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Term End Examination - May 2013

Course : HUM103 - Business Economics Slot: C2

Class NBR : 1979

Time : Three Hours Max.Marks:100

PART A (5 X 8 = 40 Marks)

Answer any FIVE Questions

1. Suppose the monthly income of Mr. Kumar increases from Rs. 5,000 to Rs. 6,000 and

his monthly demand for vegetables increases from 20 kgs. to 25 Kgs. Calculate income

and quantity relationship.

2. A reputed pen company named Reynolds is able to sell 4,200 units of its latest model

mobile phone priced at Rs. 12 per piece. A survey conducted by the companys

research team shows that if the price of the pen could be lowered by Rs. 2, the

company would be able to sell 6,300 units of this pen. What is the Price Elasticity ofDemand (PED) for pen?

3. Combination of two factor inputs, labour and capital, produces different output of a

particular commodity as given below.

Q = 50 Q = 70 Q = 95 Q = 117 Q = 130

L K L K L K L K L K

1 20 2 20 3 20 4 20 5 20

2 12 3 14 4 13 5 13 6 15

3 7 4 9 5 9 6 8 7 11

Determine the APP, MPP of labour for 20 units of capital.

4. From the following table, calculate average variable cost of each given level of output.

Output (units) 1 2 3 4

Marginal cost (Rs.) 40 30 35 39

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5. Draw a diagram and explain the nature of AR,MR under perfect competition.

6. Draw a diagram and explain the short run equilibrium of a firm under monopolistic

competition.

7. Write a short note on Asymetric information.

PART B (5 X 12 = 60 Marks)

Answer any FIVE Questions

8. A firms total cost function is C = Q2 22Q. It faces a demand function is Q = 14 - P.

Find out the profit maximizing output and price for the firm.

9. The following data relate to the sale of note books of SPB Company over the last five

years.

Year 2006 2007 2008 2009 2010

No. of note books 120 130 150 140 160

Estimate the demand for note books in the year 2015, if the present trend is to continue.

10. Explain law of return to scale with a suitable schedule and diagrams. Analyze the

causes for various returns occuring in the production process.

11. A manufacturer sells his product at Rs. 5 each. Variable costs are Rs. 2 per unit and

the fixed costs amount to Rs. 60,000.

a) Calculate the break even point.

b) What would be the profit if the firm sells 30,000 units?

c) What would be the BEP if the firm spends Rs. 3,000 on advertising?

d)

How much should the manufacturer sell to make a profit of Rs. 30,000 after

spending Rs. 3,000 for advertisement?

12. The price of staplers manufactured by Max Stables Limited varies with the quantity ;

as per the demand eqauation, Q = P 7. Establish the total revenue, average revenue

and marginal revenue functions for Max Staples Limited.

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13. Given the market demand as, Q = 5000 10P, the market supply as, Q = 10P, and the

total cost of a firm in the market as TC = 5000 + 750Q 30Q2 + (1/3)Q3; determine,

a)

The market price,

b) The profit earned by the firm,

c) Draw a rough sketch and mark off the equilibrium price and output and the

profit earned by the firm.

14. Let market demand faced by a producer be P = 100 0.5 Q, Q = Q1 + Q2 and their

respective cost function as C1 = 5Q1, and C2 = 5Q2. Work out Cournot Nash

equilibrium.