# BUSINESS ECONOMICS Model Question Paper

APJ Abdul Kalam Technological University

### Model Question PaperHS200 BUSINESS ECONOMICS

Part A

1. a.  Discuss the scope of Business Economics.
b.  Is usefulness same as Utility? Justify your answer with examples.

2. a. With the help of a suitable diagram explain Production Possibility Curve.
b. What do you understand by i. Veblen Effect ii. Griffen’s Paradox

3. a. If you are the Finance Minister, for which item,   eg. Perfectly Elastic or Perfectly Inelastic item will you increase tax to ensure additional revenue. Why?

b. Discuss Variable Proportion Production. How is it different from Fixed          Proportion Production?

4.    Suppose the production function is Y = 2K1/4L3/4 and K = L = 1. How much output is produced? If we reduced L by 10%, how much would K need to be increased to produce the same output?

Part B

5.  The owner of Old-fashioned Berry Pies is thinking of adding a new line of pies  which require leasing new equipment for a monthly payment of \$6000. Variable costs would be \$2 per pie and retail price per pie is \$7.

a. How many pies must be sold in order to break even?

b. What would be the profit  (or loss) if  1000 pies are made and sold out in a month?

c. How many pies must be sold to realize a profit of \$4000?

d. If 2000 can be sold and a profit target is \$5000, what price should be charged per pie?

6.  Discuss the following:

a. Features of Monopolistic Competition.       b. Oligopoly

7.  Explain how RBI controls inflation.

8.  With the help of a diagram, explain two sector model for circular flow of money.

Part C

9. Discuss the classification of investment analysis techniques and popular methods under each. 10. Initial outlay for each of the following projects is Rs. 15,000 & standard payback is 3 years. Evaluate the projects and rank them based on payback period.

Year    Project A        Project B     Project C     Project D

1         5000                 3500           2500           8000
2         5000                 4000           2500           6000
3         5000                 4500           2500           6000
4         5000                 6000           2500           5000
5         5000                 6000           2500           5000

11. Discuss the advantages and disadvantages of IRR over NPV.

12. a. State the Accounting Equation and explain its term
b. Explain the usefulness of Balance Sheet.

13. Explain the terms
a. Associative Forecasting
b. Delphi Technique

14. Develop a trend equation for the following data and predict the sales in the 7th Week

T y        Week Sales

1                150
2                157
3                162
4                166
5                177