|
SECTION A – (5 X 6 = 30 marks)
Answer any FIVE questions.
All questions carry equal marks.
1. Write down the objective of the firms.
2. What is meant by Law of Diminishing Returns?
3. Explain price and output equilibrium under monopoly.
4. Explain wage determination under perfect competition in the labour
market.
5. Explain the concept of discount rate.
6. Explain few economic indicators influencing the business.
7. Explain the scope of monetary policy.
8. What is the difference between money market and capital market?
Section B – (5 x 10 = 50 marks)
Answer any FIVE questions.
All questions carry equal marks.
9. What are
the determinants of demand? Explain Price and Substitution Elasticity
of demand.
10. Write short notes on:
(a) Fiscal policies
(b) IDBI
(c) Memory market.
11. The total cost function is
C = 100 + 3q -2q2 + 3q3
Where c = total cost q = output per day...
At what
output is marginal cost a mimnimum?
12. Explain
the price and the output determination under perfect competition.
13. Explain the concept of analysis of risk and uncertainty.
14. Evaluate the technology and employment trade-off in the economic
growth.
15. In determining whether or not to add a new product line, if a new
product line is a success, the firm will increase it’s profits by
$ 1 m; if it not success, its profit will decrease by $0.5 m. The
manager feels that the probability is 0.6 that the new product line
will be a success and 0.4 will not be a success.
How do you determine whether they
are risk neutral?
16. The corporation ‘A’ is considering the purchase
of new machines that cost Rs. 30,000 and that will reduce labor cost by
Rs. 17,500 per year for the next four years. Its marginal tax rate is
34%.
If the discount rate
is 8%, should the firm buy this machine?
SECTION C - (1 x 20 = 20 marks)
(Compulsory)
17. Case
Study:
Until January 1990 laboratory technicians at the Mecklenburg County
Environmental Protection Department in Charlotte, North Carolina made
regular visits to their local supermarket to buy two or three bottles
of Perrier mineral water . The technical needed purified water to
dilute substances they were testing for hazardous chemicals and buying
Perrier was simpler than making their own. But on 19 January as
biologist at the laboratory spotted an unusual reading on hi mass
spectrometer: something was corrupting his sample.
Since Perrier had been an unfailingly reliable source of pure water in
the past, the Scientist’s first reaction was that the equipment
was at fault. But after extensive checking and the purchasing of a
further eight bottles of Perrier, it soon
became clear that the mineral water
contained minute quantities of benzene and industrial solvent and
a carcinogen
It was a discovery that was to prove costly to Source Perrier, the
water's French manufacturer. Within weeks it had withdrawn every bottle
from world wide circulation – 160 million in all – at an
estimated cost of £140 million.
Perrier did not get to hear of the problem until the findings had been
confirmed buy both American state and federal agencies, and even there
appeared to be little cause for haste. The concentrations of Benzene
discovered, although well about the Food and Drug Administration's
tolerance limits, were far below the sort of levels that might endanger
health. But this was where the first risk appeared, since it should
have been clear to Perrier to that clinical health endangerment and
customer's perception can be entirely different - especially given the
general risk averting profile of many Perrier consumers.
Nevertheless, when Perrier group of America was told of the problem it
moved immediately to recall’s 70 million bottles from North
American outlets.
But it also broke the first rule of crisis management; don’t play
the problem down.As a result before it knew the exact source of benzene
contamination Perrier American branch was confidently announcing that
the contamination was limited to North America .Here was risk no two,
and the American management really should have known better than to
make statements that might have to be retreated at a later date,
In France, how ever ,Source Perrier was making far more serious
errors.At first it reacted decisively, halting global bottling of the
product that made up 14% of it’s sales in 1990, but then it
started breaking every rule in the book.On 11th February, two days
after the crisis had broken, a Source Perrier spokesman announced that
the source of the benzenes was a cleaning fluid mistakenly used on the
bottling line that served the noth American market .The machine in
question had now been cleaned and repaired, and independent tests, it
was claimed, showed that the source of the water, at Vergeze in the
South of France, was unaffected by any pollutants. This was risk no
three, and having taken it Perrier was later to wish that it had not .
This apparently calming public announcement was to say the least, a
little disingenious, since in reality Perrier had no idea where the
contamination at it’s Verges plant was coming from.Less that
three days later the real cause was discovered , a failure to
screen out impurities in the natural gas that was present in the
Perrier spring . six months' worth of production , covering Perrier's
entire global market, had been affected, and clearly the company had
too change its story
In Paris, Source Perrier still did not seem to have grasped the
enormity of the problem.The company chairman,Gustav Leven , announced a
global withdrawal of the product but was at pain’ to make light
of the problem. Fredrick Zimmer, the president of Perrier's
international division was even quoted as saying that 'all this
publicity helps build the brand's renown.' More worryingly however he
also observed that Perrier water 'naturally contains several gases,
including benzene. These have to filter out'. This last remark raised
the obvious point that the filtration device was clearly a logical
place to look for the contamination.
Questions:
(a) Identify the risks that source Perrier took in it’s handling
of the benzene crisis
(b) If Source Perrier could undo any one of its reactions to the crisis
which one should it be?
-------------------------------------------
|
