PROGRAM - MBA - SEMESTER - 1

SUBJECT CODE & NAME MBA105- MANAGERIAL

ECONOMICS
1. Define Elasticity of Supply? Explain the factors
determining Elasticity of Supply?
Definition Elasticity of Supply
It is a parallel concept to elasticity of demand. It refers to the sensitiveness or
responsiveness of supply to a given change in price. In short, it measures the
degree of adjustability of supply to a given change in price of a product. The
formula to calculate elasticity of supply is as follows:

It implies that at the present level with every change in price by one unit, there
will be a change in

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2. What is Perfect Competition and also mention

the features of Perfect Competition? Explain the

different
characteristics
Competition?

of

Monopolistic

Definition of Perfect Competition and its Features

A perfectly competitive market is one in which the number of buyers and sellers
are large, all engaged in buying and selling a homogeneous product without
any artificial restriction and, possessing perfect knowledge of the market at a
time. According to Bilas, the perfect competition is characterised by the
presence of many firms; they all sell the same product which is identical. The
seller is the price-taker. According to Prof. F. Knight, perfect competition entails
Rational conduct on the part of buyers and sellers, full knowledge, absence of
friction, perfect mobility and perfect divisibility

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3. A cost-schedule is a statement of variations in

costs resulting from variations in the levels of
Output and it shows the response of costs to
changes in output. If we represent the relationship
between changes in the level of output and costs
of production, we get different Types of cost curves
in the short run. Define the kinds of cost concepts
like TFC, TVC, TC, AFC, AVC, AC and MC and its

corresponding curves with suitable diagrams for

each.
Answer:
In order to study the relationship between the level of output and
corresponding cost of production, we have to prepare the cost schedule of the firm.
A cost-schedule is a statement of variations in costs resulting from variations in the
levels of output. It shows the response of costs to changes in output. Below table
represents a hypothetical cost schedule of a firm.
Output
in
Units
0
1
2
3

TFC
in Rs.
360
360
360
360

TVC
in Rs.

180
240
270

TC
in Rs.
360
540
600
630

AFC
in Rs.

360
180
120

AVC
in Rs.

180
120
90

AC
in Rs.

540
300
210

MC
in Rs.

180
60
30

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