Course: Business Economics

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NMIMS Global Access

School for Continuing Education (NGA-SCE)

Course: Business Economics

Internal Assignment Applicable for December 2015 Examination

Assignment Marks: 30

Instructions:

·         All Questions carry equal marks.

·         All Questions are compulsory

·         All answers to be explained in not more than 1000 words for question 1 and 2 and for question 3in not more than 500 words for each subsection. Use relevant examples, illustrations as far aspossible.

·         All answers to be written individually. Discussion and group work is not advisable.

·         Students are free to refer to any books/reference material/website/internet for attempting theirassignments, but are not allowed to copy the matter as it is from the source of reference.

·         Students should write the assignment in their own words. Copying of assignments from otherstudents is not allowed.

Question. 1. Distinguish between by giving examples

a) Inferior Good and Normal Good

b) Income Effect and Substitution Effect

c) Shift in Supply Curve and Movement along Supply Curve.

d) Elastic and Inelastic Demand

Answer:a) Inferior Good and Normal Good

Goods are classified in various types but to be specific, there are three types of goods which are known as Superior Goods, Normal Goods and Inferior Goods. Here, we will discuss about the major aspects that makes Inferior Good different from Normal Good.

Normal Goods-These goods are classified as Pulses and Spices and therefore it increases the demand when

b) Income Effect and Substitution Effect

The Substitution Effect:The principal component clarifying expansion in consumption when price falls down is known as the substitution impact. The substitution impact means the substitution of one item for another resultfrom an adjustment in their relative cost.

Example: A lower cost of good X, with the costs of different products staying unchanged, will automatically increase

c) Shift in Supply Curve and Movement along Supply Curve.

Supply curve Movement happens because of the demand curveshift. Supply curve shift causes the demand curve movement.

A movement along the supply curve is only an adjustment in cost and the relating amount requested at that cost. A movem

d) Elastic and Inelastic Demand

Elastic demand implies that the sum or quantity of a specific item changes in substantial measure when the cost of the item changes, especially when the rate of the progress in the quantity of the item is being demanded is more prominent

Question.2. Differentiate between the Laws of returns to variable proportions and Laws of returns toScale.

Answer:When we talk about the main differences between Laws of returns to variable proportions and Laws of returns to Scale then there are many things to point out but to be specific and clear on the point, here I am sharing few most common factors that makes these two laws different from each other.

Question.3. a)Complete the following table and comment of the behavior of:-

·       Average Fixed Cost

·       Marginal Cost

·       Average Cost

Answer:

b) Can a monopolist incur losses in the short run? Explain how, with the help of example.

Answer:The market is considered complete with the presence of monopoly because it drives many changes and development to the business sectors. When we talk about the monopoly then we should know that monopoly exists only when any specific firm or person is the sole supplier of any specific particular commodity contrasts with another monopsony. It relates to the control of specific single entity of market for the purpose of purchasing services or goods. Therefore, Monopolies are classified by the deficiency of

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