IGCSE/GCSE/O & A Level/IB/University Student Forum
Qualification => Subject Doubts => GCE AS & A2 Level => Commerce => Topic started by: Azland on November 01, 2011, 08:15:28 am
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Anyone who has a doubt or question..please post it here and well discuss it here.
I'll start off since this question has been on my mind.
2 The schedule shows the total utility derived by a consumer of a good X at different levels of
consumption.
quantity of X consumed 1 2 3 4 5 6 7
total utility (units) 30 50 65 75 80 83 84
The consumer obtains three units of utility from the last $ she spends on each good that she
purchases.
What is the maximum number of units of X that she will consume if the price of X is $5?
A 3
B 4
C 5
D 6
Mark scheme says A. Does anyone know how?
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Hi Azland!
The equilibrium for a single-good is MUx=Px.
You know the price is $5, you will have to look for marginal utility which should be equal to 5.
When you consume 3 units, the marginal utility is 15 and as she obtains 3 units of utility, the MUx= 15/3= 5.
Thus, C.
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the answer is A..but thanks anyway for the try ;p
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Yes if you examine my solution properly the answer is three units which is option A! Just read the option wrong dude.
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k its like this, this guy gets 3 units of utility /$ on each good(this means any other good in market) she purchases.If the price of a single unit of good x was $5 then she gets:
@ 1 unit of x : 30 units of utility for $ 5 spent
@ 2 units of x : 20 units of extra utility $ 5 spent
@ 3 units of x : 15 units of extra utility $ 5 spent
She wouldent purchase more than that because the utility falls below 15 units / $ 5, where she would buy another good(not good x) from the market which gives @ least 3 units of utility / $ spent.
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Isnt it a replica to what I explained Dasith?
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Isnt it a replica to what I explained Dasith?
yea replica with details :D
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The table shows the figures for consumption, capital formation and depreciation in four
economies, all measured in US $.
Assuming that the state of technology remains unchanged, which economy is most likely to
experience economic growth?
consumption ($ m) capital formation($ m) depreciation
($ m)
A 100 20 10
B 500 200 200
C 1000 1200 1400
D 20000 5000 6000
Anyone knows how to solve this question? . If so, please explain.
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^ is da ans A) in the above post ?
its because all the other economies hav a way too higher depreciation than their capital formation , which means their capital in current year would depreciate causing them difficulties in producing the same amount of goods they produced this year , in the next year , which means they are unlikely to hav economic growth , but in A) the Depreciation < than Capital formation , which allows them to produce more goods next year....
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Yes, Answer is A. I got your point so the table listing consumption has no significance?
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Yes, Answer is A. I got your point so the table listing consumption has no significance?
yea u cud say dat ..
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Hello everyone
I didn't come here for long.
i started practicing economics P3 and its really hard
i'll just post my doubts!
please try helping me out someone:D
oct/nov 2002:- Qns 2,3,5,6,7,9,11,12,14,18 and 27
oct/nov 2003:- Qns 1,2,4,5,7,8,9,10,11,12,15,16,17,19,20,21,24,27,28 and 30
oct/nov 2004:- Qns 1,5,6,8,9,10,12,24,25,27,28,29 an 30
PLEASE HELP ME OUT:'(
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long list :(. Would be helpfull if you could copy paste the questions here.
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The table shows the marginal utility that a consumer obtains from consuming successive units of
good X.
Quantity of units MU of units
1 10
2 18
3 24
4 28
5 30
6 31
The price of good X is $4.
What additional information is needed to determine the quantity of X that the consumer will
purchase?
A the consumer’s income elasticity of demand for good X
B the consumer’s price elasticity of demand for good X
C the marginal utility of money to the consumer
D the marginal utility that the consumer obtains from substitute goods
price output
i said A but the answer is C
can anyone explain why?
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Equi-marginal principle Mux = Px
Marginal utility of good X = Price of good X.
In words a consumer will continue to purchase a good untill the utility he gains from the last purchase is equal to or higher than his value of money. Note..the marginal utility of money is assumed constant for this assumption..it does not reduce with more or lesser purchases of any good.
