Accounting For Business 10 October

www.afterschoool.tk AFTERSCHOOOL MATERIAL FOR PGPSE PARTICIPANTS

ECONOMIIC ENVIRONMENT OF BUSINESS

AFTERSCHOOOL – DEVELOPING CHANGE MAKERS

CENTRE FOR SOCIAL ENTREPRENEURSHIP PGPSE PROGRAMME –

World’ Most Comprehensive programme in social entrepreneurship & spiritual entrepreneurship

OPEN FOR ALL FREE FOR ALL


ECONOMIIC ENVIRONMENT OF BUSINESS

Dr. T.K. Jain.AFTERSCHOOOL

Centre for social entrepreneurshipBikaner

M: [email protected]

www.afterschool.tkwww.afterschoool.tk

http://www.afterschool.tk/

http://www.afterschoool.tk/


What is consumer surplus? Difference of total utility from the goods

and total utility from the money spent. It is the difference in the utility from

goods and the utility of price paid. It is upto the point where Marginal utility

is equal to price paid.


Who gave the concept of consumer’s surplus? Alfred Marshall


Price is 10 units (utility), and marginal utility from 1 unit is 30, from 2nd it is 20 and from 3rd it is 10, from 4th it is 5 units. What is my consumer surplus?

I shall use 3 units (where marginal utility is equal to price paid).

Thus my total utility is 30+20+10 =60. but utility of price paid is 10*3 = 30. Thus my consumer surplus is 60-30 =30 answer.

I shall not by 4th unit because price paid is more than utility.


What is indifference curve? It represents all those combinations of

goods which give same satisfaction to the consumer.

For example: I derive equal satisfaction from 3 units of rice plus 10 units of bread and the same satisfaction is available from 10 units of rice+3 units of bread thus both these combinations are on indifference curve.


If we are at less than Production Possibility curve(PPF), what does it denote? We are not at full employment level, we

are not yet able to achieve full productivity.


If opportunity costs are constant (which is not possible), what will be the shape of PPF (production possibility curve)? It will be a straight line – not a curve.


Can we product some item beyond PPF (higher then the PPF)? NO. (with the given resources and given

productivity level, it would not be possible).


According to economists, what should be our approach in decision making? RATIONAL (analyse goals and take a

decision consistent with goals – with the objective of optimisation)

(but according to some management thinkers, we cannot be completely rational and we try to satisfice rather than optimise.)


What is fundamental assumption in economics? People want to optimise – i.e. they want

to select the alternatives which will give them the best returns in comparison to inputs


Who said that “economics is neutral between ends”? ROBBINS


In a free market economy, what will happen if demand exceeds supply? Prices will increase.


What is the point of consumer’s equilibrium? It is the point where the consumer has

maximum possible satisfaction from given combination of goods.

It is at a point where marginal rate of substition between goods X & Y is equal to the ratio between the prices of these goods.

MUx/MUy = Px / Py


What is budget line, how does it help? If we allocate the total budget on two

products for various units, we get budget line. The point where budget line touches the highest indifference curve, is the point where consumer decides to go for – because that is the point of consumer’s equilibrium.


If my income doubles, but prices are stable, what will happen to budget line? It will shift upwards.


If my income remains stable, but prices are doubled, what will happen to budget line? It will shift downwards.


Suppose you have Rs. 1000 with you as your budget. X costs Rs. 200 per item and Y costs Rs. 250 per item. What is the maximum possible point on X’s axis in the budget line?

1000/200 = 5 answer.


What is price elasticity of demand? Change in demand due to change in

prices.


What is income elasticity of demand? Change in demand due to change in

income. If income will increase, generally the demand will increase and vice versa.


For luxury goods, the income elasticity is usually in what range? More than 1.


For inferior goods, the income elasticity is usually in what range? Less than 1.


If price increase from 120 to 200 and demand decreases from 300 to 200 units, what is the price elasticity? (Q1-Q2)/(Q1+Q2) * (P1+p2)/ (P1-P2) (300-200)/(300+200) * (120+200)/(120-

200) =100/500 * 320/(-)80 =.2*-4 = -.8 answer.


Price is reduced from 300 to 200 but demand increases from 300 to 500 what is price elasticity? (Q1-Q2)/(Q1+Q2) * (P1+p2)/ (P1-P2) =(-200/800) *(500/100) =-.25*5 =-1.25 (answer)


Can price elasticity be positive? Generally No (but exceptions are

possible – for example in giffin goods)

Giffin goods = inferior goods for example Bajra, Jwar, inferior rice, etc.


What is short run in economics? The period in which you can modify only

one factor of production is called short run.

The period in which you can modify both the factors of production (labour and capital) is called long run.


What is planning curve? Long run average cost curve is called

planning curve (because you may plan out your production).


Which curve can never be U shaped curve? Average fixed cost curve – as it is always

reducing.


Which costs have direct relation with production – i.e. they increase with production and reduce with production (if production reduces)? Variable costs.


When is a firm on break even point? When AC = AR or TC=TR (there is no profit no loss).


WHEN IS THE FIRM IN EQUILIBRIUM? When MR = MC (it may be in profit or

loss – but the point of equilibrium is always at this point, and MC curve should come from below the MR curve and cut it and then go up).


