"ECONOMICS INTERVIEW QUESTIONS AND ANSWERS" - By MaddaliSwetha
DEFINED COST CONTROL?
Cost Control is defined as the regulation by execution action of the costs of operating an undertaking. Cost control is exercised through numerous techniques some of which are standard. Costing, Budgetary control, Inventory control, Quality Control and performance evaluation.
Thus,Cost control refers to management's effort to influence the actions of individuals who are responsible for performing tasks, incurring costs, and generating revenues. First managers plan the way they want people to perform, then they implement procedures to determine whether actual performance complies with these plans. Cost control is a continuous process that begins with the annual budget.
EXPLAIN COST REDUCTION?
Cost reduction implies profit optimizing through economics in costs of manufactures, Administration, selling and distribution. We know that profit can be maximized either by increasing sales or by reducing costs. In a monopoly market it may be possible to increase price to earn profits.
In a competitive situation it is not possible to increase price significantly; Growth of profit would, therefore, depend mainly on the extent of cost reduction. Even when monopoly conditions prevail at present these may not exist permanently.
DEFINED PRICE CONTROL?
Price control has been defined as the government effort to restrict the prices of commodities in the market. The restriction can act on either the lowest prices or the highest prices. When the government decide to restrict the highest price that a good or service should be sold at in the market then this type of restriction is known as the price ceiling. Price floor on the other hand is the restriction imposed by the government on the minimum prices that a goods or service should be sold at in the market.
DEFINED MICRO ECONOMICS?
Microeconomics examines the impact that economic choices made by individuals, businesses and industries have on resource allocation and the supply and demand of goods and services in market economies. Because supply and demand determine the price of goods and services, microeconomics also studies how prices factor into economic decisions, and how those decisions, in turn, affect prices.
Macroeconomics refers to how economists in this field analyze the structure and function of large-scale economies as a whole, whether regional, national or global. Macroeconomics examines the complex interplay between factors such as national income and savings, gross domestic product, gross national product, consumer and producer price indexes, consumption, unemployment, foreign trade, inflation, investment and international finance.
EXPLAIN ABOUT THE LAW OF SUPPLY AND DEMAND?
The Law of Supply and Demand – For a market economy to function, producers must supply the goods that consumers want. This is known as the law of supply and demand. “Supply” refers to the amount of goods a market can produce, while “demand” refers to the amount of goods consumers are willing to buy. Together, these two powerful market forces form the main principle that underlies all economic theory.
Economics is the science that deals with the production, allocation, and use of goods and services. It is important to study how resources can best be distributed to meet the needs of the greatest number of people. As we are more connected globally to one another, the study of economics becomes extremely important. While there are many subdivisions in the study of economics, two major ones are macroeconomics and microeconomics. Macroeconomics is the study of the entire system of economics. Microeconomics is the study of how the systems affect one business or parts of the economic system.
THE FATHER OF ECONOMIC?
Adam Smith considered as the father of modern economics.
Karl Marx – father of economic thought
DEFINED MANAGERIAL ECONOMICS?
Managerial Economics is the application of economic theory and methodology to managerial decision making problems within various organizational settings such as a firm or a government agency. Managerial economics is a social science discipline that combines the economics theory, concepts and known business practices. Hence Managerial economics is the "application of the economic concepts and economic analysis to the problems of formulating rational managerial decisions"
Managerial decision areas include:
*Assessment of investible funds
*Selecting business area
*Choice of product
*Determining optimum output
*Determining price of product
*Determining input-combination and technology
DEFINED OF DEMAND?
An economic principle that describes a consumer's desire and willingness to pay a price for a specific good or service.
DEFINITION OF LAW OF DEMAND?
The law of demand states that other factors being constant .price and quantity demand of any good and service are inversely related to each other.
Definition: The law of demand states that other factors being constant, price and quantity demand of any good and service are inversely related to each other. When the price of a product increases, the demand for the same product will fall.
Description: Law of demand explains consumer choice behavior when the price changes. In the market, assuming other factors affecting demand being constant, when the price of a good rises, it leads to a fall in the demand of that good. This is the natural consumer choice behavior. This happens because a consumer hesitates to spend more for the good with the fear of going out of cash.
The above diagram shows the demand curve which is downward sloping. Clearly when the price of the commodity increases from price p3 to p2, then its quantity demand comes down from Q3 to Q2 and then to Q3 and vice versa. Quantity demand comes down from Q3 to Q2 and then to Q3 and vice versa.
DEFINITION OF SUPPLY?
The total amount of a good or service available for purchase; along with demand, one of the two key determinants of price.
DEFINITION OF LAW OF SUPPLY?
Law of supply states that other factors remaining constant, price and quantity supplied of a good are directly related to each other.
Definition: Law of supply states that other factors remaining constant, price and quantity supplied of a good are directly related to each other. In other words, when the price paid by buyers for a good rises, then suppliers increase the supply of that good in the market.
Description: Law of supply depicts the producer behavior at the time of changes in the prices of goods and services. When the price of a good rises, the supplier increases the supply in order to earn a profit because of higher prices.
The above diagram shows the supply curve that is upward sloping (positive relation between the price and the quantity supplied). When the price of the good was at P3, suppliers were supplying Q3 quantity. As the price starts rising, the quantity supplied also starts rising.