MFM 105 Managerial Economics Notes cover all 4 units of the GGSIPU MBA (Financial Management) Semester 1 paper in a 75-page English book: 19 solved examples, 35 labelled diagrams, 40 short and 35 long exam questions, and a formula sheet plus revision table for every unit. They follow the scheme for batches admitted from 2021-22 onwards.
Written and reviewed by Prateek Talwar, Founder, Unnati Educations; ACS (ICSI); B.Com, University of Delhi · Checked against MBA (Financial Management) Scheme and Syllabus, 2021-22 onwards · Updated 14 October 2026 · Editorial policy
Scheme: MBA (FM) scheme 2021-22 onwards | Applies to: batches admitted 2021-22 onwards | Verified against: MBA (Financial Management) Scheme and Syllabus
MFM 105 Managerial Economics at a glance: GGSIPU MBA (FM) Sem 1 credits, units and exam pattern
| Code and title | MFM 105 Managerial Economics (printed "MFM-105" on the syllabus page) |
|---|---|
| Course and semester | MBA (Financial Management), Semester 1 |
| Category and credits | Core, 3 credits; L-T-P: 3-0-0 |
| Marks | 100: 25 internal + 75 external. Internal assessment: class test 15; assignments, presentation, viva, GD or class participation 10. |
| Pass mark | Not printed in the scheme PDF; see Ordinance 11 (examinations and results). |
| Applies to | Batches admitted 2021-22 onwards |
| End-term pattern | Not printed in the official scheme PDF |
| Units and hours | 4 units, 42 teaching hours: Unit I 12 hours; Units II, III and IV 10 hours each |
| Paired lab | None (MFM 117 is paired with MFM 109) |
Unit I receives the most teaching time, with 12 hours. MFM 105 is one of nine GGSIPU MBA (FM) Semester 1 papers, worth 25 credits together.
MFM 105 Managerial Economics Notes unit-wise: 19 solved examples and 35 diagrams across 4 units
The 75-page printed book has four preliminary pages and 71 pages of unit content. Each unit ends with exam questions, a formula sheet and a revision table. Other papers are available under GGSIPU MBA (FM) notes.
MFM 105 Unit 1: Introduction
Unit 1 (pages 5 to 21) also covers "Introduction to Managerial Economics and Consumer Behaviour". Topics include nature, scope and significance; relationships with other disciplines; the six-step decision process; opportunity cost and incremental principles; utility laws; indifference curves and marginal rate of substitution; the budget line; and price effects. It has 4 solved examples, 8 diagrams and 19 exam questions.
Quick look: a special order judged by the incremental principle (from page 10)
- Full cost is ₹45 per unit, including ₹10 fixed overhead; spare production capacity exists.
- A buyer offers ₹40 per unit for 2,000 additional units.
- Incremental revenue = 2,000 × ₹40 = ₹80,000.
- Incremental cost = 2,000 × ₹35 = ₹70,000, assuming the fixed overhead is unavoidable and no other relevant costs arise.
- Incremental profit = ₹80,000 − ₹70,000 = ₹10,000. Accept the order under these assumptions.
MFM 105 Unit 2: Demand Analysis and Theory of Production
Unit 2 (pages 22 to 40) covers the demand function, four types of elasticity and their measurement, survey and statistical forecasting, Cobb-Douglas production, variable proportions, isoquants, returns to scale and least-cost input combinations. It has 8 solved examples, 10 diagrams and 18 exam questions.
| Income elasticity (Ey) | Type of good | Illustrative examples |
|---|---|---|
| Ey > 1 | Luxury or income-elastic normal good | Cars, foreign travel |
| 0 < Ey < 1 | Income-inelastic normal good, often a necessity | Food grains, basic clothing |
| Ey = 0 | Income-neutral demand | Salt, matchboxes |
| Ey < 0 | Inferior good | Coarse grains, local bus travel |
Quick look: reading income elasticity (from page 27)
- Income elasticity (Ey)
- Ey > 1
- Type of good
- Luxury or income-elastic normal good
- Illustrative examples
- Cars, foreign travel
- Income elasticity (Ey)
- 0 < Ey < 1
- Type of good
- Income-inelastic normal good, often a necessity
- Illustrative examples
- Food grains, basic clothing
- Income elasticity (Ey)
- Ey = 0
- Type of good
- Income-neutral demand
- Illustrative examples
- Salt, matchboxes
- Income elasticity (Ey)
- Ey < 0
- Type of good
- Inferior good
- Illustrative examples
- Coarse grains, local bus travel
These examples are illustrative; actual income elasticity varies by consumer, market and income level. A good with Ey = 1 has unit income elasticity.
