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Business Economics-NMIMS Dec-16

Business Economics-NMIMS Dec-16

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Q1. Long run average cost curve is “U” shaped. Discuss the factors influencing the shape of long run average cost curve. Do you agree with the statement that LAC curve is often found to have a nearly flat bottom and to be L-shaped rather than U-shaped? Substantiate your answer. (10 Marks)

Q2. Oligopoly is a “competition among few”. Explain the features and pricing strategy among the oligopolistic firms. Also apply the concept of Cartel in case of De Beers and OPEC. (10 Marks)

Q3. Read the caselet and answer the questions given below.

The annual Report of National Food Survey Committee has estimated the price elasticity of demand for different food items in the UK.

Commodity Elasticity
Cheese 1.20
Bread 0.09
Meat 1.37
Potatoes 0.21
Frozen Peas 1.12

 

  1. From the price elasticity values, which of the above commodities are essential for the people in UK? Explain in detail why? And from price elasticity values, which of the above commodities are non-essential for the people in UK? Why? Explain in detail. (5 Marks)
  2. As a result of a change in the price of product X from Rs. 40 per unit to Rs. 45 per unit, total supply of product has changed from 1,000 units to 1,200 units. Calculate elasticity of supply and comment on your answer. (5 Marks)
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