Code No: 220201 Set No.

II B.Tech., II-Semester Supplementary Examinations, November-2003 1

MANAGERIAL ECONOMICS AND PRINCIPLES OF ACCOUNTANCY
(Common to Electrical and Electronics Engineering, Electronics and
Instrumentation Engineering and Electronics and Control Engineering)

Time: 3hours Max.Marks:80

Answer any FIVE questions
All questions carry equal marks
----
1. Managerial economics is an integration of economic theory with business practice
for the purpose of facilitating decision making and forward planning by
management. Explain.

2.a) What is meant by demand? Every one desires an Ambassador car – Does this
mean that the demand for Ambassador cars is large?
b) Calculate elasticity of demand
Q1 = 4000 P1 = Rs.20
Q2 = 5000 P2 = Rs.19
Construct on the nature of the elasticity.

3.a) What is meant by production? Define production function and describe the
underlying assumption.
b) Explain the importance and uses of production function in Managerial
Economics.

4. When MC changes, does AC change (a) at the same rate, (b) at a higher rate (or)
(c) at a lower rate? Illustrate your answer through a diagram.

5. Determine the cash inflows pay back period for the information given below
(a)the project cost is Rs.20,000 (b)the life of the project is 5 years (c) the cash
flows for the 5 years are Rs.10,000;Rs.12000;Rs.13000; Rs.11000 and Rs.10,000
respectively and (d)tax rate is 20%.

6. What is the Shutdown Point? Explain why a firm suffering from Losses still
decides to operate and not quit the market.

7. What are the different problems that are encountered by public enterprises?

8. Write short notes on: (a) Ratios associated with working capital, (b) Components
of Debt.

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 Set No.
Code No: 220201

II B.Tech., II-Semester Supplementary Examinations, November-2003 2

MANAGERIAL ECONOMICS AND PRINCIPLES OF ACCOUNTANCY
(Common to Electrical and Electronics Engineering, Electronics and
Instrumentation Engineering and Electronics and Control Engineering)

Time: 3hours Max.Marks:80

Answer any FIVE questions
All questions carry equal marks
----
1. Explain the nature of problems studied in Managerial Economics. What is the
importance of the study of such problems in business Management?

2.a) What are the possible approaches to forecasting demand for new products?
b) Discuss the Utility of demand forecasting.

3.a) What is meant by internal and external economies of scale?

b) What are the sources of internal and external economies?
c) Discuss various types of internal economies available to a firm.

4. Explain the relationship between marginal cost, average cost and total cost
assuming a short run non-linear cost function.

5. The cost of the project is Rs.50,000 and has an expected life of 5 years. The cash
inflows for the five years are Rs.24,000; Rs.20,000 Rs.26,000, Rs.17,000 and
Rs.16,000 respectively. (a) Determine the pay back period. (b) What is the
accounting rate of return?

6. Distinguish between Market Price and Normal Price. Discuss the significance of
time element in the determination of Price under Perfect Competition.

7. What are the reasons for Joint Stock Company being popular as a form of
business Organization? Explain.

8. Distinguish between the following:

(a) Fixed Assets and Current Assets
(b) Debt and Equity
(c) Gross profit and Net profit
(d) Debtors and Creditors.

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 Set No.
Code No: 220201

II B.Tech., II-Semester Supplementary Examinations, November-2003 3

MANAGERIAL ECONOMICS AND PRINCIPLES OF ACCOUNTANCY
(Common to Electrical and Electronics Engineering, Electronics and
Instrumentation Engineering and Electronics and Control Engineering)
Time: 3hours Max.Marks:80
Answer any FIVE questions
All questions carry equal marks
----
1. What is meant by Demand Schedule, Demand curve and demand function? How
is market demand calculated from individual demands?

2. Examine the trend projection method and collective opinion method of demand
forecasting?

3. Explain the following:

a) The Law of Constant Returns b) The Law of Increasing Returns
4. “All costs are variable in the long run” - Explain.

5. A company is considering two investment opportunities (A and B) that cost

Rs.4,00,000 and Rs.3,00,000 respectively. The first project generates Rs. 1,00,000
a year for four years. The second generates Rs. 60,000, Rs.1,00,000, Rs.80,000
Rs. 90,000 and Rs.70,000 over a five year period . The company’s cost of capital
is 8%. Which project will you choose under NPV method?

6. What are the main features of Monopoly? How does it differ from Perfect
Competition?

7. Compare the merits and demerits of different forms of business organisation and
their suitability with different types of business activities.

8. The following information is given about XYZ Ltds for a given year.
Stock- Turnover ratio = 6 times
Sales during the year Rs.3,00,000
Gross profit ratio to sales = 20%
Closing stock = Rs.l 0,000 more than opening stock.
Opening balance and closing balance of Creditors: Rs.20,000 and Rs.30,000.
Debtors at the end of the year Rs.60,000
Net working capital:Rs.50,000
Find out the following: (a) Average stock (b) Purchases (c) creditor-turnover ratio
and (d) Working capital ratio.
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 Set No.
Code No: 220201

II B.Tech., II-Semester Supplementary Examinations, November-2003 4

MANAGERIAL ECONOMICS AND PRINCIPLES OF ACCOUNTANCY
(Common to Electrical and Electronics Engineering, Electronics and
Instrumentation Engineering and Electronics and Control Engineering)

Time: 3hours Max.Marks:80

Answer any FIVE questions
All questions carry equal marks
----
1. What is demand analysis? Explain the factors influencing the demand for a
product.

2. Forecasting the demand for a new product poses special problems. How is it
possible to overcome them?

3. What do you mean by a firm’s production function? Suppose the price of one
input goes up. How does this affect the firms’ production functions? With two
inputs how does it affect the firm’s choice of inputs?

4. Explain the utility of Break-Even Analysis in managerial decision-making.

5. A company reported the following results for two periods.

Period Sales Profit

I Rs.20,00,000 Rs.2,00,000
II Rs.25,00,000 Rs.3,00,000

Ascertain the BEP, PV Ratio, Fixed Cost and margin of safety.

6. Explain how an individual firm attains equilibrium in the short and in the long
periods under conditions of Perfect Competition

7. Define a Business Organisation. Discuss the features of different types of

Business Organisations.

8. Explain the concept of 'Profitability'. Who interprets Profitability Ratios?

Supplement your answer with suitable examples.

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