Qualification > Commerce
Economics P3 Questions/Doubts
Tohru Kyo Sohma:
Thanks alot :D
Tohru Kyo Sohma:
Ok i have doubts!
P3-Oct/Nov'2008
Qns.2-The diagram shows the levels of utility corresponding to different allocations of resources
between two people.
The initial allocation is Z.
Which reallocation of resources would definitely be more Pareto efficient?
[i'll post the pic]
What doe pareto effecient means?
Qns.5-A firm currently employs 30 workers at a daily wage rate of $40.
It calculates that the marginal cost per day of hiring an additional worker would be $102.
By how much would the daily wage rate have to be increased to attract an extra worker?
A $2 B $42 C $62 D $102
Qns.12-The diagram shows the demand and cost curves of a monopolist who initially produces at the
profit-maximising level of output.[pic attached]
The monopolist is required by the government to adopt marginal cost pricing.
What will be the effect on the price charged and the output produced?
price output
A increase increase
B increase decrease
C decrease increase
D decrease decrease
Qns13-The table shows the costs of two milk producers
costs per litre
firm X $9
firm Y $7
The price received by producers is $10 per litre. Both firms have been given quotas allowing
them to produce 200 litres per day. Firm X sells its quota to firm Y.
Assuming constant costs of production and zero costs of entry and exit, what price did firm Y pay
(per day) to buy X’s quota?
A $200
B $600
C $700
D between $200 and $600
Qns.16-The table shows some data for an economy.
[pic attached]
What is the equilibrium level of national income?
A $700 m B $800 m C $900 m D $1000 m
I'm really sorry for throwing my doubts but i currently have no one to help me besides SF!
:-[
Azland:
--- Quote from: Tohru Kyo Sohma on February 26, 2012, 06:08:56 pm ---Ok i have doubts!
P3-Oct/Nov'2008
Qns.2-The diagram shows the levels of utility corresponding to different allocations of resources
between two people.
The initial allocation is Z.
Which reallocation of resources would definitely be more Pareto efficient?
[i'll post the pic]
What doe pareto effecient means?
Qns.5-A firm currently employs 30 workers at a daily wage rate of $40.
It calculates that the marginal cost per day of hiring an additional worker would be $102.
By how much would the daily wage rate have to be increased to attract an extra worker?
A $2 B $42 C $62 D $102
Qns.12-The diagram shows the demand and cost curves of a monopolist who initially produces at the
profit-maximising level of output.[pic attached]
The monopolist is required by the government to adopt marginal cost pricing.
What will be the effect on the price charged and the output produced?
price output
A increase increase
B increase decrease
C decrease increase
D decrease decrease
Qns13-The table shows the costs of two milk producers
costs per litre
firm X $9
firm Y $7
The price received by producers is $10 per litre. Both firms have been given quotas allowing
them to produce 200 litres per day. Firm X sells its quota to firm Y.
Assuming constant costs of production and zero costs of entry and exit, what price did firm Y pay
(per day) to buy X’s quota?
A $200
B $600
C $700
D between $200 and $600
Qns.16-The table shows some data for an economy.
[pic attached]
What is the equilibrium level of national income?
A $700 m B $800 m C $900 m D $1000 m
I'm really sorry for throwing my doubts but i currently have no one to help me besides SF!
:-[
--- End quote ---
2. Pareto efficient means no one can be made better of without making someone else worse off. Answer is A as that is the only point where the value of X has not changed but Y has increased. All other points represent a trade off. An increase in Pareto efficiency: through reallocation, improvements to at least one participant's well-being can be made better without reducing any other participant's well-being.
5. 30*40 = 1200$
Consider option A first. 31 workers and wage increased to 42$.
31*42 = 1302
1302-1200 = 102$ which is what the question states as the marginal cost per day. Answer = A
12. Originally producing at MC=MR ( D=MR ). Marginal Costing is P=AC. In this diagram its where AC=D. Output increase and price fall as diagram shows. Even if you dont understand this part just try to remember that anyone other then a monopoly will usually reduce the price and output has to increase as a result.
13. Firm X - Profit = 200*10 - 200*9 = 200$
Firm Y - Profit = 200*10 - 200*7 = 600$
As you can see Firm X only makes 200$ profit so if they were going to sell it would have to be higher then 200$ or the same. Firm Y only gets 600$ so they would not pay more. As a result they would negotiate anywhere in-between.
16. Equilibrium is when Withdrawals = Injections.
I,E,G = Injections into circular flow of income
S,I,T = Withdrawls from circular flow of income.
I,E,G = S,I,T ( In value ) = Equilibrium
As you can see when equilibrium is 800 both sides are equal.
I dread to think what your going to do if they ask you an essay on this stuff in P4 :P
Romeesa-Chan:
--- Quote from: Azland on February 28, 2012, 07:20:34 pm ---
I dread to think what your going to do if they ask you an essay on this stuff in P4 :P
--- End quote ---
Is her situation that bad ? :-\
Azland:
--- Quote from: Romeesa-Chan on February 28, 2012, 07:50:15 pm ---Is her situation that bad ? :-\
--- End quote ---
No No..just mcq quests were quite straight forward..cant really do any essay quests without understanding main concepts first. Relax though its far from bad..my old classmates still get 15/100 ;p
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