Roll Number:

Thapar University Patiala

School of Humanities & Social Sciences
Auxiliary Examination , 21" July , 2016 UHU-081: Engineering Economics
Time: 3 Hours; MM: 100 Name of Faculty: Dr. R.K. Sharma & Dr. A.N.
Sah, S.C. Bose, Kuldeep Walia
Note: Attempt all Questions.
Instructions:
• All the sub parts of respective question must be attempted in sequence.

Q.1 (a) What is elasticity? Discuss various types of elasticity. Also discuss the importance of
elasticity.
b) Cash flows for two mutuall ex lu ive
y
, c s ..... ■ •■•••■•••■••• .
(10)
Year 0 1 2 3
-10000 1000 6000 8000
-10000 7000 5000 2000

Both projects have a cost of capital of 12%.

I. Calculate the payback for both projects.
II. Calculate the_NPV for both projects.
III. Calculate the IRR for both projects.
.2 (a) Distinguish between perfect competition and monopolistic competition. (5)
(b) In a correlation study,the follow ,values _ obtained•
______. (2*3)
X Y
Mean 86 90
S.D 3.5 4.5
o-efficient of correlation = 0 78
I. Find the two regression equations that are associated with the above values.
II. Estimate the value of Y if X=80
III. Estimate the value of X if Y=95

(c) What is inflation? Distinguish between cost-push inflation and demand-pull inflation. (5)
What are the various measures taken by the government to control inflation?
Q.3 (a) Is there any difference between change in quantity demanded and change in demand?
Explain. (7)
b) Consider the following data on net profit (Rs.Cr) and sales turnover (Rs. Cr.) (3 *3)
Net Profit: 34.12 56.45 67.34 82.14 102.05
Sales Turnover: 280 320 300 405 460
a) Fit a regression model assuming linear relationship between net profit and sales
turnover.
b) Interpret the intercept and slope coefficient.
c) What is the predicted net profit when sales is Rs 400?
-Q.4 (a) Explain the kinked demand curve model and show that price once determined under
(8)
oligopoly does not change even if MC changes within a range.
(b) A firm's books of accounts provide the following data regarding sales and cost: (4 2)
Estimated Sales are 25,000 units
Estimated Cost:
Material cost Rs 6.00
Labour Cost _ Rs 4.00
Factory Expenses Rs 18,000 per annum
Legal and Audit Charges Rs 7,000 per annum
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 Profit per unit is Re 1. If the Selling expense is 20% of sales, calculate:
I. Selling Price of the Product.
II. Breakeven sales in terms of Rupees and units.
.5 (a)
What Isoquant? Write the properties of isoquant. Explain the producer's equilibrium?
(b)
An instruments limited company estimates its total cost (T.C.) of manufacturing total (8)
output 'Q' per month as: T.C.= 180 + 30Q — 10Q2 + Q
3. Determine the
Cost, Total Cost, Average Fixed Cost, Average Variable Cost, Average Cost, Variable
Cost incurred and graphically illustrate them when :- Total Marginal

Total output (Q)

100
(c)
Bata India manufactures shoes for export. The production function is TP = 30L — L If
Bata would like to achieve the highest possible APL what is the labor to be employed? (5)
I.
What can be the Average Productivity of Labor (APL) when labor employed is
6.5?
II.
What is the Marginal Productivity of Labor (MPL) when the Average Productivity
of Labor APL is maximum?
a) 'There is no bifurcation of costs in the long-run.' Substantiate.

(b) What is price discrimination? What are its objectives? Discuss the different degrees of
price discrimination. (5)
c) A monopoly firm sell its product in two markets —Domestic Market and Foreign Market.
The price functions for the two markets are given as follows: (8)
131=500-Q1
P2=300-Q2
The monopoly firm's total cost function is given as
TC=50000+l 00Q
Find the following:
I. Profit maximizing output
II. Allocation ofoutput between two markets
III. Equilibrium price of each market
IV. Total rofit at rofit maximizin • ou u

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