Your question shows the marginal utility he gets from each good and so the only information left is the value of money(Px). Elasticity has pretty much nothing to do with these type of questions so you can cross of a,b,d completly.
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Thanks alot :D
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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!
:-[
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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 $1000 m
I'm really sorry for throwing my doubts but i currently have no one to help me besides SF!
:-[
2. Pareto efficient means no one can be made better of without making someone else worse off. Answer is A as that is the only point where the value of X has not changed but Y has increased. All other points represent a trade off. An increase in Pareto efficiency: through reallocation, improvements to at least one participant's well-being can be made better without reducing any other participant's well-being.
5. 30*40 = 1200$
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
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I dread to think what your going to do if they ask you an essay on this stuff in P4 :P
Is her situation that bad ? :-\
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Is her situation that bad ? :-\
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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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
LOL
Thanks alot for yer help!
although i didn't quite get question 16. but it's fine because we're still on ch.5 supplement in economics so i still need to finish the chapter to fully understand the question!
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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
Lol, I hope Tohru improves. :)
Thank you for your help. :)
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Lol, I hope Tohru improves. :)
Thank you for your help. :)
LOL
i will..........IshaAllah
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I just did Nov 2011 P32 of Economics and kind of failed like got 21 answers wrong
If someone can please Help me out and explain to me why the other choices apart from the correct answer wasn't right
I'm posting the paper and the markscheme for it and I'm really sorry but from qns 1-30 i don't know any of them so can someone take out their precious time and help me out here
I'm posting the paper along with the markscheme
Please help me
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I just did Nov 2011 P32 of Economics and kind of failed like got 21 answers wrong
If someone can please Help me out and explain to me why the other choices apart from the correct answer wasn't right
I'm posting the paper and the markscheme for it and I'm really sorry but from qns 1-30 i don't know any of them so can someone take out their precious time and help me out here
I'm posting the paper along with the markscheme
Please help me
This was the same paper I did for my main CIE exam, haha. Not sure why your finding it so difficult though as it felt the same as previous past papers. Honestly, though I dont think anyone can explain why every option is wrong for all questions. Gotto be a bit more specific.
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This was the same paper I did for my main CIE exam, haha. Not sure why your finding it so difficult though as it felt the same as previous past papers. Honestly, though I dont think anyone can explain why every option is wrong for all questions. Gotto be a bit more specific.
ok...let me be honest here.....i didn't practice P3 much.....i'll do the previous papers and then do this and if i still have doubts then i'll post, kay?
I just had a mock exam and this was the paper i practiced and i got stuck:P
plus i got a 9/30 in this paper.....so you see i suck very much!
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May/june 2005-
Qns 13- the government imposes a specific tax equal to $0.20 per unit on the output of a monopoly producer.
what will be the effect on the price charged by the monopoly and on the quantity it produces?
Price quantity
A. increase by $0.20 decreases
B. increases by less than $0.20 decreases
C. increases by $0.20 unchanged
D. increases by less than $0.20 unchanged
i taught it's C but it's B.
fine an imposition of tax will decrease quantity produced but why will thw price rise by less than $0.20....won't a monopoly put the whole burden on consumers!!!?
Qns 18- In a closed economy with no gov , consumption is three-quarter of income at all levels of income
the present equilibrium level of income is $220 million
the full employment level of income is $240 million
by how much would investment have to increase to reach full employment?
A.$5 million B.$15 million C.$20 million D.$30 million
dunno how to even calculate this???:(
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May/june 2005-
Qns 13- the government imposes a specific tax equal to $0.20 per unit on the output of a monopoly producer.
what will be the effect on the price charged by the monopoly and on the quantity it produces?
Price quantity
A. increase by $0.20 decreases
B. increases by less than $0.20 decreases
C. increases by $0.20 unchanged
D. increases by less than $0.20 unchanged
i taught it's C but it's B.
fine an imposition of tax will decrease quantity produced but why will thw price rise by less than $0.20....won't a monopoly put the whole burden on consumers!!!?
