Jawaharlal Nehru Technological University Hyderabad
Jawaharlal Nehru Technological University Hyderabad B.Tech II Year Managerial Economics and Financial Analysis Previous Question Paper (November/December - 2020 - R15)
Answer any Five Questions. All Questions Carry Equal Marks.
Main
Explain Law of demand and its exceptions.
Answer
The Law of Demand states that, other things remaining constant (ceteris paribus), there is an inverse relationship between the price of a commodity and the quantity demanded. As the price of a good rises, the quantity demanded falls, and as the price falls, the quantity demanded rises, resulting in a downward-sloping demand curve.
Exceptions to the Law of Demand occur when the demand curve slopes upward, meaning more is bought at higher prices. These include:
- Giffen Goods: Highly inferior goods where the negative income effect outweighs the substitution effect, causing demand to fall as price decreases.
- Veblen Goods (Conspicuous Consumption): Luxury items like diamonds or designer goods where high prices serve as a status symbol, increasing demand as prices rise.
- Speculation: If consumers expect prices to rise further in the future, they may buy more now despite current price increases.
- Ignorance: Consumers may incorrectly perceive a higher-priced product as being of superior quality.
Define elasticity of demand and its types.
Answer
Elasticity of demand measures the responsiveness of the quantity demanded of a good to a change in one of its determinants, such as price, income, or the price of related goods. It is expressed as the percentage change in quantity demanded divided by the percentage change in the determinant.
The main types of elasticity of demand are:
- Price Elasticity of Demand (PED): Measures the sensitivity of quantity demanded to a change in the price of the good itself.
- Income Elasticity of Demand (YED): Measures how quantity demanded changes in response to a change in consumer income.
- Cross Elasticity of Demand (XED): Measures the responsiveness of the quantity demanded of one good to a change in the price of another related good (substitutes or complements).
- Advertising Elasticity of Demand: Measures the responsiveness of demand to changes in advertising expenditure.
Draw a ‘breakeven chart’ and mark its components.
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Describe the uses and application value of Break-even analysis.
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Explain Price and output determination under monopoly.
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ABC Ltd. Proposes to acquire a machine per Rs. 6,00,000. Details are as follows:
Life of the machine = 4 years; Salvage value = Rs. 1,00,000; Income per annum before depreciation and tax = Rs. 4,00,000; Tax rate = 50%; Cost of capital = 20%.
| Years | P.V. Factors |
|---|---|
| 1 | 0.833 |
| 2 | 0.694 |
| 3 | 0.579 |
| 4 | 0.482 |
Compute the Net Present Value of the machine.
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Give different formulae to compute solvency and profitability ratios.
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Project A requires an investment of Rs. 5,00,000 and has a scrap value of Rs. 20,000 after five years. It is expected to yield profits after depreciation and taxes during the five years amounting to Rs. 40,000, Rs. 60,000, Rs. 70,000, Rs. 50,000, Rs. 20,000 respectively. Calculate the Accounting Rate of Return (ARR).
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Explain any four accounting concepts and conventions.
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Write short notes on:
Sole Proprietor Vs Partnership
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Monopolistic Competition.
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