MFM 105 Unit 3: Theory of Cost and Market Structures
Unit 3 (pages 41 to 56) covers short-run and long-run cost curves, the MR = MC rule and price-output decisions under perfect competition, monopoly, price discrimination, monopolistic competition and oligopoly. It has 5 solved examples, 10 diagrams and 18 exam questions.
| Output (Q) | Total cost (₹) | Average total cost (₹) | Marginal cost (₹) |
|---|---|---|---|
| 2 | 190 | 95.00 | 40 |
| 3 | 220 | 73.33 | 30 |
| 4 | 260 | 65.00 | 40 |
| 5 | 320 | 64.00 | 60 |
Quick look: short-run costs with total fixed cost of ₹100 (from page 42)
- Output (Q)
- 2
- Total cost (₹)
- 190
- Average total cost (₹)
- 95.00
- Marginal cost (₹)
- 40
- Output (Q)
- 3
- Total cost (₹)
- 220
- Average total cost (₹)
- 73.33
- Marginal cost (₹)
- 30
- Output (Q)
- 4
- Total cost (₹)
- 260
- Average total cost (₹)
- 65.00
- Marginal cost (₹)
- 40
- Output (Q)
- 5
- Total cost (₹)
- 320
- Average total cost (₹)
- 64.00
- Marginal cost (₹)
- 60
Average total cost = total cost ÷ output. Marginal cost is the change in total cost for one additional unit. The marginal cost at Q = 2 requires the total cost at Q = 1 for independent verification.
MFM 105 Unit 4: Introduction to Macro Economics
Unit 4 (pages 57 to 75) covers microeconomics versus macroeconomics, economic systems, the invisible hand and market failure, fiscal policy, growth and development, money supply, RBI monetary policy, inflation, interest rates and business cycles. It has 2 solved examples, 7 diagrams and 20 exam questions.
Quick look: credit creation at a 10% reserve ratio (from page 65)
- Initial deposit = ₹10,000; reserve ratio = 10%.
- Simple deposit multiplier = 1 ÷ 0.10 = 10.
- Maximum total deposits = ₹10,000 × 10 = ₹1,00,000.
- Additional credit created = ₹1,00,000 − ₹10,000 = ₹90,000, assuming no cash leakage, no excess reserves and complete redepositing.
Kinked demand curve and sticky prices in oligopoly: excerpt from page 53 of the MFM 105 notes
Excerpt from page 53
Kinked Demand Curve Model (Paul Sweezy, 1939)
The kinked demand curve explains why prices may remain rigid in an oligopoly. The model assumes that rivals respond differently to a price increase and a price reduction.
- If a firm raises its price, rivals do not follow. The firm loses many customers, so demand above the prevailing price is relatively elastic.
- If a firm cuts its price, rivals follow to protect their market shares. The firm gains relatively few customers, so demand below the prevailing price is relatively inelastic.
The demand curve has a kink at the prevailing price, point K. Because the segments have different slopes, the corresponding marginal revenue curve contains a discontinuity or vertical gap below the kink.
When marginal cost intersects the discontinuous portion of the marginal revenue curve, changes in marginal cost within that gap need not change the profit-maximising price or output. This helps explain sticky prices in oligopolistic markets.
Limitations of the kinked demand model
- It explains why an existing price may remain unchanged, but not how the initial price was determined.
- Empirical work by Stigler questioned the assumed asymmetric responses of rival firms.
- The basic model does not adequately explain non-price competition or collusive behaviour.
Collusive oligopoly
A cartel is an agreement among competing firms to coordinate prices, output or market shares. OPEC is a commonly discussed international example. In India, anti-competitive cartel agreements are prohibited under Section 3 of the Competition Act, 2002, subject to the applicable legal provisions. The Competition Commission of India has investigated cartelisation in industries including cement and tyres.
Price leadership occurs when one firm sets a price that others follow. Three types discussed in the notes are dominant-firm leadership, low-cost-firm leadership and barometric leadership, in which a firm regarded as an informed indicator of market conditions leads price changes.