Qns 18- In a closed economy with no gov , consumption is three-quarter of income at all levels of income
the present equilibrium level of income is $220 million
the full employment level of income is $240 million
by how much would investment have to increase to reach full employment?
A.$5 million B.$15 million C.$20 million D.$30 million
dunno how to even calculate this???:(
For the first question, you have to just remember the concept. The entire burden of the tax can never be fully shifted to the consumers in the case of a monopoly. This is because they still have to produce at the quantity where MC = MR. I've added an Attachment and an explanation if needed, but its a bit complicated. Better to just remember that the increase in Tax will always only shift a specific ammount on the consumer which is lower then the original tax. The value which does shift however depends on elasticity's. Also, if it helps at all it even if you dont know much of this, its just a guessing game between option A and B as monopoly's can never control both price and quantity. If one changes the other has to change, which means quantity will never be unchanged.
Read this with the help of the diagram if you still want to understand further. Bit complicated though -
The original equilibrium of the monopolist firm is established at point 'E' in the figure, when the marginal cost (MC) intersects the marginal revenue (MR) from below. OP and OQ are the equilibrium price and equilibrium quantity respectively. In this situation, the firm maximizes its profit. When the Government imposes a specific tax on the monopolist's output, both MC and AC would rise upward to MC1 and AC1 respectively. The amount of tax is measured by the vertical distance between MC and MC1 The new marginal cost curve MC1 intersects the MR curve at point E1. The new equilibrium quantity gets reduced to OQ1. Further, the new equilibrium price P1 Q1 is greater than the old equilibrium price. It indicates that the tax has been shifted to the consumers. However, the increase in the price as a result of the levying of the tax is generally less than the amount of the tax. Since the increase in price is equal to P1T, the incidence of the tax on the consumers is equal to P1T. Thus, monopolist cannot shift the whole burden of a specific tax to the consumers. To what extent the monopolist will be able to shift the burden of tax to the consumersTo what extent the monopolist will be able to shift the burden of tax to the consumers depends upon the elasticity of demand and elasticity of supply of his product. The more elastic the demand curve (AR) and less elastic the supply curve (MC), the larger will be the incidence of the tax borne by the monopolist and vice-versa. A sales tax whether based upon quantity sold or value of sales will reduce his profit and output level and raise his price.
Question 2.
Find value of multiplier first.
mpc = 3/4
Multiplier = 1 / 1 - mpc
= 1 / 0.25
= 4
Present income is 220 and they want to reach 240. How much investment is needed for it to reach that? a 5 million investment will change to 20 million as the value of the multiplier is 4. Answer is A
I think your main problem with question one is that your thinking of it like a person who doesn't consider economic theory behind any decision. In the real world its entirely possible for firms to increase it by the complete 0.20$ but the question assumes that decision makers for the firm make full use of economics and the assumptions behind a monopoly.
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For the first question, you have to just remember the concept. The entire burden of the tax can never be fully shifted to the consumers in the case of a monopoly. This is because they still have to produce at the quantity where MC = MR. I've added an Attachment and an explanation if needed, but its a bit complicated. Better to just remember that the increase in Tax will always only shift a specific ammount on the consumer which is lower then the original tax. The value which does shift however depends on elasticity's. Also, if it helps at all it even if you dont know much of this, its just a guessing game between option A and B as monopoly's can never control both price and quantity. If one changes the other has to change, which means quantity will never be unchanged.
