MICROECONOMICS PRACTICE QUESTIONS FOR MBA
1. Discuss the various economic indicators.
An economic indicator is a piece of economic data, usually of macroeconomic
scale, that is used by analysts to interpret current or future investment
possibilities. These indicators also help to judge the overall health of an
economy.
Economic indicators can be anything the investor chooses, but specific pieces of
data released by the government and non-profit organizations have become
widely followed. Such indicators include but aren't limited to:
i) Leading indicators such as the yield curve, consumer durables, net
business formations, and share prices, are used to predict the future movements
of an economy. The numbers or data on these financial guideposts will move or
change before the economy, thus their category's name. Consideration of the
information from these indicators must be taken with a grain of salt, as they can
be incorrect.
ii) Coincident indicators, which include such things as GDP, employment
levels, and retail sales, are seen with the occurrence of specific economic
activities. This class of metrics shows the activity of a particular area or region.
Many policymakers and economists follow this real-time data.
iii) Lagging indicators, such as gross national product (GNP), CPI,
unemployment rates, and interest rates, are only seen after a specific economic
activity occurs. As the name implies, these data sets show information after the
event has happened. This trailing indicator is a technical indicator that comes
after large economic shifts.
2. Talk about economies of scale.
Economies of scale occurs when more units of a good or service can be
produced on a larger scale with fewer input costs. Diseconomies of scale can
also exist, which occurs when inefficiencies exist within the firm or industry,
resulting in rising average costs. There are 2 types of economies of scale.
They are:
i) Internal economies of scale: Internal economies of scale measure a
company's efficiency of production and occur because of factors
controlled by its management team. Types of internal economies of
scales are labour, technical, managerial, financial and welfare
economies of scale.
1. Discuss the various economic indicators.
An economic indicator is a piece of economic data, usually of macroeconomic
scale, that is used by analysts to interpret current or future investment
possibilities. These indicators also help to judge the overall health of an
economy.
Economic indicators can be anything the investor chooses, but specific pieces of
data released by the government and non-profit organizations have become
widely followed. Such indicators include but aren't limited to:
i) Leading indicators such as the yield curve, consumer durables, net
business formations, and share prices, are used to predict the future movements
of an economy. The numbers or data on these financial guideposts will move or
change before the economy, thus their category's name. Consideration of the
information from these indicators must be taken with a grain of salt, as they can
be incorrect.
ii) Coincident indicators, which include such things as GDP, employment
levels, and retail sales, are seen with the occurrence of specific economic
activities. This class of metrics shows the activity of a particular area or region.
Many policymakers and economists follow this real-time data.
iii) Lagging indicators, such as gross national product (GNP), CPI,
unemployment rates, and interest rates, are only seen after a specific economic
activity occurs. As the name implies, these data sets show information after the
event has happened. This trailing indicator is a technical indicator that comes
after large economic shifts.
2. Talk about economies of scale.
Economies of scale occurs when more units of a good or service can be
produced on a larger scale with fewer input costs. Diseconomies of scale can
also exist, which occurs when inefficiencies exist within the firm or industry,
resulting in rising average costs. There are 2 types of economies of scale.
They are:
i) Internal economies of scale: Internal economies of scale measure a
company's efficiency of production and occur because of factors
controlled by its management team. Types of internal economies of
scales are labour, technical, managerial, financial and welfare
economies of scale.
