1/GCE—76 (i) (Syllabus-2009) 2010 COMMERCE Paper : BC-102 { Business Economics ) Full Marks : 100 Time : 3 hours ( PART : B—DESCRIPTIVE ) ( Marks : 60 ) The figures in the margin indicate full marks for the questions _ Answer three questions, including Question No. 1 which is compulsory 1. Define Business Economics. Discuss the applications of business economics to the practical problems of a business firm. 5+15=20 Or Discuss the role ,and responsibility of a managerial economist. 10+10=20 . bee 2. What is demand forecasting? What are various methods of demand forecasting? ip Outline various variables which you would consider to forecast the demand for a consumer durable commodity like a scooter. . 4+6+10=20 OD—2700/994a ( Turn Over )(2) i | 3. What is a production function? Using the | isoquant map and isocost line, determine the least cost input combination for a firm. 5+15=J j 4. Explain, with illustration, the salient features of the LAC curve and bring out its usefulness in business decision-making. Why is it known } as the planning curve? 14+6=1} | 5. What is monopolistic competition? Illustrate the determination of equilibrium price and output under monopolistic competition in the short run, In what way is the firm’s long-run equilibrium different from its short-run eeeetemneemaintiaaatieanas | equilibrium? 44+12+4=2 f kk | ; : 7 10D—2700/994a 1/GCE—76 (i) (Syllabus-20' i ee ee1/GCE—76 (i) (Syllabus-2009) 2010 COMMERCE Paper : BC-102 ( Business Economics ) ( PART : A—OBJECTIVE ) ( Marks : 40 ) The figures in the margin indicate full marks for the questions Answer all questions SECTION—I ( Marks : 20 ) 1. State whether the following statements are True (T) or False (F) by putting a Tick (/) mark in the brackets provided : 1x5=5 (a) Business Economics is essentially a study of macro-concepts. ( True / False ) (b) There cannot be a market without a place. ( True / False )(2) (3) (c) An individual demand curve marks the upper (b) Ina perfectly competitive market a firm will be limit of his/her intention to buy a commodity at different prices. . / (@) a price maker ( True / False ) (i) a price taker (d) For price discrimination to take place, market a segmentation is necessary. (ui) producing a product which will be different fi it i (True / False ) rom its competitors (wv) restricting freedom of entry into the market (e) Fixed costs remain constant regardless of ( ) changes in total output. ( True / False ) (c) A linear isoquant assumed 2. Choose the correct/most appropriate answer and put the code in the brackets provided : 1x10=10 () that K and L are perfect substitutes for one ‘ another (a) Which of the following gives a correct measure of price elasticity of demand? (i) that K and L are perfect copiplements for one another () (AP /AQ)-(P/Q) iii) limited i ili fil) (AQ / AP)-(P /Q) (iii) limited substitutability between K and L (iti) (AQ / AP)(O/P) (iv) oa ee substitutability between Le ad ; (iv) None of the above ( ) ( ) 1/GCE—76 {i s-2009)/994 i i(4) (d) Indifference curves are convex to the origin, because of ( (ii) (iii) (wv) diminishing marginal rate of substitution of commodities increasing marginal rate of substitution of commodities no possibility to make any substitution of commodities None of the above ( ) (e) When the total product increases at an increasing rate, then @ (ii) (iii) (iv) 1/GCE—76 (i) (Syllabus-2009)/994 average and marginal product increase at the same rate marginal product increases faster than the average product average product increases faster than the marginal product marginal product equals the average product ( ) (9) (h) (5) Demand for electricity is elastic, because () it is expensive (i) it has a number of close substitutes (ii) it has alternative uses (iv) it is a complementary good ( ) The distinction between the firm and industry disappears under the condition of (i) monopsony (ii) oligopoly (iii) monopoly (iv) duopoly ( ) In the cardinal utility approach to consumer behaviour, the marginal utility of money is assumed to be ~ (J) decreasing (@) increasing (wi) constant (w) decreasing and increasing ( )) @ (6) Under monopolistic competition it is assumed that (i) products are close substitutes but not perfect substitutes (ii) products are perfect substitutes (iii) there is only one variety of products and there is no substitute (iv) All of the above ( ) A firm earns a total revenue of Rs 500 by selling 10 units. Suppose the firm sells 11 units and earns a total revenue of Rs 520. The extra Rs 20 will constitute (i) marginal revenue (ii) average revenue (iii) total revenue fiv) price ( ) 3. Fill in the blanks with suitable words given in the brackets : (a) The curve tangent to the lower boundary of the family of short-run average cost curve is called (long-run average cost curve/long-run . marginal cost curve } 1/GCE—76 (i) (Syllabus—2009)/994 1x5=5 (b) () (a) (e) 1/GCE—76 (i) (Syllabus-2009)/994 ( B) The percentage change in the capital-labour ratio (K/L) divided by the percentage change in the marginal rate of technical substitution (MRTS) ig called 5....0.58........0s_ aoa ' (elasticity of substitution/ elasticity of demand ) Giffen goods are those goods for which demand when price increases. ( increases/decreases ) A kinked demand curve implies adios oa aces be llcatt dodlade y elasticity of demand. ( different/same ) Breakeven point for a firm takes place when - fotal reVEMUE. «J rccchadedaparbhediaiesees see total costs. . an ( equals/is greater ) i(8) SECTION—II ( Marks : 20 ) 4. Write short notes on the following in not more than 5 sentences each : 2x10=20 (a) Goals of a business firm 1/GCE—76 (i) (Syllabus-2009)/994 (b) Demand function 1/GCE—76 (i) (Syllabus-2009)/994 (9)( 10 ) (c) Properties of isoquants 1/GCE—76 (i) (Syllabus-2009)/994 (11) (d) Marginal rate of technical substitution 1/GCE—76 (i) (Syllabus-2009)/994 do}(12) (43) k oxi (e) Engineering costs curves @) Markup pricing 6 (i) (Syllabus-2009)/994 1/GCE—76 (i) (Syllabus-2009)/994 LGC E ea abs 20071(14 ) (g) Assumptions of the cardinal utility approach 1/GCE—76 (i) (Syllabus-2009)/994 ( 15 ) (h) Selling costs 1/GCE—76 (i) (Syllabus-2009)/994( 16 ) | (17) (ij) Perfect and imperfect competitions G) Product differentiation kkk 1/GCE—76 (i) (Syllabus-2009)/994 10D—2700/994 1/GCE—76 (i) (Syllabus-2009) Cl