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Business Economics-NMIMS-June-17

Business Economics-NMIMS-June-17

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Q1. Analyse various factors influencing the demand for a commodity. Which of these factors will particularly influence demand for the following commodities? Why? a) Ice-cream b) Sugar c) Pen d) Designer Jean (10 Marks)


Q2. What do you mean by Monopolistic competition as a common type of market? Discuss two important features of monopolistically competitive market – product differentiation and selling cost by taking real world cases. Also discuss how these two features have an influence over the demand for products under monopolistic competition. (10 Marks)


Q3. Read the paragraph below and answer the question given at the end of the paragraph.


a. According to a study of a rental market for VCDs, the price elasticity of demand for VCDs rental is 0.7. It means, 10% increase in the price of rentals, leads to 7% fall in the demand. This further means, the demand for VCD’s on rental is price inelastic. Mr. Jagjit, who is in the business of VCD rentals, increases the rentals by 25% on the basis of the information made available by the study, with expectation of raising the revenue. But contrary to his expectation, his revenue in fact has decreased. What is the mystery? (5 Marks)


b. Business cartels are the unique feature of oligopoly. Explain the nature and working of cartels with the help of an example of OPEC as an international cartel. (5 Marks)

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