How to write MFM 105 answers: definition-first theory answers, labelled diagrams and short elasticity numericals
For a long answer on the nature and scope of managerial economics, begin with two definitions, add six to eight points on its nature, present the internal and external scope table, explain three or four points on significance and include the relationship diagram (Figure 1.1) where relevant.
Units 2 and 3 answers benefit from clearly labelled diagrams. For the U-shaped short-run average cost curve, explain both the fall and subsequent rise in average variable cost due to variable proportions, and the continuous decline in average fixed cost as output increases.
For the rational stage of production, identify Stage II. In Stage I, the fixed factor is not yet fully utilised; in Stage III, the marginal product of the variable factor becomes negative.
In incremental-cost questions, exclude sunk costs and fixed costs that the decision does not change. For elasticity questions, use MR = P(1 − 1/e), where e is the positive absolute value of price elasticity. Under the standard downward-sloping demand model, marginal revenue is negative when demand is inelastic.
Worked example: Arc price elasticity of demand (page 26)
Price falls from ₹20 to ₹15, while quantity demanded rises from 100 to 150 units.
- Change in quantity = 150 − 100 = 50; sum of quantities = 250.
- Change in price = 15 − 20 = −5; sum of prices = 35.
- Arc elasticity = (50 ÷ 250) ÷ (−5 ÷ 35) = −1.4.
- The absolute value is 1.4, so demand is elastic.
- Using the initial-value percentage method gives (50 ÷ 100) ÷ (−5 ÷ 20) = −2.0. Always identify the method used.
The class test accounts for 15 of the 25 internal marks. Every unit includes a formula sheet and revision table for pre-test preparation.
For Unit 4, relate the invisible-hand argument and market failure to the Great Depression, Keynesian economics and the role of government. Practise the same answer structure using GGSIPU MBA (FM) important questions.
MFM 105 exam corner: 40 short-answer and 35 long-answer practice questions by unit
| Unit | Short Answer (2–5 marks) | Long Answer (10–15 marks) | Solved examples |
|---|---|---|---|
| Unit 1 | 10 | 9 | 4 |
| Unit 2 | 10 | 8 | 8 |
| Unit 3 | 10 | 8 | 5 |
| Unit 4 | 10 | 10 | 2 |
| Total | 40 | 35 | 19 |
MFM 105 notes: exam questions and solved examples per unit
- Unit
- Unit 1
- Short Answer (2–5 marks)
- 10
- Long Answer (10–15 marks)
- 9
- Solved examples
- 4
- Unit
- Unit 2
- Short Answer (2–5 marks)
- 10
- Long Answer (10–15 marks)
- 8
- Solved examples
- 8
- Unit
- Unit 3
- Short Answer (2–5 marks)
- 10
- Long Answer (10–15 marks)
- 8
- Solved examples
- 5
- Unit
- Unit 4
- Short Answer (2–5 marks)
- 10
- Long Answer (10–15 marks)
- 10
- Solved examples
- 2
- Unit
- Total
- Short Answer (2–5 marks)
- 40
- Long Answer (10–15 marks)
- 35
- Solved examples
- 19
Marks bands are labels used in the notes, not a confirmed official end-term question pattern.
One question per unit, with answer pointers:
- Unit 1: Explain the properties of indifference curves and consumer equilibrium. Pointer: Explain the properties from page 16, followed by the tangency condition MRSxy = Px/Py for an interior optimum with convex preferences.
- Unit 2: Explain the survey and statistical methods of demand forecasting. Pointer: Compare survey methods such as census, sample surveys, Delphi and test marketing with statistical methods such as trend analysis, barometric techniques and regression.
- Unit 3: Explain the degrees and conditions of price discrimination. Pointer: Explain separable markets, differing demand elasticities and the equilibrium condition MR1 = MR2 = MC, with a higher price in the market with less elastic demand under standard assumptions.
- Unit 4: Distinguish between CRR and SLR. Pointer: CRR is the required cash reserve maintained with the RBI; SLR concerns specified liquid assets maintained by banks under applicable regulations.
The MFM 105 notes contain 40 short-answer and 35 long-answer exam questions across four units, plus 19 solved examples.
Additional practice is listed under MFM 105 important questions.
