Business Economics: Concepts, Theories and Assignments

Business economics is the study of financial, organizational, market-related, and environmental issues faced by corporations.

Business Economics encompasses:

• Study of scarcity, product factors, distribution, and consumption.
• Microeconomic analysis that involves understanding Supply and Demand, Cost Analysis, Market Structures and Consumer Behaviour
• Macroeconomic analysis that involves understanding Economic Indicators, Monetary and Fiscal Policy, Global Economics
• Business performance analysis such as Profitability, Productivity, Competitive Advantage
• Forecasting that involves using economic models to predict future trends.
• Strategy making related to pricing strategies, resource allocation, investment decisions

Questions and Answers on Business Economics

Q. With the help of the concept of production function. Briefly explain the Law of Variable Proportions and Law of Returns to Scale. Elaborate your answer by citing real world examples.

Q. Countries are making every effort to cut back on their usage of petroleum products, particularly gasoline, in light of the rising cost of crude oil. Results from this will only become apparent over time. To cut down on the usage of private automobiles, the majority of nations are working to increase public transportation systems’ popularity. For the reasonably developed countries, the income elasticity of spending on private vehicles has been calculated to be approximately 2.5. Some nations, like India, are highly irritated that despite fare reductions, there is no movement towards public transportation. The following describes the user profile of the public transportation system: They belong to the middle and low income categories with income elasticity less than one and the absolute value of price elasticity also less than one. With the above given statement, you are required to suggest your point logically as to why the public transport is not becoming popular and why the use of private vehicles is only continuing to increase. You can build your answer by keeping income elasticity in mind and analysing it.

Q. A corporation in the USA that works in the telecommunications industry is called SNDL. Their intention is to join the Indian telecom industry. Prior to entering the Indian market, they would like to examine the market structure. They are doing this in order to determine how much price power they may have in the Indian telecom market. If you were giving them advice on the same thing, how would you go about comprehending the structure of the market? Explain which test or technique you would choose for determining the market concentration.

Q. ABC Ltd sought to determine the nature of the relationship between goods A and B, specifically if they are complementary or substitutes. Regarding the price and quantity requested for commodities A and B, the following information was available. The price of A remained unchanged, but the price of B dropped from Rs 240 to Rs 200, which increased the demand for A from 3500 to 4000 units. Determine the cross-elasticity of demand between goods A and B, and then provide a commentary on the relationship between the two goods based on the results.

Question: What is Indifference Curve, explain with the help of diagram and also explain its properties.

Question: Consider the demand for a good. At price Rs 4, the demand for the good is 25 units. Suppose price of the good increases to Rs 5, and as a result, the demand for the good falls to 20 units. Calculate the price elasticity?

Question a: Two goods have a cross-price elasticity of demand of +1.2 (a) would you describe the goods as substitutes or complements? (b) If the price of one of the goods rises by 5 per cent, what will happen to the demand for the other good, holding other factors constant?

b. Calculate Marginal Utility and Average Utility from the information given in the below table:

Quantity Consumed, Total Utility -> 1, 20; 2, 35; 3, 47; 4, 55; 5; 60

Question: a) Define capitalism & the state the merits and demerits of capitalism b) Explain the role & importance of MNCs in global economy

Question: a) Explain the features & problems of American economy b) Write a detailed note on ‘Karl Marx’ and also state the importance of Karl Marx theories.

Question: a) Discuss the importance of second-generation reforms in the planning process in India b) What are the important instruments of monetary & fiscal policy to control conditions in an economy?

Question: (i) A demand recession is always reflective of bad times for the corporate sector. The current phase, according to many, has witnessed slowing down of economic activities, (a)What has caused this slowdown? (b) What are the chances of revival in near future? How? (ii) Discuss the existence of externalities with special reference to public goods.

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