Important Questions Of Business Economics BCA 3rd Semester CCSU Exam
Here are the answers based on the CCSU exam format:
1. What is FDI? How does it differ from FPI?
- FDI (Foreign Direct Investment): It refers to the investment made by a company or individual in one country into business interests located in another country. It involves establishing ownership or controlling interest in a foreign business.
- Difference from FPI: FDI focuses on long-term control and ownership in a foreign company, while FPI (Foreign Portfolio Investment) involves investing in financial assets like stocks and bonds without ownership control.
2. Explain Law of Supply.
- The Law of Supply states that, other things being equal, an increase in the price of a good leads to an increase in its quantity supplied, and vice versa. It shows a direct relationship between price and supply.
3. Define Fiscal Policy.
- Fiscal Policy refers to the government's use of taxation, public spending, and borrowing to influence the economy. It aims to achieve economic stability, growth, and redistribution of wealth.
4. Define the objectives of WTO.
- The objectives of the World Trade Organization (WTO) include:
1. Promoting free and fair international trade.
2. Reducing trade barriers and tariffs.
3. Ensuring a level playing field for all member countries.
4. Resolving trade disputes through a structured mechanism.
5. Define Profit Maximization.
- Profit Maximization is the process by which a firm determines the price and output level that generates the maximum profit. It is achieved when the difference between total revenue and total cost is at its highest.
6. Give any two objectives of a monopolist.
- Profit Maximization: Ensuring maximum returns from operations.
- Market Control: Maintaining dominance over the market to prevent competition.
7. What do you mean by market demand?
- Market demand refers to the total quantity of a good or service that all consumers in a market are willing and able to purchase at various prices over a specific period.
8. Explain Economies of Scale.
- Economies of Scale occur when a firm’s average cost per unit decreases as its production increases. This can happen due to factors like bulk purchasing, better specialization, and advanced technology.
9. Define Firm.
- A firm is an organization that combines resources like labor, capital, and raw materials to produce goods or services for profit. It operates within the framework of a market.
10. Capital Budgeting.
- Capital Budgeting is the process by which businesses evaluate and prioritize long-term investment opportunities, such as purchasing new machinery, launching a new product, or constructing a new facility. It involves estimating future cash flows, risks, and returns.
Here are the answers according to your CCSU exam requirements:
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### 11. **What is meant by Price Elasticity of Demand? Explain any one method for measuring it.**
- **Price Elasticity of Demand (PED):** It measures the responsiveness of the quantity demanded of a good to a change in its price.
- **Formula:** \( PED = \frac{\%\Delta Qd}{\%\Delta P} \), where \( Qd \) = Quantity demanded, \( P \) = Price.
- **Method – Total Expenditure Method:**
- If total expenditure increases as price decreases, demand is elastic.
- If total expenditure remains unchanged with a price change, demand is unitary elastic.
- If total expenditure decreases as price decreases, demand is inelastic.
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### 12. **Explain the price determination under perfect competition.**
- Under perfect competition, price is determined by the forces of **demand and supply** in the market.
- No single buyer or seller can influence the market price.
- The equilibrium price is set at the point where the quantity demanded equals the quantity supplied.
- Firms are price-takers and can sell any amount at the prevailing market price.
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### 13. **What are the characteristics of perfect competition?**
1. **Large Number of Buyers and Sellers:** No single entity can influence the market price.
2. **Homogeneous Products:** All products are identical, leaving no scope for preference.
3. **Free Entry and Exit:** Firms can freely enter or exit the market without restrictions.
4. **Perfect Knowledge:** Buyers and sellers have complete information about prices and products.
5. **Price Takers:** Individual firms cannot set the price; they accept the market-determined price.
14. Give the essential requirements of TRIPS.
- TRIPS (Trade-Related Aspects of Intellectual Property Rights): A WTO agreement that sets minimum standards for intellectual property protection.
- Esential requirements:
1.Patents20 years of patent protection.
2. Copyright: Minimum protection of 50 years.
3. Trademarks: Protection of distinctive signs for products/services.
4. Enforcement Legal measures to prevent IP infringement.
5. Geographical Indications: Protection for region-specific goods.
15. .What is Fiscal Policy? What are its objectives? Explain its role in the economic development of developing countrie
- Fiscal Policy: It is the government’s strategy in using taxation, spending, and borrowing to influence economic activities.
- Objectives:
1. Economic stability.
2. Redistribution of wealth.
3. Employment generation.
4. Promoting economic growth.
- **Role in Economic Development of Developing Countries:
1. **Infrastructure Development:**LLP, Funds for roads, electricity, and water facilities.
2. **Reduction of Inequalities:** Through progressive taxation and subsidies.
3. **Employment Generation:** Government spending on labor-intensive projects.
4. **Control Inflation:** By managing demand through tax and expenditure adjustments.
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16. Explain the anomalies in India's Tax Policy.
-Anomalies in India’s Tax Policy:
1. Complex Tax Structure: Overlapping taxes and excessive compliance.
2. Tax Evasion: High evasion due to loopholes in policies.
3.*Inequity: Disproportionate tax burden on certain income groups.
4. Low Tax Basel: A significant portion of the population remains outside the tax 🥅.
5. **LlHigh Indirect Taxes: Increase the burden on lower-income groups.
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17. What are the various sources of Foreign capital flows in India?
1. Foreign Direct Investment (FDI): Investments in businesses and industries.
2. Foreign Portfolio Investment (FPI): Investments in stocks, bonds, and other financial assets.
3.External Commercial Borrowings (ECBs): Loans from foreign financial institutions.
4 Remittances: Money sent by overseas Indians to their families in India.
5. Fooreign Aid and Grants: Provided by international organizations or countries.
6. Export Earnings: Revenue generated from selling goods and services abroad.
18. Explain Monopoly, Monopolistic Competition, and Oligopoly Situations of Market.
- Monopoly:
- Single seller dominates the market.
- No close substitutes for the product.
- High entry barriers.
- Example: Railways in certain countries.
- Monopolistic Competition:
- Many sellers offering differentiated products.
- Free entry and exit.
- Some control over pricing due to product differentiation.
- Example: Restaurants and clothing brands.
- Oligopoly:
- Few large firms dominate the market.
- Products can be homogeneous or differentiated.
- Firms are interdependent in pricing and output decisions.
- Example: Automobile and telecom industries.
