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JNTU B.Tech III ENGINEERING ECONOMICS AND ACCOUNTANCY Previous Question Paper (August - 2022 - R18)

B.Tech | III | III-I | R18 | August - 2022

Answer PaperPaper Code: 155BDMaximum Marks: 75Time: 3 Hours

Answer any five questions

All questions carry equal marks

Main

115 marks
a

State and briefly explain ‘Law of Supply’. What are the underlying assumptions?

7 marks

Answer

The Law of Supply states that, other factors remaining constant, there is a direct relationship between the price of a commodity and its quantity supplied. As the price of a good increases, the quantity supplied by producers increases, and as the price decreases, the quantity supplied decreases. This positive correlation exists because higher prices offer greater profit potential, incentivizing producers to increase output.

The law operates under the following assumptions:

  • The prices of factors of production (land, labor, capital) remain constant.
  • The state of technology remains unchanged.
  • The goals of the firm (e.g., profit maximization) do not change.
  • There are no changes in government policies like taxes or subsidies.
  • The prices of related goods remain constant.
  • Producers expect no future changes in the price of the commodity.
b

Explain briefly the following two methods of demand forecasting: i) Test marketing method and ii) Expert opinion method.

8 marks

Answer

Demand forecasting methods are essential for production planning and inventory management. Two prominent methods are:

  • Test Marketing Method: In this approach, a firm selects a sample market or a specific geographic area to launch a product on a trial basis. By observing actual consumer behavior, purchase patterns, and feedback in this controlled environment, the firm estimates the potential demand for the product on a larger scale. It is highly reliable as it relies on actual market data rather than hypothetical responses.
  • Expert Opinion Method: This is a qualitative technique where the firm consults industry experts, sales representatives, or consultants who possess deep knowledge of market trends and consumer behavior. These experts provide subjective estimates based on their experience and intuition. A popular variation is the Delphi Method, which involves multiple rounds of anonymous surveys to reach a consensus among experts, helping to mitigate individual biases.
215 marks
a

What is the nature and scope of engineering economics?

7 marks

Answer

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b

Demand function ‘D’ for coconut oil in a day in a town is given as below:

D = 1450 – 2.5 P

where P is the price per kilogram. At what price, the demand would be zero? Also determine demand at price of Rs. 400, 450 and 500 per kg.

8 marks

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315 marks
a

What is meant by inflation? What are its effect on economy?

8 marks

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b

Bring out the major changes in our country’s trade policy effected since 1991.

7 marks

Answer

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415 marks
a

What is GDP? What is National Income (NI)? What is the difference between GDP and NI?

7 marks

Answer

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b

How does macroeconomics differ from microeconomics? Briefly explain.

8 marks

Answer

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515 marks
a

Define Profitability Index. What is the criteria for accepting or rejecting the project proposal based on Profitability Index?

6 marks

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b

What is the nature of capital budgeting? Explain its significance.

9 marks

Answer

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6

Two investment proposals with the same initial investment of Rs. 72,00,000 has the following returns after depreciation of 10 percent on machineries.

DescriptionProposal IProposal II
Return at the end of I yearRs. 40,00,000Rs. 45,00,000
II yearRs. 30,00,000Rs. 25,00,000
III yearRs. 25,00,000Rs. 26,00,000
IV yearRs. 32,00,000Rs. 34,00,000

Calculate the a) payback period and b) ARR for both the projects.

15 marks

Answer

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715 marks
a

Explain operating leverage and the degree of operating leverage. How are they related?

7 marks

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b

What are the advantages and disadvantages of debt financing?

8 marks

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815 marks
a

What are the rules governing the entries to Personal, Real and Nominal accounts?

7 marks

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b

Give three examples each for Personal, Real and Nominal accounts.

8 marks

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