MFM 105 and the GGSIPU MBA (FM) Sem 1 papers it connects to
Paired lab: None. MFM 117 Information Technology Management Lab is associated with MFM 109 Information Technology Management.
Three Semester 1 papers share important concepts with Managerial Economics:
- MFM 103 Quantitative Techniques: Game theory relates to strategic interactions in Unit 3, while regression supports the least-squares demand forecast in Unit 2.
- MFM 107 Accounting for Management: Marginal costing and cost-volume-profit analysis connect with the cost concepts of Units 1 and 3.
- MFM 111 Marketing Management: Pricing decisions draw on price elasticity and the marginal-revenue relationship discussed in Unit 2.
| Group | Papers |
|---|---|
| Related papers | MFM 103 Quantitative Techniques; MFM 107 Accounting for Management; MFM 111 Marketing Management |
| Other theory papers | MFM 101 Management Process and Organisational Behaviour; MFM 109 Information Technology Management; MFM 113 Communication in Organizations; MFM 115 Legal Aspects of Business |
| Practical paper | MFM 117 Information Technology Management Lab |
Other MBA (FM) Semester 1 papers (2021-22 onwards scheme)
- Group
- Related papers
- Papers
- MFM 103 Quantitative Techniques; MFM 107 Accounting for Management; MFM 111 Marketing Management
- Group
- Other theory papers
- Papers
- MFM 101 Management Process and Organisational Behaviour; MFM 109 Information Technology Management; MFM 113 Communication in Organizations; MFM 115 Legal Aspects of Business
- Group
- Practical paper
- Papers
- MFM 117 Information Technology Management Lab
The full paper list and credits are available in the GGSIPU MBA (FM) syllabus.
Who writes and checks the MFM 105 Managerial Economics notes?
- Prateek Talwar, author: Founder, Unnati Educations; Associate Company Secretary (ACS), ICSI, membership no. 58704, since 15 May 2019; B.Com, University of Delhi (School of Open Learning), 2012. Author profile
Prateek Talwar is also listed as the subject reviewer. Each MFM 105 unit was mapped to the MBA (Financial Management) scheme for batches admitted from 2021-22 onwards.
The 2026-27 edition includes a discussion of RBI policy rates dated 7 October 2026 in Unit 4. The precise figures should be checked against the RBI announcement. Last updated 14 October 2026; see the editorial policy.
The same team also prepares GGSIPU important questions across courses.
Do the MFM 105 notes cover the full GGSIPU syllabus?
The notes map the listed topics of Units I to IV to their corresponding sections, and Unit 4 also discusses business cycles.
| Official unit | Official topics | In the notes | Status |
|---|---|---|---|
| I: Introduction | Nature, scope, significance; relationships with other disciplines; role in decision making; opportunity cost; incremental concept; cardinal and ordinal approaches; equi-marginal principle; diminishing and equi-marginal utility; indifference curve analysis | Sections 1 to 9, pages 5 to 18 | Covered |
| II: Demand Analysis and Theory of Production | Demand function, elasticity, forecasting, applications in decision making; production function; short-run and long-run analysis; isoquants; optimal input combination | Sections 1 to 8, pages 22 to 37 | Covered |
| III: Theory of Cost and Market Structures | Costs in short and long runs; price-output decisions under perfect competition, monopoly, monopolistic competition and oligopoly | Sections 1 to 9, pages 41 to 54 | Covered |
| IV: Introduction to Macro Economics | Nature and importance; market, command and mixed economies; invisible hand; role of government; growth and development; money supply, inflation and interest rates | Sections 1 to 8, pages 57 to 72 | Covered |
MFM 105 official syllabus topics mapped to the notes
- Official unit
- I: Introduction
- Official topics
- Nature, scope, significance; relationships with other disciplines; role in decision making; opportunity cost; incremental concept; cardinal and ordinal approaches; equi-marginal principle; diminishing and equi-marginal utility; indifference curve analysis
- In the notes
- Sections 1 to 9, pages 5 to 18
- Status
- Covered
- Official unit
- II: Demand Analysis and Theory of Production
- Official topics
- Demand function, elasticity, forecasting, applications in decision making; production function; short-run and long-run analysis; isoquants; optimal input combination
- In the notes
- Sections 1 to 8, pages 22 to 37
- Status
- Covered
- Official unit
- III: Theory of Cost and Market Structures
- Official topics
- Costs in short and long runs; price-output decisions under perfect competition, monopoly, monopolistic competition and oligopoly
- In the notes
- Sections 1 to 9, pages 41 to 54
- Status
- Covered
- Official unit
- IV: Introduction to Macro Economics
- Official topics
- Nature and importance; market, command and mixed economies; invisible hand; role of government; growth and development; money supply, inflation and interest rates
- In the notes
- Sections 1 to 8, pages 57 to 72
- Status
- Covered
Check the MBA (Financial Management) Scheme and Syllabus, 2021-22 onwards. The source identifies MFM-105 on page 14 and the marks scheme on page 3.
