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Thapar University, Patiala

School of Humanities & Social Sciences
Mid Semester Examination
B.E. (Fourth Year), Semester-VIII (MEE,ELE,MPE) Course Code: UHU081
Course Name: Engineering Economics
September 20, 2017 Wednesday, 10.30 — 12.30 Hrs
Time: 2 Hours, M. Marks: 30 Name of Faculty: RKS, SCB, ANS, SC
Instruction: Attempt all question in proper sequence.

Q.1 Explain how engineering economics is similar to and different from microeconomics. (3)
Q.2 Explain why the concept of scarcity is central to the study of economics. (2)
Q.2 What are the different kinds of demand elasticities? Briefly discuss the various methods (4)
to measure price elasticity of demand.
Q.3 PK Corp estimates that its demand function is as follows: (2+2+2)
Q=5.4P10.8A+2.8Y-1.2P*
where
Q=quantity demanded per month (in 1000s)
P=price of the product (in Rs.)
A=firm's advertising expenditure (in Rs. thousand per month)
Y=per capita disposable income (in Rs. thousand per month)
P* =price of product of BJ Corp (in Rs.)
1. I I next year PK intends to charge Rs. 15 and spend Rs 10,000 per month on
promotional activities, while it believes per capita income will be Rs 12,000 and
Bis price will be Rs 3, calculate the Price elasticity, income elasticity & cross
elasticity of demand. What does this tell you about the nature of PK's product?
II. During the next five years, per capita disposable income is expected to increase
by Rs. 2,500. What effect will this have on the firm's sales?
If PK wants to raise its price by enough to offset the effect of the increase in
income, by how much must it raise its price?
Q.4 What is the purpose of demand forecasting? Distinguish between survey techniques & (1+1+2)
non survey techniques. Discuss in detail the different time series techniques of
forecasting.
Q.5 A market trader sells ball point pen on his stall, he sells pen for different fixed price, in (2+2+1+1)
each of six weeks. He notes the number of pens that he sells in each of these six weeks.
The results are shown in the followin table 1:
Price (Rs) 10 15 20 I 25 30 35
Quantity ofpens 68 60, 55 1 48 38 32
I. Calculate the regression equation price to quantity of pens.
II. Calculate the regression equation quantity of pens to price.
III. Find out the expected quantity to be sold, if he desires to get price of Rs.27.
IV. If he desires to sell 80 pens in a week, than find out what will be expected price?
Q.6 In a year number of cars sold decreased by 20% during the year, prices of cars increased (1+2+2)
by 5%, per capita income declined by 2% and price of petrol increased by 10% income
elasticity of demand for cars is estimated to be +1.5 and cross price elasticity of petrol
and cars is estimated to be —0.30.
I. What is the impact of decline in per capita income on the demand for cars?
II. What is the impact of increase in price of petrol on the demand for cars?
III. If sales decline because of increase in petrol and decrease in income are 3% and
3% respectively, what would be the price electricity of demand for cars?

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