NATIONAL INSTITUTE OF TECHNOLOGY KARNATAKA, SURATHKAL

DEPARTMENT OF HUMANITIES, SOCIAL SCIENCES AND MANAGEMENT

Register No.

VI SEMESTER B.TECH MID SEMESTER EXAMINATIONS- FEBRUARY 2014

HU-300 - ENGINEERING ECONOMICS
(Common to Civil, Mechanical, Chemical and Metallurgical & Materials Engineering)
Duration: 1 Hrs

Maximum Marks: 50
PART-I

I.

State whether the statement is True or False.

(5 X 1=5 Marks)

1. Government raise more tax revenue if it imposes a tax on a good with elastic demand than
2.
3.
4.
5.

with inelastic demand.

Consumer surplus is measured by the area of demand curve above the equilibrium price.
Price elasticity of demand is not the same as the slope of a demand curve.
An increase in nominal GDP will always result in increase in real GDP.
If the cross price elasticity between two products is positive, the goods in question are
complements.

II.

Fill the blanks with most appropriate answer.

(5 X 1= 5 Marks)

1. Indias rank is _____________ in UNs Human Development Index for 2013.

2. The tendency of the consumer to substitute less and less of a commodity for every unit of the
other commodity in indifference curves analysis is termed as__________________________
3. _______________ is the difference between GDP and GNP.
4. _______________ the change in the quantity demanded of a good that results because a
change in the price of a good changes the buyers purchasing power.
5. ______________ the additional utility gained from consuming an additional unit of a good.
PART- II
III.

Answer all questions in few sentences

(5 X 3= 15 Marks)
1. What is the necessity to use Purchasing Power Parity Dollar in HDI instead of official
2.
3.
4.
5.

exchange rate between domestic currency versus US Dollar?

Why isnt knowing the cost of producing a good sufficient to predict its market price?
Distinguish between physical and economic efficiency of an engineering project.
Distinguish between the income and substitution effect of a price change.
Why essential product like water is low priced compared to non-essential product like
Diamond, which is priced very high?

IV.
Answer any four of the following
(4 X 5= 20 Marks)
1. Propose an index for measuring development of states in India. Justify the selection of
components and the overall index.
2. Why should the economic interpretation of engineering proposals be made by engineers?

3. Explain the impact on the price and quantity of the following events and show their impact on
supply/demand curves.
a) A price ceiling imposed in the housing market below the equilibrium price.
b) A price floor imposed in the unskilled labour market above the equilibrium wage i.e.
minimum wage
c) Export ban imposed on sugar
d) Quantitative restriction on gold imports below the equilibrium quantity.
e) Warning on Cigarette packets on the adverse health effects of smoking
4. Qd= 49.18- 3.12P+ 0.51Y is the demand equation for a product. Where, Qd= Quantity
Demanded, P= Price in Rs and Y= Income in thousand Rs.
a) Find the total quantity demanded if the price= Rs 13 and income= Rs 15,000
b) Find the price and income elasticity of demand and comment on the result.
5. Suppose the market demand for a commodity is given by equation Qd= 1000- 2P, and market
supply by equation Qs= 500+ 30P.
a) Find the quantity demanded and supplied at price Rs. 12. Is there a surplus or

V.

shortage of the commodity?

b) Find the equilibrium price by equating Qd= Qs
c) Prove that the price found in (b) do not result in wither shortage or surplus.
Analyse the case and answer the questions
(5 Marks)

The TATA Nano has failed to live up to the expectations after being hyped as the cheapest car to
hit the roads, despite entry level cars constitute nearly 64 per cent of the total car market in India.
Its sales have been dwindling despite the company's attempts to reposition it. In the AprilOctober, 2013, it clocked just 12,322 units as against 43,627 units in the year-ago period, down
71.7 per cent. Mr. Ratan Tata, who stepped down as the Chairman of the salt-to-software
conglomerate last December, said I always felt that Nano should have been marketed towards
the owner of a two-wheeler because it was conceived giving the people who rode on two-wheels
with the whole family an all-weather safe form of affordable transportation, not the cheapest.
Questions:
1. Do you agree with opinion of Mr. Ratan Tata for the failure of Nano? Comment.
2. Assuming Mr. Ratan Tata is correct; explain Nanos failure in the framework of demand
analysis.