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# Roll Number:

## Thapar University, Patiala

School of Humanities & Social Sciences
Mid Semester Examination
13. E. (Fourth Year) Semester-VW Course Code: UHU-081
(CIE,CHE,MEE & BT) Course Name: Engineering Economics
BE (Third Year): Semester-VI
(COE)
BE (Second Year): Semester-IV
(ECE)
March 16, 2016 Wednesday, 10.30 — 12.30 Hrs
Time: 2 Hours, M. Marks: 30 Name Of Faculty: SCB,RKS,ANS & KW

Instruction: All questions are compulsory. Attempt all sub parts of question at one place.

Q.1 (a) Explain why the concept of scarcity is central to the study of economics. (2.5)
(b) What is economics? Why should engineers study economics? (2.5)

Q.2 (a) Define. elasticity of demand and analyze factors determining elasticity of demand (3)
and some practical applications of elasticity of demand.
(b) The market research department of Paradox Enterprises has determined that the (4)
demand foi- fingolds is Q= 1,000 - 5P + 0.05I - 50Pz,
Where P is the price, 1 is income, and Pz is the price of substitute or complementary
product. Suppose that P = \$5, I = \$20,000, and Pz = \$.15.
i. Compute the price elasticity of demand for fingolds.
ii. Is the firm maximizing its total revenue at P = \$5. If not, what price should it
charge?
iii. At P = \$5, compute the income elasticity of demand forfingolds.
iv. At P = \$5, compute the cross-price elasticity of demand for fingolds.
(c) The market demand and supply equations fora product are (3)
QD =300-3P
Qs. 100+5P
Where Q is quantity and P is price.
i. What are the equilibrium price and quantity for this•product?
Suppose that an increase in consumer income/ resulted in the new 'demand
equation •
QD= 420-3P
ii. What are the new equilibrium price and quantity for this product?
iii. Suppose the government enacts legislation that imposes a price ceiling
equivalent to the original equilibrium price. What is the result of this
legislation?

Q.3 (a) Briefly dis'cuss delphi technique & end use method of demand forecasting. (3)
bl Following information related to product X : (4)
Years 2001. 2002 2003 2004 2005 2006 - 2007 2008 2009 2010
Price 23 28 15 14 ' 30 • 19 33 29 34 45
Sales in 11 9 16 23 7 14 6 12 8 4
lacs

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Estimate demand for 2011 if projected price is Rs. 37
Estimate Price for 2011 if projected demand is Rs. 23 Lacs

Q.4 (a) Suppose that .output is a flinction of labor and capital. Assume that labor is the (4)
variable input and capital is the fixediinput. Explain the law of diminishing marginal
product. How is the law of diminishing marginal product reflected in the total product of
labor curve?
(b) The average product of labor is given by the equation (4)
• APE_ =600+200L-L2
i. What is the equation for the total product of labor (TPL)?
ii. What is the equation for the marginal product of labor (MPL)?
iii. Find out labour units where TPL will be maximum.
iv.. Fin,d out labour units where APL will be maximum.

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