Roll Number:

Thapar University, Patiala

School of Humanities & Social Sciences
Mid Semester Examination
B.E. (Fourth Year): Semester-VIII Course Code: UHU-081
(MEE,CIE,CHE & BT) Course Name: Engineering Economics

March 27, 2017 Monday, 13.00 —15.00 Hrs •

Time: 2 Hours, M. Marks: 30 Name of Faculty: RKS,SCB,ANS &KW

Instruction: Attempt all question in proper sequence.

Q.1 "Engineering economics is applied microeconomics". Elucidate. (3)
Q.2 What are the different kinds of demand elasticities? What useful information do these concepts (4)
of elasticities provide to management?
Q.3 The accompanying table .shows the price and yearly quantity sold of souvenir T-shirts in the (4)
articular town of Pun ab according to the average income of the tourists visiting.
Price of T-shirts (Rs.) Quantity of T-shirts demanded Quantity of T-shirts demanded
when average tourist income is when average tourist income is
Rs.8,00,000 Rs. 10,00,000
320 3000 5000
400 2400 4200
480 1600 3000
560 800 1800

(a) Using the midpoint method, calculate the price elasticity of demand when the price of a
T-shirt rises from Rs.400 to 480 and the average tourist income is Rs. 800,000. Also
calculate it when the average tourist income is Rs. 10, 00,000.
(b) Using the midpoint method, calculate the income elasticity of demand when the price of
a T-shirt is Rs. 320 and the average tourist income increases from Rs. 8„00,000 to Rs.
10,00,000. Also calculate it when the price is 560.
Q.4 What is the purpose of demand forecasting? What are the necessary steps that need to be taken (4)
for forecasting demand for a product?
Q.5 The accompanying table illustrates the number of movie theaters showing a popular film and the (6)
film's weekly ross earnings, in millions of dollars.
Number of Theatres (X) 443 455 493 590 657 723 1064 1000
Gross Earnings (Y) 2.57 2.65 3.73 4.05 4.76 4.80 5.15 4.90
(Millions of Dollars)

a) Write the linear regression equations for this set of data, rounding values to two decimal
places.
b) Using this linear regression equation, find the approximate gross earnings, in millions of
dollars, generated by 610 theatres. Round your answer to two decimal places.
c) Find the minimum number of theatres that would generate at least 7.65 million dollars in
gross earnings in one week.
Q 6 What is mean by isoquant? Discuss the different properties of iso quart. (4)
Q 7. Consider a firm with production function given by: (5)
Q=4G+2F
Where G is the amount of natural gas used and F is the amount of fuel oil used. The firm wants
to produce 20 units of output, and the current input prices are WG =3 , Wr=5
What choice of G and F minimizes the firm's costs? Show how you obtain your answer either
by using a diagram of an isoquant and isocosts or through mathematical expressions.

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Roll Number:
Thapar University, Patiala
School of Humanities & Social Sciences
Auxiliary Examination
B. E. Course Code: UHU-081
Course Name: Engineering Economics
March 10, 2017 Friday, 17.00 — 20.00 Hrs
Time: 3 Hours, M. Marks: 100 Name Of Faculty:
SCB,RKS,ANS,KW,SCH & SD

Instruction: Attempt all question in proper sequence.

Q1 (a) What is inflation? Discuss various types of inflation. Also discuss various measures to control (10)
inflation India.
(b) The ABC company is planning to undertake either project X or Y (2+8)
to expand its existing manufacturing information The following information are related
Two projects (P) & (Q).
You are required to calculate :
Year 0 1 2 3 4 5
Expected Net Project X (Rs.1500cr) 300cr 600cr 800cr 600cr 300cr
Cash Flow
Project Y (Rs.1500cr) 900cr 600cr 300cr 200cr 100cr
I.Payback period of both the projects ,
II. NPV and IRR of both the projects

Q2 (a) What is National Income? What are the various methods of estimating National Income? Also (10)
discuss the limitations of these methods?
(b) What do you mean by price discrimination? Discuss the necessary condition for price (10)
discrimination. Elaborate the different degrees of price discrimination
Q3 (a) Suppose that International Dynamo is a contractor in the oligopolistic aerospace industry. (10)
International Dynamo faces a "kinked" demand curve for its product, which is defined by the
equations:
Q1=200-2P & Q2=60-0.4P
Suppose further that International Dynamo has a constant marginal cost MC = $50.
I. Give the price and output level for International Dynamo's product.
II. Based on your answer to part a, what is International Dynamo's profit?
III. Determine the range of values within which marginal cost may vary without affecting the
prevailing market price and output level.
(b)A monopoly firm sells its product in two markets —Market-1 and Market -2. The price (10)
functions for the two markets are given as follows:
P1=500-Q1
P2=300-Q2
The monopoly firm's total cost function is given as
TC=50000+100Q
Find the following:
1. Profit maximizing output
II. Allocation of output between two markets
III. Equilibrium price of each market
IV. Total profit at profit maximizing output.
Q4 (a) Explain the kinked demand curve model and show that price once determined (10)
under oligopoly does not change even if MC changes within a range.
(b) 'Monopolistic firms behave like a monopoly in the short-run but like a perfectly (10)
competitive firm in the long run.' Comment.

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Q5 (a) Consider the following data: (10)
Income (Rs.Lacs): 4.6 4.08 2.87 3.37 3 2.73 3.17 2.1
Expenditure (Rs.Lacs) : 2.01 2.05 1.74 1.55 1.64 1.5 1.34 1.26
I. Estimate the regression line
II. Forecast the expenditure when income = 3

(a) BGJ Co has annual fixed costs of Rs. 1, 60,000, sales of 6000 units and a selling price of (10)
100. The company has earned profit of Rs. 1,40,000
I. What is Profit Volume ratio?
II. What is the Variable Cost?
III. What's the break-even point by volume and by value?
IV. Calculate the profit next year if sales rise to the budgeted level of 7500 units.
V. Calculate the next year sales if desired profit is Rs. 2,00,000

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