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Thapar University, Patiala: Instruction: Attempt All Question in Proper Sequence. Assume Missing Data (If Any) - Q.1

This document contains an exam for a course in Engineering Economics. It consists of 12 questions covering various topics in economics including capital budgeting, inflation, GDP measurement, price discrimination, oligopoly market structures, costs of production, and elasticity of demand. Students are asked to calculate financial metrics like NPV, IRR, breakeven point, and profit and loss for various hypothetical business scenarios and economic situations.

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74 views2 pages

Thapar University, Patiala: Instruction: Attempt All Question in Proper Sequence. Assume Missing Data (If Any) - Q.1

This document contains an exam for a course in Engineering Economics. It consists of 12 questions covering various topics in economics including capital budgeting, inflation, GDP measurement, price discrimination, oligopoly market structures, costs of production, and elasticity of demand. Students are asked to calculate financial metrics like NPV, IRR, breakeven point, and profit and loss for various hypothetical business scenarios and economic situations.

Uploaded by

sahibjot
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 2

Roll Nuthber:

Thapar University, Patiala


School of Humanities & Social Sciences
End Semester Examination
B. E. (Fourth Year): Semester-VII Course Code: UHU-081
(MEE,CIE,BT & CHE) Course Name: Engineering Economics

MAY 16, 2016 Tuesday, 09.00— 12.00 Hrs


Time: 3 Hours, M. Marks: 100 Name Of Faculty: SCB,RKS,ANS & KW

Instruction: Attempt all question in proper sequence. Assume missing data (if any).
Q.1 Swanson Industries has two potential projects ,all with an initial cost of $2,000,000. The (12)
capital budget for the year will only allow $wanson industries to accept one of the two
projects. Given the discount rates and the future cash flows of each project, which project
should they accept according to:
I.Payback period of both the projects
II. NPV and IRR of both the projects
III.Rank the above projects with all three methods
Cash Flows Year one Year two Year three Year four Year five Discount Rate

Project 0 $1,000,000 $800,000 $600,000 $400,000 $200,000 15%


Project P $300,000 $500,000 $700,000 $900,000 $1,100,000 22%
Q.2 What is inflation? What are the prime causes of inflation' Briefly discuss fiscal and monetary (8)
measure to control inflation.
Q 3 What do you mean gross domestic products? Discuss the different methods to measure GDP. (8)
Q 4 What do you mean by price discrimination? Discuss the basis for price discrimination. Discuss the (8)
various degree of price discrimination with some suitable examples.
Q 5 Vella Bista Ltd. is an export oriented trading firm. Vella Bista exports handicrafts to Europe (8)
and North America. The total demand function faced by Vella Bista is P = 140 — Q/0.15
further the market research team at Vella Bista estimated individual demand functions for
north America and Europe to be
PA = 100 — 10QA
PE = 220 — 20QE respectively.
Vella Bista is actively considering a proposal for discriminating so as to maximize its total
profits. The cost function of Vella Bista is TC = 400 + 20Q.

I. The objective of Vella Bista is to maximize its profits. What is the profit earned by
Vella Bista if it does not exercise price discrimination?
II. If the objective of Vella Bista is to maximize Total Revenue how many units should it
export without exercising price discrimination?
III. If Vella Bista exercises price discrimination and aims to maximize profits, what is the
total profitearned by Vella Bista?

Q. 6 What is Oligopoly? How it differs from other market structures? Discuss the Paul Sweezy's Kinked (8)
Demand Curve ?
Q.7 Divyani Enterprises is a small firm in the steel office wooden table industry, which is (8)
perfectly competitive. The market price of each chair is Rs.640. The cost function of the firm
is TC = 240Q — 20Q2 +Q3.
I. What is the profit maximizing output?
II. What is the Average Cost at profit maximizing output?
III. What is the profit earned by the Divyani Enterprises at profit maximizing output?
IV. Suppose the local government imposes a specific tax of Rs.325 per table on the
Divyani Enterprises, then what will be profit maximizing output?
Page 1 of 2
C\\
Q 8 Why the short run average cost curve is U shaped? Also discuss the relationship (8)
between short run average cost curve and marginal cost curve. Does this relationship hold
Good in long run?
Q 9 It costs a publishing company Rs. 50,000 to make books. The 50,000 is a fixed cost or a cost (8)
that cannot change. To help the publishing company sell the books, a marketing company
charges 4 dollars for each book sold. If the company charges 9 dollars per book,
I. How many books should they sell to break even?
II. How much profit company will earn if it desires to sell 15,000 books
III. How much books company will sell tp earn profit of 50,000.
IV. If there is increase in fixed of Rs. 20, 000 than what will be new BEP?
Q.10 Mr. Jogui operates Bake Box Bakery and projected the sales revenue of Rs.85,000 for next (8)
month. Earlier he was working as a manager in the 7 Star International Hotel and used to get
a salary of Rs.12000 p.m. He thought of selling his own venture and started Bake Box about
three months ago. He used his own building to house the bakery, which otherwise could have
earned a rent of Rs.9000 p.m. he employed four men to man Bake Box and wages would be
Rs.10000 p.m. He planned to spend Rs.4000 for local promotional (advertisement etc.) work
per month. Raw material cost would be Rs.38,000. Cost of utilities is likely to be Rs.3000
and provision for tax payments is Rs.9000. When he started the bake box he invested all his
savings Rs.50000 which could have earned interest @18% p.a.

I. What is the accounting profit of the firm ?


II. What is the economic profit of the firm ?
Q.11 Consider the demand equation Q = 25 - 3P, where Q represents quantity demanded and P, (8)
The selling price.
I. Calculate the arc-price elasticity of demand when P1 = $4 and P2 = $3.
II. Calculate the point-price elasticity of demand at these prices. Is the demand for this
good elastic or inelastic at these prices?
III. What, if anything, can you say about the relationship between the price elasticity of
demand and total revenue at these prices?
IV. What is the price elasticity of demand at the price that maximizes total revenue?
Q.12 A firm has the following production function. (8)
Q = 4L2 + 5K2 2LK
Budget constraint of the firm is Rs.2880, the market going wage rate, w = Rs.15 and cost of
capital, r = Rs.10.
I. Compute the optimum combinations of labour and capital
II. Compute the Optimum output?

.END

te: Evaluated Answer Sheets will be shown on 256 May, 2017(Thursday)

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