Read this with the help of the diagram if you still want to understand further. Bit complicated though -
The original equilibrium of the monopolist firm is established at point 'E' in the figure, when the marginal cost (MC) intersects the marginal revenue (MR) from below. OP and OQ are the equilibrium price and equilibrium quantity respectively. In this situation, the firm maximizes its profit. When the Government imposes a specific tax on the monopolist's output, both MC and AC would rise upward to MC1 and AC1 respectively. The amount of tax is measured by the vertical distance between MC and MC1 The new marginal cost curve MC1 intersects the MR curve at point E1. The new equilibrium quantity gets reduced to OQ1. Further, the new equilibrium price P1 Q1 is greater than the old equilibrium price. It indicates that the tax has been shifted to the consumers. However, the increase in the price as a result of the levying of the tax is generally less than the amount of the tax. Since the increase in price is equal to P1T, the incidence of the tax on the consumers is equal to P1T. Thus, monopolist cannot shift the whole burden of a specific tax to the consumers. To what extent the monopolist will be able to shift the burden of tax to the consumersTo what extent the monopolist will be able to shift the burden of tax to the consumers depends upon the elasticity of demand and elasticity of supply of his product. The more elastic the demand curve (AR) and less elastic the supply curve (MC), the larger will be the incidence of the tax borne by the monopolist and vice-versa. A sales tax whether based upon quantity sold or value of sales will reduce his profit and output level and raise his price.
Question 2.
Find value of multiplier first.
mpc = 3/4
Multiplier = 1 / 1 - mpc
= 1 / 0.25
= 4
Present income is 220 and they want to reach 240. How much investment is needed for it to reach that? a 5 million investment will change to 20 million as the value of the multiplier is 4. Answer is A
I think your main problem with question one is that your thinking of it like a person who doesn't consider economic theory behind any decision. In the real world its entirely possible for firms to increase it by the complete 0.20$ but the question assumes that decision makers for the firm make full use of economics and the assumptions behind a monopoly.
ok...i get......at first i taught since it's a monopoly...they have the power to increase price by whole amount since they dont have competition!
Thanks alot Azland!
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i have doubts in Economics A2-P3
O/N'07- qns 10,2027,29
QP-http://www.xtremepapers.com/papers/...d AS Level/Economics (9708)/9708_w07_qp_3.pdf
MS-http://www.xtremepapers.com/papers/...d AS Level/Economics (9708)/9708_w07_ms_3.pdf
p31 O/N '11-2,3,9,24,29 & 30
QP-http://www.xtremepapers.com/papers/... AS Level/Economics (9708)/9708_w11_qp_31.pdf
MS-http://www.xtremepapers.com/papers/... AS Level/Economics (9708)/9708_w11_ms_31.pdf
p3 O/N '08-25 What would increase an economy’s actual output but not its potential output?
A an increase in the capital available to the labour force
B an increase in the labour force’s skill level
C an increase in the number in the labour force
D an increase in the proportion of the labour force employed
ANSWER IS "D"
P31-O/N'09- 5,6,8,9,10,13,18,21,24,26,27 & 29
QP-http://www.xtremepapers.com/papers/... AS Level/Economics (9708)/9708_w09_qp_31.pdf
MS-http://www.xtremepapers.com/papers/... AS Level/Economics (9708)/9708_w09_ms_31.pdf
P31 O/N 2010- 20,27,28 & 30
QP-http://www.xtremepapers.com/papers/... AS Level/Economics (9708)/9708_w10_qp_31.pdf
MS-http://www.xtremepapers.com/papers/... AS Level/Economics (9708)/9708_w10_ms_31.pdf
P3 O/N 2006- 4,16,18,21 & 23
QP-http://www.xtremepapers.com/papers/...d AS Level/Economics (9708)/9708_w06_qp_3.pdf
MS-http://www.xtremepapers.com/papers/...d AS Level/Economics (9708)/9708_w06_ms_3.pdf
PLEASE HELP ME OUT!!!
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http://www.xtremepapers.com/papers/...d AS Level/Economics (9708)/9708_w03_qp_3.pdf
qns 2-how to calculate
http://www.xtremepapers.com/papers/...d AS Level/Economics (9708)/9708_w04_qp_3.pdf
qns 6-why not B.......why D shouldn't it result in fall in demand
qns 30-answer is A
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http://www.xtremepapers.com/papers/...d AS Level/Economics (9708)/9708_w07_qp_3.pdf
qns 17-i chose B but answer is A!
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I have doubts in the M/J 2009 paper 3: Q11,20,21,22,23,28.
Help will be appreciated greatly.