Roll Number: Thapar University, Patiala End Semester Exam, May 18, 2011 Time: 03 Hours; MM: 45 Note:

Attempt any five questions

School of Management & Social Sciences HU: 201 Engineering Economics Name ofFaculty: Ms Sheena Chhabra and Mrs. Kuldeep Walia

QI

A I II III B A
B

State giving reason whether the following are True or False: According to Kinked demand curve model, Oligopolists match price cuts and price increases. Increase in nominal GDP always results in increase in real GDP. The supply curve becomes more elastic, the longer the time period under consideration. Explain various economies and diseconomies of scale. Under Monopoly, a firm will always produce at a point where demand is elastic. Explain with the help of diagram. If the initial investment of a firm in new product development is Rs. 4.5 lakhs and the expected annual returns for five years are Rs. 55,000 ; Rs.75, 000 ; Rs . 105,000; Rs. 180,000 and Rs. 215 ,000. Calculate whether the firm should invest in new product development or not ? Explain the models of Price Leadership by Dominant firm and Low-cost firm . Explain various sources of Foreign Capital. Is the dependence on foreign capital good for Indian economy? If, on March 1, 20 I Mary opened a retail clothing outlet. The only product she sells is blue jeans. She pur chases the blue jean's'from a wholesaler in Washington. The jeans cost Mary $20.00 each (including shipping) and she sells them at retail (to you and I) for $50 .00 each . Mary and her accountant decided the company's year end will be December 31 of each year. Prepare a Cost sheet and calculate the income of Mary after tax (income tax rate of 40% ) if the company sold 5,000 pair of blue jeans. The other expenses are as below: /Marketing Expenses: !Advertising ISales Promotions /Radio /Administrative Expenses : IWage Expense /Employer Mandatory Costs IRent Expense !Telephone Expense !Utilities Expense IOffice Supplies Expense IRegistration of Company IMiscellaneous

2
2 2 3

Q2

4
5

Q3

6
...,
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Q4

1 1
II II

I
$ 25,0001
$ 20 ,0001

$ 5,0001

I
$ 50,0001 $ 5,000l

II
II

/I

II
II

$ 20,0001 $ 3,0001
$ 4,0001

II

$ 3,0001
$ 6001

II
II

$ 4001
2
2

B C

What are the two conditions of equilibrium of a firm? Explain with the help of graphs. Differentiate between Breakeven point and Shut down Point

f ;)3

Q5

A Why Depreciation is charged? A Lathe Machine is purchased at the first cost of Rs. 5 lakhs.
Depreciation is allowed in equal yearly instalments. The depreciation amount forms a fund which is invested in securities yielding early return of 10%. The salvage value ofthe lathe machine at the end of its useful life of 20 years is Rs. 50,000 . Calculate the depreciation fund and depreciated value of the asset at the end of 5 th and lOth years.

B Differentiate between Risk and Uncertainty.

C
Why is demand curve for coffee usuall y less elastic than demand curve faced by Nescafe in the market?

2 2

Q6

A Does monopoly leads to more technological progress than perfect competition? Why?
B What is Globalisation. Explain its impact on Indian economy?
C Given the Production function Q= 40LO.5KO .S What is the efficient input combination for an output of Q= 200 and Q=500 if the input price of capital and labour are 20 and 30 respectively.

3 3
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