Evaluation Scheme 2020

(For all courses having end semester Full Mark=50)

KIIT Deemed to be University

Online End Semester Examination(Autumn Semester-2020)

Subject Name & Code: Engineering Economics & HS2002

Applicable to Courses: 3rd BTech

Full Marks=50
Time:2 Hours

SECTION-A(Answer All Questions. Each question carries 2 Marks)

Time:30 Minutes
(7×2=14 Marks)

Question Questi Answer 2x7

No on
Type(
MCQ/
SAT)
Q.No:1 MCQ 1. Four central problems of an economy are what to (b)
produce, ----------------------------, for whom to
produce and Economic growth problems.
(a) Who will to produce
(b) How to produce
(c) When to produce
(d) Where to produce

MCQ 2. ----------- goods are the goods whose demand is (d)

negatively related to income.
(a) Complement (c) Normal
 (b) Substitute (d) Inferior

MCQ 3. Which of the following pairs is a substitute? (b)

(a) Mobile phone and charger (c) Salt and
pepper
(b) Wool and cotton (d) Tea and
sugar

MCQ 4. Movement along the demand curve arises because (d)

of change in the -------------------.
(a) Consumer’s income (c) Taste and
preference of the consumer
(b) Prices of related goods (d) Price of the
good itself

Q.No:2 MCQ 5. If with the increase in the price of a good from ₹ (c)
30 to ₹ 50, quantity demand for that good
decreases from 1000 units to 800 units, then price
elasticity of demand will be -----------.
(a) 0.8 (c) 0.3
(b) 0.06 (d) 0.5

MCQ 6. Demand function for a commodity is given as Q = (b)

3000 + 25Y (Q = Quantity demand for the
commodity, Y = Income of the consumer per
month). If a consumer’s monthly income is ₹
42,000 per month, then income elasticity of
demand is ----------.
(a) 0.5 (c) 0.7
(b) 0.9 (d) 0.4

MCQ 7. If demand for coffee increases form 5000 units to (c)

6000 units due to a rise in the price of tea from ₹
300 to ₹ 350 per 250 grams pack, then cross
elasticity of demand between tea and coffee will be
--------.
(a) 4.5 (c) 1.2
(b) 1.5 (d) 3.2

MCQ 8. Demand function for a commodity X is Q X = (a)

10,000 – 5PX (QX = Quantity demand for the
commodity X, PX = Price of the commodity X). If
price of the commodity is ₹ 200 per unit, then
elasticity of demand is ----------.
(a) 0.1 (c) 2
(b) 0.13 (d) 2
Q.No:3 MCQ 9. A company takes a loan of ₹ 60,00,000 at 9% (c)
interest rate compounded annually. The installment
amount is --------------- as the number of installment
s 20.
(a) ₹ 5,26,275 (c) ₹ 6,57,150
(b) ₹ 4,30,000 (d) ₹ 5,20,160

MCQ 10. A person invests an equal sum of ₹ 20,000 at the (a)

end of every year for 15 years. If the interest
rate is 8% compounded annually, then the maturity
value of his account is-----------------.
(a) ₹ 5,43,042.2 (c) ₹ 4,23,050.3
(b) ₹ 7,35,060.7 (d) ₹ 6,20,040.5

MCQ 11. --------------- is the future value of ₹ 3,00,000 after (b)

10 years at11% interest rate compounded annually
if the compounding is monthly.
(a) ₹ 7,52,432.5 (c) ₹ 9,45,856.8
(b) ₹ 8,96,672.6 (d) ₹ 6,23,678.9

MCQ 12. If a credit plan charges 25% interest rate (d)

compounded annually, then the effective interest
rate is---------------- as the compounding is
quarterly.
(a) ₹ 25.23% (c) ₹26.45%

(b)₹ 24.62% (d) ₹ 27.44%

Q.No:4 MCQ 13. When plotting marginal and average product (d)
curves, the ------------ product curves always
crosses the ------------ product curve at its
-------------- point.
(a) average, marginal, minimum
(b) marginal, average, minimum
(c) average, marginal, maximum
(d) marginal, average, maximum

