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JAIPUR NATIONAL UNIVERSITY, JAIPUR
School of Distance Education & Learning
Internal Assignment No. 1
Bachelor of Business Administration (BBA)-Retailing
Paper Code: BBA-105
Paper Title: Business Economics
Last date of submission: Max.marks:30
Note: Question No. 1 is of short answer type and is compulsory for all the students. It carries 1 Mark (Word limits 50-100)
Question. 1. Answer all the questions:
Question 1. Define Business Economics.
Answer: Business economics is an integral part of traditional economics and is an extension of economic concepts to the real business situations. It is an applied science in the sense of a tool of managerial decision-making and forward planning by management. In other words, business economics is concerned with the application of economic theory to business management. Business economics is based on
Question 2. Differentiate between positive and normative economics.
Answer: Positive Economics is a part of economics that contemplates the explanation and elucidation of economic occurrence. It concentrates on certainty and cause-and-effect behavioural association, and incorporates the development and trial of economics thesis.
It is the study of economics
Question 3. What is ordinal utility?
Answer: The Ordinal Utility approach is based on the fact that the utility of a commodity cannot be measured in absolute quantity, but however, it will be possible for a consumer to tell subjectively whether the commodity derives more or less or equal satisfaction when compared to another.
The modern economists have discarded the concept of cardinal utility and instead applied ordinal utility approach to study the behavior of the consumers. While the neo-classical economists believed that the utility can be measured and expressed in cardinal numbers, but the modern economists maintain that the utility being the
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Question 4. Explain the law of diminishing marginal utility?.
Answer: The law of diminishing marginal utility explains that as a person consumes an item or a product, the satisfaction or utility that they derive from the product wanes as they consume more and more of that product. For example, an individual might buy a certain type of chocolate for a while. Soon, they may buy less and
Question5. What is demand forecasting? Explain it.
Answer: Demand Forecasting refers to the process of predicting the future demand for the firm’s product. In other words, demand forecasting is comprised of a series of steps that involves the anticipation of demand for a
Question6. What is meant by production function?
Answer: The production function expresses a functional relationship between quantities of inputs and outputs it shows how and to what extent output changes with variations in inputs during a specified period of time. In the words of Stigler, The production function is the name given to the relationship between rates of input of productive services and the rate of output of product.It is the economist’s summary of technical
Question7. Explain the law of variable proportion.
Answer: Law of Variable Proportion is regarded as an important theory in Economics. It is referred to as the law which states that when the quantity of one factor of production is increased, while keeping all other factors constant, it will result in the decline of the marginal product of that factor.
Law of variable proportion
Question8. What is least cost combination?
Answer: A rational firm/producer seeks maximisation of profit.
For this, he tries to minimise its cost of For this, he tries to minimise its cost of production.production.
The cost is minimum, when input combination isThe cost is minimum, when input combination isoptimal.optimal.Optimal input combination indicates theOptimal input combination indicates themaximum returns to the
Question9. What are the types of market?
Answer: Perfect Competition with Infinite Buyers and Sellers:
Perfect competition is a market system characterized by many different buyers and sellers. In the classic theoretical definition of perfect competition, there are an infinite number of buyers and sellers. With so many market players, it is impossible for any one participant to alter the prevailing price in the market. If they attempt to do so, buyers and sellers have infinite alternatives to pursue.
Question10. Explain the Kinked demand curve
Answer: Kinked” demand curves and traditional demand curves are similar in that they are both downward-sloping. They are distinguished by a hypothesized concave bend with a discontinuity at the bend – the “kink.” Therefore, the first derivative point is undefined and leads to a jump discontinuity in the marginal
Note: Answer any four quetions. Each question carries 5 marks (Word limits 500)
Question 1. Differentiate between economics and Business Economics.
Answer: Economics is a part of the social sciences that studies human behaviour with regard to incentives or resources available. Economics studies the actions and decisions taken by the employees, firms, customers, individuals and governments and their impact on the larger economy.Business Economics is a part of the larger ecosystem for the exchange of goods and services are exchanged between two or more people
Question. 2. Explain the Hick’s theory of price effect.
Question 3. Explain the various types of elasticity of demand.
Answer: Demand extends or contracts respectively with a fall or rise in price. This quality of demand by virtue of which it changes (increases or decreases) when price changes (decreases or increases) is called Elasticity of Demand.The Elasticity of Demand measures the percentage change in quantity demanded for a
Question 4. Explain the Returns to Scale approach of Production function
Answer: The changes in output on account of the change in the factors of production in the same proportion are called the returns to scale. In the long run all the factors of production are variable and even the scale of production can be changed according to the demand for various goods and services in the economy. The returns to scale are concerned with long run production function. They are studied with the help of iso-product curves and iso-cost curves.
Question 5. Discuss the characteristics of Isoquants
Answer:.An isoquant shows various combinations of two factors that will enable a producer to produce a same level of output. In other words, each point of an isoquant will represent a technology and as we move from one point to another on an isoquant we switch across technologies.
An isoquant, therefore, depicts all the technological possibilities graphically and show a substitution between two factors while keeping the output same.
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