MU Chemical Engineering (Semester 3)
Chemical Engineering Economics
December 2015
Total marks: --
Total time: --
(1) Assume appropriate data and state your reasons
(2) Marks are given to the right of every question
(3) Draw neat diagrams wherever necessary

Answer the following (any four):-
1(a) Explain demand supply curve.
5 M
1(b) Explain various cost indices used in economics.
5 M
1(c) Explain concept of nominal and effective interest rates.
5 M
1(d) What is present worth of an annuity.
5 M
1(e) Describe the general outline of accounting procedure
5 M

Explain the following terms in detail.(Any five)
2(a) Diseconomies of scale
4 M
2(b) Types of Growth Strategies
4 M
2(c) Demand schedule and demand curve
4 M
2(d) Concept of price determination under particular market conditions
4 M
2(e) Law of supply-assumptions and exceptions
4 M

3(a) Draw '' Tree diagram'' showing cash flow for industrial operation.
10 M
3(b) The purchase cost of 5 m3 SS tank in 1980 was Rs.3,75,000/-. The tank is cylindrical with flat top and the bottom diameter is 2 m. If the entire outer surface of the tank is to be covered with 5 cm thick magnesia block, estimate the present total cost for the installed and insulated tank. 1 January 1980 cost for the 5cm magnesia block was Rs.1000/m3 while labor for installing the insulation was Rs.200/m3 and if the installed equipment costs index for 1980 was 560 and now it is 979.
10 M

4(a) A heat exchanger has been designed for use in a chemical process. A standard type of H.E. with negligible scrap value. Cost of HE is Rs. 4000 & wil have useful life 6 yrs. Another proposed HE of equivalent design capacity cost Rs.6800 but will have a useful life 10 years & a scrap value of Rs.800. Assuming an effective compound interest rate of 8% per annum, determine with H.E. is cheaper.
10 M
4(b) What is break Even point? Explain with graph, in detail.
10 M

5(a) Estimate the manufacturing cost for 100 kg of product under the following conditions.
FCI=Rs.100 millions.
Annual production output=10 million kg of product
Raw material cost=Rs. 12/kg of product
Utilities :-
100 psi(g) steam=50 kg/kg of product
Electric power= 0.4 kwh/kg of product
Filtered & softend water = 50 lit/kg of product
Operating labor = 20 men/shift at Rs. 40 employee per hour
Cost of 100 psig. steam=Rs. 260/Tonne of steam
Cost of power = Rs.3.5 /kwh.
Cost of filtered & softend water = Rs.14/m3
Plant operates 300 days 24 hrs. Per year
Non corrosive fluids are involved, no direct supervision is required. There are no patents royalties, interest or rent charges. The plant overhead cost amount 50 % of the cost for operating labor, supervision and maintenance.
20 M

6(a) The total capital investment for a chemical plant is Rs. 10,00,000/- and working capital is Rs. 1,00,000/-. If plant can produce average of 8,500 kg product/day during a 360 days a year, what selling price per kg of product will be necessary to give turnover ratio of 1.0.
10 M
6(b) What is depreciation? Describe the methods of depreciation in detail.
10 M

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