MCQ 14. Which of the following statements on the (c)

relationship between total product (TP), average
product (AP), and marginal product (MP) is
incorrect?
(a) TP reaches a maximum when the MP becomes
zero.
(b) AP reaches a maximum, before TP reaches a
maximum.
(c) AP continues to rise, so long as TP is rising
(d) MP cuts AP at the maximum point of AP.
 MCQ 15. When output increases in higher proportions than (b)
the increases in inputs, the returns to scale are
-------------.
(a) decreasing (c) negative
(b) increasing (d) constant

MCQ 16. In the short-run, product curves have all the (b)
following characteristics, except ------------
(a) total product is at its maximum when marginal
product equals zero.
(b) total product begins to decrease when average
product begin to decrease.
(c) average product is at its maximum when
average product equals marginal product
(d) when the average product equals the marginal
product and both are positive, then total
product must be rising.

Q.No:5 MCQ 17. In the short-run, a firm which produces 200 units of (a)
output has an average total cost of ₹ 500 and
average variable cost of ₹ 300. The firm’s total
fixed cost is-------------.
(a) ₹ 40,000 (c) ₹ 4,000
(b) ₹ 30,000 (d) ₹ 50,000

MCQ 18. A firm has total cost of production of ₹ 200,000 by (c)

producing 500 units of output in the short-run. If
average fixed cost is ₹ 100, then average variable
cost is--------------.
(a) ₹ 500 (c) ₹ 300
(b) ₹ 400 (d) ₹ 600

MCQ 19. If a firm produces 1000 units of output having (a)

average fixed cost of ₹ 600 and average variable
cost of ₹ 400 in the short-run, then firm’s total cost
of production is --------------.
(a) ₹ 10,00,000 (c) ₹ 12,00,000
(b) ₹ 15,00,000 (d) ₹ 20,00,000

MCQ 20. A firm has average cost of ₹ 50,000. If the total (a)
fixed cost and total variable cost of the firm are ₹
60,00,000 and ₹ 40,00,000 respectively in the
short-run, then the firm produces ----------- units of
output.
(a) 200 (c) 300
(b) 400 (d) 600
 Q.No:6 MCQ 21. A firm has a cost function of C = 10 + 30Q – 2Q 2 in (a)
the short-run under perfectly competitive market. If
price of the product prevailing in the market is ₹
10, then firm will maximize its profit with ---------
units of output.
(a) 5 (c) 8
(b) 6 (d) 10

MCQ 22. If a firm under perfectly competitive market has a (b)

revenue function of TR = 5Q and cost function of
TC = 50 + 15Q – 5Q 2, then at ---------- level of
output firm will maximize its profit.
(a) 2 (c) 4
(b) 1 (d) 6

MCQ 23. A firm has a cost function of C = 10 + 30Q – 2Q 2 in (a)

the short-run under perfectly competitive market. If
price of the product prevailing in the market is ₹
10, then firm will maximize its profit with ---------
units of output.
(c) 5 (c) 8
(d) 6 (d) 10

MCQ 24. A monopolist has a demand function of P = 20 – (a)

5Q and cost function of TC = 500 + 160Q – 40Q 2
in the short-run. At --------- level of output the
monopolist will earn maximum profit?
(a) 2 (c) 6
(b) 4 (d) 8

Q.No:7 MCQ 25. ----------- - Depreciation is NDP. (c)

(a) GNP (c) GDP
(b) NNP (d) GNPFC

MCQ 26. GDPMP + NFIA is ------------------. (d)

(a) GNPFC (c) NDPMP
(b) NNPMP (d) GNPMP

MCQ 27. GNPFC + ----------------- = GNPMP (b)

(a) Depreciation (c)NFIA
(b) Net indirect taxes (d) Subsidy

MCQ 28. NNPFC + ----------- = GNPFC (a)

(a) Depreciation (c)NFIA
(b) Net indirect taxes (d) Subsidy

SECTION-B(Answer Any Three Questions. Each Question carries 12 Marks)

Time: 1 Hour and 30 Minutes
(3×12=36 Marks)

