(SEM V) THEORY EXAMINATION 2017-18 ENGINEERING ECONOMICS

Engineering Economics (NHU-501)

Section-Wise Important Questions & Study Notes

SECTION – A

(Attempt all questions | 2 marks each)

This section tests basic definitions and clarity of concepts.
Answers should be short (2–3 lines), direct, and to the point.

1. Cost Estimation

Cost estimation is the process of predicting the total cost required to complete a project, including materials, labor, machinery, and overhead expenses.

2. Efficiency

Efficiency refers to the ability to produce maximum output using minimum input. It shows how effectively resources are utilized.

3. Decision Making

Decision making is the process of choosing the best alternative among available options to achieve specific objectives.

4. Monopolistic Competition

Monopolistic competition is a market structure where many firms sell similar but differentiated products and have limited price control.

5. Delphi Method

The Delphi method is a qualitative forecasting technique that collects expert opinions through multiple rounds of questionnaires to reach a consensus.

6. Opportunity Cost

Opportunity cost is the value of the next best alternative that is sacrificed when a particular decision is made.

7. Project Evaluation

Project evaluation is the systematic assessment of a project’s feasibility, profitability, and economic viability before implementation.

8. Staffing

Staffing is the management function concerned with recruiting, selecting, training, and placing suitable employees in an organization.

9. Seasonal Adjustments

Seasonal adjustments remove seasonal variations from data to analyze long-term trends more accurately.

10. Welfare Analysis

Welfare analysis studies how economic policies affect the well-being of society, consumers, and producers.

Exam Tip:
Write crisp definitions. Avoid examples unless asked.

SECTION – B

(Attempt any THREE | 10 marks each)

This section checks conceptual understanding and explanation ability.

1. Managerial Economics & Its Techniques

Managerial economics applies economic theories and principles to business decision making.
It helps managers solve problems related to pricing, production, cost, and demand.

Techniques include:                             Demand analysis and forecasting

Cost and production analysis                Pricing strategies

Profit management                               Capital budgeting

2. Engineering Economics & Role in Industries

Engineering economics deals with the application of economic principles to engineering problems.
It helps in selecting the best alternative based on cost, efficiency, and returns.

Role in industries:                                Project selection

Cost reduction                                       Investment analysis

Resource optimization                           Profit planning

3. Market Structures & Their Features

Market structure refers to the nature of competition in a market.

Main types:                                           Perfect competition

Monopoly                                               Monopolistic competition

Oligopoly

Explain features like number of firms, nature of products, price control, and entry barriers.

4. Short-Run Equilibrium under Monopoly Competition

In monopolistic competition, firms earn normal profits in the short run when marginal cost equals marginal revenue.

Explain:                                                   Demand curve

Cost curve                                              Equilibrium condition

Role of product differentiation

5. Value Engineering vs Value Analysis

Value engineering focuses on reducing cost during the design stage, while value analysis is applied after production begins.

Explain:                              Objectives

Differences                        Importance in cost control

SECTION – C

(Attempt ONE from each question | 10 marks each)

This section demands long, structured answers with diagrams where applicable.

Question 3

(a) Decision Making & Its Characteristics

Decision making involves identifying alternatives, evaluating them, and choosing the best one.

Characteristics:                                     Goal-oriented

Rational process                                     Continuous activity

Involves risk and uncertainty                  Based on available information

OR

(b) Elasticity of Demand

Elasticity of demand measures responsiveness of demand to changes in price, income, or related goods.

Types:                                                       Price elasticity

Income elasticity                                      Cross elasticity

Explain formulas and importance.

Question 4

(a) Why Firm Is Price Taker under Perfect Competition

A firm cannot influence market price due to:     Large number of buyers and sellers

Homogeneous products                                     Free entry and exit

Perfect knowledge

OR

(b) Duopoly & Price Determination

Duopoly is a market with two dominant firms.
Explain price determination under different conditions and assumptions.

Question 5

(a) Demand Forecasting Methods

Demand forecasting predicts future demand for a product.

Methods:                                   Survey method

Statistical method                     Expert opinion

Delphi technique                      Trend projection

OR

(b) Opportunity Cost & Marginal Cost

Opportunity cost is the value of foregone alternatives.
Marginal cost is the additional cost of producing one more unit.

Question 6

(a) Cost Curves Diagram

Explain:                                               Total cost

Fixed cost

Variable cost                                       Draw and explain curves clearly.

OR

(b) Management & Its Functions

Management is the process of planning, organizing, staffing, directing, and controlling resources.

Explain each function briefly.

Question 7

(a) Macroeconomics vs Microeconomics

OR

(b) Decision Making Characteristics

(Repeat of Q3 – prepare well)