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:The curve on the left is an association's short-run normal aggregate cost curve. The one on the privilege speaks to an association's for quite some time run normal aggregate cost curve. See the distinction?

I didn't think so. The state of a regular company's short-run and long-run ATC curves might be indistinguishable. Be that as it may, there are some essential contrasts to comprehend about the short-run costs and long-run costs confronted by firms.

The Short-Run: In microeconomics, we characterize the short-keep running as the timeframe over which a company's plant size is altered. The main variable asset is work and crude materials, implying that when request increments for a company's item, the firm can build representative work hours, employ more specialists and utilize existing capital all the more seriously, yet it doesn't have sufficient energy to gain new capital or grow

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:Monopolies, rather than flawlessly focused markets, have high obstructions to passage and a solitary maker that goes about as a value creator.

Key Points

·         In an impeccably aggressive market, there are numerous makers and shoppers, no hindrances to exit and passage into the market, consummately homogenous products, immaculate data, and very much characterized property rights.

·         Perfectly aggressive makers are value takers that can pick the amount to deliver, however not the cost at which they can offer their yield.

·         A restraining infrastructure exists when there is stand out maker and numerous buyers.

·       Monopolies are portrayed by an absence of financial rivalry to deliver the great or benefit and an absence of suitable substitute

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:Demand Shifts: Demand Shiftscan be brought on by a wide assortment of components, yet to a great extent rotate around drivers of customer conduct and circumstances. Request moves can in this manner frequently be influenced by financial variables, for example, normal spending control per individual in a given economy or general normal pay. Request can likewise be influenced by social changes, demographic moves, accessibility of substitutes, ecological components and concerns (e.g. environmental change), legislative issues, and advances in science (e.g. declining interest for unfortunate sustenances

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

Answer:Concept Of Elasticity of interest Alfred Marshall presented the idea of flexibility in 1890 to quantify the extent of rate change in the amount requested of a thing to a specific rate change in its cost or the wage of the purchaser or in the costs of related merchandise .In this area, we take a gander at the affectability of interest for an item to a change in the item's own particular price.Since Price Elasticity of Demand is dominatingly utilized as a part of financial examination it is then again alluded to as Elasticity of Demand.

Definition: Price Elasticity of interest is the level of

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:  E.D =  X

Old price = Rs.12    Old demand = 40 Units

New Price= Rs.

2. When the income of a consumer was Rs. 24,000/-, he was demanding 20 units of a commodity. Now his income has gone up to Rs. 28,000/- and the demand for the same product has gone down to 15 units. Calculate income elasticity of demand and comment on the answer.

Answer: Answer-

X  = Income Elasticity

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