Question Question M
No ar
ks
Q.No:8 (a) Students will have to write the Law of demand, its assumptions, prepare a 2x
demand schedule, demand curve, explanation of the demand curve and criticism of 6
the law.
(b)
Sales(in
Year 000) X XY x2
2015 25 -2.5 -62.5 6.25
2016 32 -1.5 -48 2.25
2017 47 -0.5 -23.5 0.25
2018 53 0.5 26.5 0.25
2019 70 1.5 105 2.25
2020 85 2.5 212.5 6.25
∑ ∑x = ∑xy = ∑x2 =
N=6 y = 312 0 210 17.5
a = 52
b = 12
Y2021 = 52 + 12(3.5) = 94
Y2024 = 52 + 12(6.5) = 130
(a)Students will have to Explain all the degrees of elasticity of demand with
suitable diagrams and examples..
(b) Students will have to write the definition of both the methods and whole
procedure of formula of both the methods.
(a) Q = 2,00,000 – 500P
 P = 400 – Q/500
TR = 400Q – Q2/500
(i) MR = d(TR)/dQ = 400 – Q/250
(ii) AR = 400 – Q/500
(iii) TR is maximum at Q = 100,000
P = 200
(a) Students have to explain definitions of change in supply and change in
quantity supplied, their types, explanation of the types with diagrams.

Q.No:9 (a) Student will have to explain the law of returns to scale.

(b)(i)
Combination Labour(L) Capital(K) MRTSLK MRTSKL
A 10 20 - -
B 15 19 1/5 5/1
C 19 18 1/4 4/1
D 22 17 1/3 3/1
(ii) Students will have to explain the increasing returns to scale and constant returns
to scale with help of suitable diagrams.

(a) Students will have to explain short-run equilibrium of a firm under

perfectly competitive market with suitable diagrams.
(b) (i) P/V ratio = 50% (% change in profit/ % change in sales)
(ii) Fixed cost = 75,000 (sales* P/V ratio)-Profit
(iii) V2010 = 1,25,000 (1-p/v) Sales
 (iv) BES = 1,50,000 (Fixed cost / p/v ratio)
(v) MS2011 = 1,40,000 (Sales-Break even sales)
(vi) 2,10,000

End of year Depreciation Book value

0 -- 1,00,000
1 12,857.142 87,142.858
2 12,857.142 74,285.716
3 12,857.142 61,428.574
4 12,857.142 48,571.432
5 12,857.142 35,714.290
6 12,857.142 22,857.148
7 12,857.142 10,000.006
(a)

(b)

End of year Depreciation Book value

0 -- 2,00,000
1 40,000 1,60,000
2 32,000 1,28,000
3 25,600 1,02,400
4 20,480 81,920
5 16,384 65,536

Q.No:10 (a) NPW1(12%) = -51624.220

NPW2(12%) = -76,825.817
Project 1 will be selected as annual income from project 1 is higher than project 2.
(b) NAWA(20%) = 82,776.421
NAWB (20%) = 1,19,164.631
NAWC (20%) = 1,56,246.947
Alternative A will be selected as annual maintenance cost of alternative A is
highest than alternative B and C.
 (a) NFWA(15%) = 7,21,37,840
NFWB (15%) = 1,41,58,255
Alternative A will be selected as return from alternative A is more than alternative
B.

(b) NPVA1 = 2,52,817.915

NPVA2 = 4,54,696.525
As annual return from alternative A2 is more than alternative A1, alternative A2
will be selected.

(a)

End of Cash Years Cash Years

year inflow required inflow required
from from
machine machine
A(in ₹) B(in ₹)
1 50,000 1 90,000 1 Machine A will be
2 2,50,000 1 1,20,000 1 selected.
3 4,00,000 1 3,50,000 1
4 6,00,000 3,00,000/ 7,00,000 440000/7 (b) PWA(B) =
6,00,000 ,00,000 18,09,13,457.544
x12 = 6 x12 = 7.5 PWA(C) =
month = 8month 11,95,58,211.626
5 8,50,000 9,00,000
Total 3 years 6 3 years (B/C)A = 1.51
years month 8month
required PWB(B) =
27,38,13,450.289
PWB(C) = 17,93,37,317.439

(B/C)B = 1.52
Project B will be selected as B/C ratio of project B is more than project A.

Q.No:11 (a) Students will have to write definition of inflation and explain causes of 2x
inflation. 6
(b) GNPMP = 270 crore
NNPFC = 195 crore

(a) Students will have to explain the monetary policy of controlling inflation.
(b) GNPFC = 350 crore
NNPMP = 450 crore

(a) Students will have to explain the fiscal policy of controlling inflation.
(b) GNP = 5600 crore
NNP = 5520 crore