CS Foundation :: Basic economics & business environment : December 2003

Roll No…………………
Time allowed : 3 hours	Maximum marks : 100
Total number of questions : 8	Total number of printed pages : 2
PART – A
(Answer Question No.1 which is compulsory and any three of the rest from this part.)

(a)

State, with reasons, whether the following statements are true or false :

(i)	Elasticity of demand for salt is almost zero.
(ii)	Substitution effect is always positive.
(iii)	The average revenue curve of an individual firm under perfect competition is a horizontal straight line.
(iv)	Constant return to scale implies that an increase in the scale in some proportion results into an increase in the output in the same proportion.
(v)	Fixed wage earners suffer both in inflation and deflation.

(3 marks each)

(b)

Differentiate between ‘micro-economics’ and ‘macro-economics’. Are they complementary to each other ?

(10 marks)

(a)

With the help of suitable schedule and diagram, show the relationship between total, fixed and variable costs in the short-run.

(7 marks)

(b)

What is meant by ‘perfect competition’ ? State, with reasons, whether it is attainable.

(8 marks)

(a)

“Discriminating monopoly is profitable, if two markets have different elasticity of demand.” Explain with the help of diagrams.

(7 marks)

(b)

What is ‘national income’ ? Is it a reliable index of economic welfare ?

(8 marks)

(a)

Give the statement of quantity theory of money. Explain it with the help of Cambridge Equation.

(7 marks)

2/2003/BEBE

P.T.O.

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(b)

Briefly explain the following :

(i)	Marginal propensity to consume.
(ii)	Ill-effects of inflation.

(4 marks)

(a)

Discuss the merits and demerits of the Ricardian Theory of comparative advantages.

(7 marks each)

(b)

What is meant by ‘exchange rate’ of currency ? How is its equilibrium rate determined in the market ?

(8 marks each)

PART – B

(Answer ANY TWO questions from this part.)

(a)

Explain the role of government in infrastructure development.

(7 marks each)

(b)

Discuss the salient elements of business environment of a firm.

(8 marks each)

(a)

Write a detailed note on population growth in India.

(7 marks each)

(b)

What do you mean by ‘mixed economy’ ? Narrate the structure of mixed economy of India.

(8 marks each)

Write notes on any three of the following :

(i)
(ii)
(iii)
(iv)

Non-banking finance companies
Financial sector reforms
Government subsidies
Industrial sickness.

(5 marks each)

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2/2003/BEBE

CS Foundation :: Basic Economics & Business environment : December 2003