Course: Business Economics

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NMIMS Global Access

School for Continuing Education (NGA-SCE)

Course: Business Economics

Internal Assignment Applicable for June 2016 Examination

Assignment Marks: 30

Instructions:

·         All Questions carry equal marks.

·         All Questions are compulsory

·         All answers to be explained in not more than 1000 words for question 1 and 2 and for question 3in not more than 500 words for each subsection. Use relevant examples, illustrations as far aspossible.

·         All answers to be written individually. Discussion and group work is not advisable.

·         Students are free to refer to any books/reference material/website/internet for attempting theirassignments, but are not allowed to copy the matter as it is from the source of reference.

·         Students should write the assignment in their own words. Copying of assignments from otherstudents is not allowed.

Question. 1. Long run cost structure of a firm is influenced by many factors, some of which are beyond the control of a manager of firm. Discuss why the long run average cost curve is U-shaped by bringing about the importance of scale economies and diseconomies. (10 Marks)

Answer:In Fig. 19.7, we have drawn the long-run normal cost bend as having an around U-shape. It is by and large accepted by financial experts that the long-run normal cost bend is regularly U formed, that is, the long-run normal cost bend first decays as yield is expanded and after that past a specific point it rises. Presently, what is the best possible clarification of such conduct of the long-run normal cost bend?

Question.2. Perfect competition and monopoly are two extremes of market structure. Evaluate the statement by analyzing contrasting features and equilibrium price and quantity determination process under these two types of market. Illustrate your discussion with the help of real world examples. (10 Marks)

Answer:A business sector can be organized distinctively relying upon the attributes of competition inside that market. At one compelling is impeccable competition. In a splendidly focused business sector, there are numerous makers and shoppers, no hindrances to enter and leave the business sector, flawlessly homogeneous products, immaculate data, and very much characterized property rights. This delivers a framework in which no individual monetary on-screen character can influence the cost of a decent - as it were, makers are value takers that can pick the amount to create, however not the cost at which they can offer their yield. Truly there are couple of commercial ventures that are genuinely impeccably focused, yet some come close. For instance, item markets, (for example, coal or copper) regularly have

Question.3. a).Other things remaining the same, what would happen to the supply of a commodity if the following changes occur? Illustrate your answers with the help of diagram. (5 marks)

1. The price of commodity decreases.

2. A technological breakthrough helps in producing a commodity at a cheaper cost.

3. Price of inputs to produce that commodity increases.

4. Price of substitute increases.

5. Manager of the product expects the price of that product to rise in future.

Answer:Cost of a commodity is dictated by the interest for and supply of a commodity. The concept of interest as indicated by which the interest for a commodity is contrarily identified with its cost. Supply of a commodity relies on how the physical returns and costs change as more yield of a product is produced. We are presently to clarify the concept of supply and the idea of versatility of supply.

The Meaning of Supply: As interest is characterized as a calendar of the amounts of good that will be obtained at different costs, also the supply alludes to the timetable of the amounts of a decent that will be offered at deal at different costs. To be more

3.b. For the following situations, calculate elasticity of demand and comment on the answer.(5 marks)

Answer:Price elasticity of demand (PED or Ed) is a measure utilized as a part of financial aspects to demonstrate the responsiveness, or versatility, of the amount requested of a decent or administration to an adjustment in its cost, ceteris paribus. All the more exactly, it gives the rate change in amount requested in light of a one percent change in cost (ceteris paribus)

Price flexibilities are quite often negative, in spite of the fact that investigators have a tendency to overlook the sign despite the fact that this can prompt vagueness. Just products which don't adjust to the law of demand, for example, Veblen and Giffen merchandise, have a positive PED. All in all, the demand for a decent is said to be inelastic (or generally inelastic) when the PED is short of what one (in outright esteem): that is, changes in

1. When the price of commodity X was Rs. 12/-, 40 units it were demanded. When the price decreased to Rs. 6/-, 50 unit are demanded. Find price elasticity of demand and comment on the answer.

Answer:Income elasticities of interest can be utilized as a pointer of industry wellbeing, future utilization designs and as a manual for firm’s speculation choices. For instance, the "chosen wage flexibilities" beneath recommend that an expanding part of purchaser's financial plans will be dedicated to obtaining autos and eatery dinners and a littler offer to tobacco and margarine.

Income elasticities are firmly identified with the populace pay dispersion and the part of the item's business owing to purchasers from various levels of

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