Other GGSIPU notes are organised against their corresponding official syllabuses.
MFM 105 Managerial Economics notes FAQs
How do I get the full MFM 105 notes?
Use the "Get Full Notes" button or the WhatsApp link at the end of this page. The complete MFM 105 notes are available as a printed book, not a full PDF. The unit summaries are free to read, and a sample PDF is planned for this page. Delivery depends on your location.
Is MFM 105 Managerial Economics a core paper, and how many credits does it carry?
Yes. The MBA (Financial Management) scheme lists MFM 105 as a core Semester 1 paper carrying 3 credits with L-T-P 3-0-0. The source lists nine Semester 1 papers carrying 25 credits, with 108 credits in the programme and a minimum of 102 required for the degree.
What is the passing mark for MFM 105?
MFM 105 has 100 marks: 25 internal and 75 external. The internal assessment includes a 15-mark class test and 10 marks for other assessment activities. The scheme PDF does not specify a passing percentage for this paper. Consult Ordinance 11 for applicable examination and result rules.
Which MFM 105 unit has the most solved examples?
Unit 2, Demand Analysis and Theory of Production, has 8 of the 19 solved examples. They cover a demand function, percentage and arc elasticity, income and cross elasticity, least-squares sales forecasting, Cobb-Douglas production and two least-cost input problems. Unit 3 has 5 examples, Unit 1 has 4 and Unit 4 has 2.
Do the MFM 105 notes include current RBI policy rates?
The source states that the 2026-27 edition includes RBI policy rates following the 7 October 2026 Monetary Policy Committee meeting, along with the CPI inflation target and tolerance band. Because policy rates change, verify the precise figures and effective dates against the RBI's official announcements before relying on them.
My batch joined MBA (FM) in 2024-25. Do the MFM 105 notes fit my syllabus?
The notes follow the MBA (Financial Management) scheme for batches admitted from 2021-22 onwards. A 2024-25 batch falls within that stated period unless a revised scheme applies. Compare the four unit headings with the syllabus supplied by your institute before ordering.
Get the full MFM 105 Managerial Economics Notes on WhatsApp
| Part | Pages | Solved examples | Diagrams |
|---|---|---|---|
| Cover and index/contents | 1–4 (4) | — | — |
| Unit 1: Introduction | 5–21 (17) | 4 | 8 |
| Unit 2: Demand Analysis and Theory of Production | 22–40 (19) | 8 | 10 |
| Unit 3: Theory of Cost and Market Structures | 41–56 (16) | 5 | 10 |
| Unit 4: Introduction to Macro Economics | 57–75 (19) | 2 | 7 |
| Total | 1–75 (75) | 19 | 35 |
MFM 105 printed notes book: pages and content per unit
- Part
- Cover and index/contents
- Pages
- 1–4 (4)
- Solved examples
- —
- Diagrams
- —
- Pages
- 5–21 (17)
- Solved examples
- 4
- Diagrams
- 8
- Pages
- 22–40 (19)
- Solved examples
- 8
- Diagrams
- 10
- Pages
- 41–56 (16)
- Solved examples
- 5
- Diagrams
- 10
- Pages
- 57–75 (19)
- Solved examples
- 2
- Diagrams
- 7
- Part
- Total
- Pages
- 1–75 (75)
- Solved examples
- 19
- Diagrams
- 35
The MFM 105 Managerial Economics notes are available in English as a 75-page printed book with labelled diagrams, solved examples, exam questions, formula sheets and revision tables. The full book is not supplied as a PDF.
Delivery: within 5 to 7 days at most; the exact time may vary with your location.
Order the MFM 105 notes book on WhatsApp (4 units, 75 pages)
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