BCom FY BCom Sem 2 BCom Sem 2 (2017 2018) Oct 2018 BUS.ECONOMICS Question Paper - Mumbai University | munotes

Questions asked in this paper

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1. Q2 All questions have internal choice
2. Q4 Use of simple calculator is permitted
3. Q5 Figures to the right indicate full marks
4. Q1 (A) Select the best answer from the given options and rewrite the statement. Any Ten. 10 marks
   • (i) | Perfectly competitive firms are described as
   • (ii) The zero profit point will occur where
   • (iii) | Under imperfect competition producers face demand curve for their products
   • (a) a horizontal (b) an upward sloping
   • (iv) Cartels are
   • (a) organization of independent firms, producing similar products, that work together to raise prices and restrict output
   • (b) usually illegal
   • (d) all of the above Amonopolistically competitive firm earns supernormal profits in the short run
   • (a) product differentiation (b) free entry and exit of firms
   • (vi) firm in monopolistic competition
   • (a) considers reactions of rival firms (b) colludes with others
   • (c) has market sharing agreements (d) decides its own price
   • (vii) cost pricing can be adopted by
   • (c) both (a) and (b) (d) none of the above
   • Q.P. Code : 04845
   • (viii) Transfer pricing has gained significant importance with the growth
   • (c) mergers (d) none of the above
   • (ix) is an advantage of mark-up pricing
   • (c) both (d) none of the above
   • (x) Capital expenditure decisions are irreversible because
   • (a) of absence of second hand markets
   • (b) fluctuation in rate of interest
   • (c) profit of capital assets is difficult to estimate
   • (d) none of the above
   • (xi) Payback period method focusses on
   • (a) rate of profit (b) rate of interest
   • (c) innovation (d) none of the above
   • (xii) A project is profitable if its NPV is
   • (a) positive (b) negative
   • (c) zero (d) all of the above
5. Q1 (B) State whether the following statements are True or False. Any Ten 10 marks
   • (i) | Under perfect competition goods are homogeneous
   • (ii) in equilibrium at that level of output where MC = MR
   • (iii) Undermonopoly AR and MR curves are identical and horizontal straight lines
   • (iv) | Amonopolistically competitive firm produces with excess capacity
   • (v) Under monopolistic competition goods have no close substitutes
   • (vi) A cartel operates on the basis of an agreement on price and output among
   • (vii) Public sector units often charge prices equal to their marginal cost
   • (viii) discrimination is always possible and profitable Cost plus pricing is also known as mark-up pricing
   • (xi) According to the IRR method a project is accepted if IRR> market rate of interest
   • (xii) NPV is based on the principle of discounting
6. Q2 Attempt A and B OR Cand D
   • (A) . Discuss the features of perfect competition. 8
   • (B) Explain equilibrium of a firm in monopoly in the long run. 7 Define monopoly. Explain the sources of monopoly power. 8
   • (D) Read the following paragraph and answer the questions below: 7 There are many farmers who grow basmati rice in India. No single farmer is large enough to influence the price of basmati rice in the market. The quality of basmati rice is fairly homogeneous. Farmers are free to decide whether they want to produce basmati rice or any other crop
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   • (i) | Name the market structure being described in the paragraph above
   • (ii) | Examine the characteristic features of the market identified by you in question(i)
7. Q3 Attempt A and B OR C and D
   • (A) Examine the equilibrium of a firm in monopolistic competition in the short run. 8
   • (B) Explain the kinked demand curve model. 7
   • (C) Discuss the various forms of product differentiation and its effects on the demand curve. 8
   • (D) Read the following paragraph and answer the questions below: 7 A car manufacturer is aware of his rivalry with other few car manufacturers in the market Like the other car manufacturers he undertakes vigorous advertising campaigns to convince potential buyers of the superior quality and style of his cars. He reacts very quickly to claims of superiority by rivals. But he avoids cutting price as that would finally lead to losses for all concerned
   • i) the market structure being described in the paragraph above
   • ii) | Describe the characteristic features of the market identified by you in question (i)
8. Q4 Attempt A and B ORC and D
   • (A) Discuss the conditions under which price discrimination is possible. 8
   • (B) Explain the multiple product pricing method. 7
   • (C) Examine marginal cost pricing asa pricing method for public sector firms. Explain using a 8
   • (D) (i) Explain the merits and demerits of full cost pricing. 7
   • (ii) Assuming a desired mark-up of 15%, if average variable cost is = 55/- and the average fixed cost is = 15/-, calculate the full cost price of product C of firm Cracker
9. Q5 Attempt A and B ORC and D
   • (A) Explain the meaning and significance of capital budgeting. 8
   • (B) Examine the Net Present Value method of project evaluation. 7 Discuss the Internal Rate of Return (IRR) method of investment appraisal. 8
   • (D) The following table shows four projects with their initial investments and annual cash 7 inflows. Calculate the payback period for each project and rank them
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10. Q6 Attempt A and B OR Write short notes on any four:
    • (A) Analyze short run equilibrium of firms under perfect competition with 10
    • (B) Discuss in detail the arguments for and against advertising. 10
11. Q6 Write short notes :Any Four (iii) 20 marks
    • (iv) | Degrees of price discrimination
    • (v) pricing
    • (vi) in capital budgeting
    • Q.P. Code : 04845 (iv)
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    • (vi) sar (vii)
    • (viii) (sect)
    • (xi) era (xi)
    • (xii) ada Yes
    • (S) ad
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    • (ii) Mc) (ii) (vi)
    • (viii) Fea
    • (xi) (IRR)
    • (xii) (Discounts
12. Q2 H al Sat
    • (3) Sat ferer
13. Q3 ar sat
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    • (3) sat
    • Q.P. Code : 04845
    • (3) ART. 20

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