. Being a student of management, how do you think US economy could have prevented
sub-prime crisis and the consequent recession?
4. Why does the entire managerial economics revolve around what to produce, how to
produce, and for whom to produce? Give examples to support your answer.

5. Among recession, unemployment, inflation and economic growth or stagnation, what do
you think is the biggest problem for an economy? Arrange them in a descending order of
importance and support your argument with reasoning.

6. 'Managerial Economics is often used to help business students integrate the knowledge of
economic theory with business practice.' How is this integration accomplished in your
point of view? What role do you think does the subject play in shaping managerial decisions?
7. Analyse the relationship of Managerial Economics with the following:
(a) Microeconomics,
(b) Macroeconomics,
(c) Mathematical economics, and

(d) Econometrics.
8. Examine various approaches of managerial decision-making.
9. Following are the examples of typical economic decisions made by managers of a firm.
Determine whether each is an example of what, how, or for whom to produce.
(a) Should the company make its own spare parts or buy them from an outside vendor?
(b) Should the company continue to service the equipment it sells or ask the customers
to use independent repair companies?

(c) Should a company expand its business to international markets or concentric in
domestic markets?
(d) Should the company replace its telephone operators with a computerised voice
messaging system?
(e) Should the company buy or lease the fleet of trucks that it uses to translate its
products to markets?
10. Analyse the impact of unemployment on Indian economy.
11. What are the causes of stagnation? Explain with example.
12. What is inflation? What should India do to check its stagflation?
13. How can you define recession?

14. Discuss the principles of economics. How can managers use these principles for effective
decision-making?
15. "Economics is concerned with the application of economic concepts and analysis to the
problem of formulating rational individual and national decisions." Discuss.

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