Business Economics — DU B.Com. (Hons.) Previous Year Question Papers

1. (a) "A sound understanding of business economics fosters analytical and decision-making abilities that can be applied across various business situations". Discuss this statement in light of nature and significance of business economics. (9) (b) A clothing brand sells 1000 shirts at 7800 cach. After a discount, the price is reduced to 7700 and monthly sales increase to 1300 shirts. (9) (1) Calculate the price elasticity of demand using arc-elasticity method. (ii) Is the demand elastic or inelastic? (iIi) What pricing strategy should the firm adopt? Should the company continue to discount to maximize its total revenue? (d) How a production manager can apply the concepts and determinants of elasticity of supply to make effective production decisions? Discuss. (9) (b) With the help of suitable diagrams, explain the situations in which indifference curves are not convex to the origin. Discuss the relationship between the two goods in each of these cases. (c) A consumer has an income of 71800. The price of good X is 760 and the price of good Y is 790. (i) Find the intercepts and slope of the budget line. (ii) If the price of good X falls to 230, what happens to the budget line? (iii) Represent this change graphically and explain its economic meaning. (d) With the help suitable diagram, explain how a fall in price of normal good leads to increase in quantity demanded? Decompose this total effect into income and substitution effect. (9) 3. (a) Discuss the role of Isoquants and Isocost lines in determination of effective input combinations in the production process. (9) (b) Why Long-run Marginal Cost (LMC) curve is not considered an envelope curve, unlike the Long-run Average Cost (LAC) curve? Explain. (9) (d) Given the following data for a firm : (9) Output (Units) Total Cost (R) 100 150 190 230 280 350 (i) Calculate MC, AC and AFC at each level of output. (i) Identify the output level where MC=AC, and explain the economic significance of this point. 4. (a) Derive long-run supply curve of a decreasing cost industry under perfect competition, and explain its significance for rational business decision-making. (9) (b) Explain the short-run equilibrium conditions of'a monopolist using the marginal principle. Ilustrate your answer with suitable diagrams showing possible (9) cases of supernormal profits, breakeven point and losses. (c) Critically analyse the long-run equilibrium under monopolistic competition with the special reference to the problem of excess capacity. How does it differ from long-run equilibrium under perfect competition? (9) 5. (a) Describe how the labour supply curve may become backward bending as wage increase? Explain the income and substitution effects responsible for this behaviour. (9) (b) Write short note on : (9) (i) Collusive v/s non-collusive oligopoly (ii) Excess capacity (d) Write short note on : (9) (1) Minimum wages (ii) Nash Equilibrium (6) le fa le de la del de te bal belle (6) Insib el fs t te ban segtee bye (6)