__a1396 - Economics HCT

Moderator’s Approval:

PC’s Approval:

HIGHER COLLEGE OF TECHNOLOGY

DEPARTMENT OF ENGINEERING SECTION: CAE EEE MIE

Final Assignment Semester: 2 A. Y: 2019 / 2020

Date of Assignment posting: 1st May 2020 Time: 10:00 AM 48 hours

Date of Uploading: 3rd May 2020 Time: 10:00 AM

Student Name

Student ID

Specialization Quantity Surveying

Level Higher Diploma

Course Name / Course Code CEQS3231 - Construction Economics

Section No. 1 & 2

Page 2 of 6

Question No.

Max. Marks Obtained

Marks

Question No. Max. Marks Obtained

Marks

PART- 1 Q 3. 5

Q 1. 2 Q 4. 7

Q 2. 3.5

Q 3. 2.5 PART- 3

Q 4. 2 Q 1. 9

PART- 2 Q 2. 7.5

Q 1. 3 Q 3. 3.5

Q 2. 5 Sub-Total

Marks 18 Sub-Total Marks 32

Grand Total

Marks ____ / 50

Course Lecturer: Ms. Sreevidhya M S Second Marker:

Student’s Declaration: (to be filled by student)

Student Name: __________________ ID: _________ Signature: _________

(Digital Signature)

Page 3 of 6

PART – 1 (10 marks)

Q 1. Muscat bakery in Al Khuwair is supplying cakes and donuts on a large scale. If the

bakery has upgraded their baking machine to a new automated version with increased

capacity, explain how the Production Possibility Frontier varies after the installation of

this new machine.

[2]

Q 2. The demand & supply schedule for a market is given in Table 1.

Table 1: Demand & Supply Schedule

Price (OMR) Demand (thousands) Supply (thousands)

30 44 28

40 40 32

50 36 36

60 32 40

Calculate:

i. The price elasticity of demand when the price is OMR 40 from the initial price

chart.

[1]

ii. The price elasticity of supply when the price is OMR 50 from the initial price

chart.

[1]

iii. Suppose the government sets a price value of OMR 30. Will there be a

shortage or surplus condition, and, if so, how large will it be?

[1.5]

Q 3. Mr. Khalil borrowed OMR 8,000 from HSBC bank at an interest rate of 8.5%.

Calculate how much interest will be due in 73 weeks using the following interest

methods:

i. Simple interest method if the rate of compounding is done annually. [1]

ii. Compound interest if the interest is compounded quarterly. [1.5]

Q 4. Assume a country in which the factors of production are owned by the private sector

and the government gets involved in decisions like what type of infrastructure is to be

built, any regulations on labor wages etc. Identify what type of economic system the

[2]

Page 4 of 6

country follows and give any 2 reasons to support your answer.

PART – 2 (20 marks)

Q 1. Mr. Hussain makes a monthly deposit of OMR 100 into an annuity for a period of 30

years. Calculate the annual rate compounded monthly, so that after 30 years his

account will be credited by OMR 160,000.

[3]

Q 2. Al Zahira company is evaluating a project that would last for 3 years. The project’s

internal rate of return is 9.71%. Its Net Present Value is OMR 6,700 and the expected

cash flows are presented in the Table 2. Calculate X.

Table 2: Cash Flow

Years from today 0 1 2 3

Expected cash flow 65,000 52,000 13,000 X

[5]

Q 3. Mr. Ammar and Mr. Akbar have decided that both will save OMR 4,000 each

annually. Mr. Ammar open his savings account at the age of 22 and continues it till he

reaches 32. In addition, the total of 10 deposits that he made is compounded annually

at an interest rate of 11% and then he deposits nothing till his retirement at age 65 (33

years afterwards). Mr. Akbar begins at age 31 depositing OMR 4,000 a year until

retirement at age 65 (34 deposits). How much amount will each of them have at the

age of retirement?

[5]

Q 4. Ray International company has planned to invest OMR 100,000,000 into the

construction industry. The company has received four investment proposals from firms

A, B, C & D. After a detailed evaluation, the company has accepted the proposal from

the firm C. What are the factors that the company has analyzed to accept the

investment proposal from C?

[7]

Page 5 of 6

PART – 3 (20 marks)

Q 1. You are evaluating an investment project with the following cash flows in Table 3.

Table 3: Cash Flow

Period (Years) Cash Flow (OMR)

0 100,000

1 35,303

2 35,303

3 35,303

4 35,303

5 35,303

Calculate the following:

i. Payback period. [1]

ii. Internal rate of return. (Take the lower rate of return as 18% & the higher rate

of return as 24%).

[8]

Q 2. The demand equation for a product is given as Qd = 8X-20P+50Y where X=175, Y=8

and P stands for the price. Table 4 shows the price-supply schedule for the product.

i. Using the demand equation, frame a demand schedule for the product.

Table 4: Price-Supply Schedule

Price

(OMR)

Quantity

supplied Quantity demanded

70 1800

60 1600

50 1400

40 1200

30 1000

20 800

10 600

0 400

[2]

Page 6 of 6

ii. Using the demand and supply schedule draw a market equilibrium graph with

all the details.

[4.5]

iii. What is the price and quantity at the equilibrium point? [1]

Q 3. Table 5 shows the production possibilities of pillows and blankets. Show these data

graphically and mark the points A, B, C, D, E & F on the graph.

Table 5: Production table for pillows & blankets

Type of

Production A B C D E F

Pillows 50 47 42 35 20 0

Blankets 0 1 2 3 4 5

[1.5]

Calculate the opportunity cost for each of the following:

i. A to C. [0.5]

ii. D to F. [0.5]

iii. E to B. [0.5]

iv. D to A. [0.5]

__________________ End of the Assignment __________________