India has what share of world poverty? 1/3


What was per capita income of Indians in 2007? Approximately $700 per annum


What is HDI? Human Development Index It is prepared by United Nations

Development Programme. (UNDP)


WHICH IS THE APEX BANK FOR AGRICULTURAL CREDIT? NABARD


WHAT IS DIRECT TAX IN % OF GDP IN INDIA AND WHAT IS TAX COLLECTION EXPENSES IN INDIA? DIRECT TAXES ARE ABOUT 5% OF

GDP IN INDIA AND TAX COLLECTION EXPENSES ARE ABOUT 3000 CRORE RUPEES IN INDIA.

GDP = GROSS DOMESTIC PRODUCT


WHAT IS MODVAT AND VAT? MODVAT = MODIFIED VALUE ADDED

TAX (it is used in excise) VAT = Value Added Taxes


What are RRBs? Regional Rural Banks.


What was sex ratio in India in 2001? 933 females per 1000 males.


What was population density in India in 2001? 324 persons per square kilometers.


What was crude birth rate and death rate in 2001 in India? Birth rate was 25.4 per 1000 and death

rate was 8.4 per 1000.


What was life expectancy in India in 2001? It was 62.3 for males, 65.3 for females

and overall 63.8.


What was literacy rate in India in 2001? It was 65.38% on the whole It was 75.85 for males and 54.16 for

females.


ABOUT AFTERSCHOOOL Afterschoool conducts three year integrated PGPSE (after

class 12th along with IAS / CA / CS) and 18 month PGPSE (Post Graduate Programme in Social Entrepreneurship) along with preparation for CS / CFP / CFA /CMA / FRM. This course is also available online also. It also conducts workshops on social entrepreneurship in schools and colleges all over India – start social entrepreneurship club in your institution today with the help from afterschoool and help us in developing society.


Why such a programme? To promote people to take up entrepreneurship

and help develop the society To enable people to take up franchising and

other such options to start a business / social development project

To enable people to take up social development as their mission

To enable people to promote spirituality and positive thinking in the world


Who are our supporters? Afterschoolians, our past beneficiaries,

entrepreneurs and social entrepreneurs are supporting us.

You can also support us – not necessarily by money – but by being promotor of our concept and our ideas.


About AFTERSCHOOOL PGPSE – the best programme for developing great entrepreneurs

Most flexible, adaptive but rigorous programme Available in distance learning mode Case study focused- latest cases Industry oriented practical curriculum Designed to make you entrepreneurs – not just an

employee Option to take up part time job – so earn while you

learn The only absolutely free course on internet


Workshops from AFTERSCHOOOL IIF, Delhi CIPS, Jaipur ICSI Hyderabad Branch Gyan Vihar, Jaipur Apex Institute of Management, Jaipur Aravali Institute of Management, Jodhpur Xavier Institute of Management, Bhubaneshwar Pacific Institute, Udaipur Engineering College, Hyderabad


Flexible Specialisations: Spiritualising business and society Rural development and transformation HRD and Education, Social Development NGO and voluntary work Investment analysis,microfinance and inclusion Retail sector, BPO, KPO Accounting & Information system (with CA / CS /CMA) Hospital management and Health care Hospitality sector and culture and heritage Other sectors of high growth, high technology and social

relevance


Salient features: The only programme of its kind (in the whole world) No publicity and low profile course For those who want to achieve success in life – not just a degree Indepth knowledge and expertise Professional approac: World class approach Strong intellectual and business capabilities Flexible – you may stay for a month and continue the rest of the

education by distance mode. / you may attend weekend classes Scholarships for those from poor economic background Latest and constantly changing curriculum – keeping pace with

the time Placement for those who are interested Admissions open throughout the year Latest and most advanced technologies, books and study material


Components Pedagogy curriculum and approach based on IIM Ahmedabad and ISB

Hyderabad (the founder is alumnus from IIMA & ISB Hyderabad) Meditation, spiritualisation, and self development Essential softwares for business Business plan, Research projects Participation in conferences / seminars Workshops on leadership, team building etc. Written submissions of research projects/articles / papers Interview of entrepreneurs, writing biographies of entrepreneurs Editing of journals / newsletters Consultancy / research projects Assignments, communication skill workshops Participation in conferences and seminars Group discussions, mock interviews, self development diaryng Mind Power Training & writing workshop (by Dr. T.K.Jain)


Pedagogy Case analysis, Articles from Harvard Business Review Quiz, seminars, workshops, games, Visits to entrepreneurs and industrial visits Presentations, Latest audio-visuals Group discussions and group projects Periodic self assessment Mentoring and counselling Study exchange programme (with institutions out of India) Rural development / Social welfare projects


Branches AFTERSCHOOOL will shortly open its

branches in important cities in India including Delhi, Kota, Mumbai, Gurgaon and other important cities. Afterschooolians will be responsible for managing and developing these branches – and for promoting social entrepreneurs.


Case Studies We want to write case studies on social

entrepreneurs, first generation entrepreneurs, ethical entrepreneurs. Please help us in this process. Help us to be in touch with entrepreneurs, so that we may develop entrepreneurs.


Basic values at afterschoool Share to learn more Interact to develop yourself Fear is your worst enemy Make mistakes to learn Study & discuss in a group Criticism is the healthy route to mutual support and

help Ask fundamental questions : why, when, how &

where? Embrace change – and compete with yourself only


www.afterschoool.tk social entrepreneurship for better society

http://www.afterschoool.tk/

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Accounting For Business 10 October

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