• We need your support!

    We are currently struggling to cover the operational costs of Xtremepapers, as a result we might have to shut this website down. Please donate if we have helped you and help make a difference in other students' lives!
    Click here to Donate Now (View Announcement)

Economics, Accounting & Business: Post your doubts here!

Messages
318
Reaction score
1,937
Points
253
Okay Paradoxical I will explain your confusions as clearly as I can

October-November-2002, Paper-3
Your 1st question is no. 4, Answer is D WKN. The reason is as worker have now joined the trade union and negotiate a wage rate of OW they will resist any wage cut and any underpayment as a result the new curve for the labour supply will be WKN. Below this line, no member of trade union will be allowed to work. Note that in this case labour supply actually increased but according to theory trade unions actually causes real wage unemployment but it is opposite here as labours realised after joining the trade union that they are being underpaid and are forced to be undermanned (hidden unemployment) as a result labour supply will also increase.

Your 2nd question was no. 9. The answer is A. The reason is that the firm is a profit-maximising firm and thus will charge the price at MC=P which in other words can be written as MC=MR (Profit maximisation point).

Your 3rd question was no. 12. The answer is A. Note that it is a demerit good and thus it was oversupplied. So when it is supplied at optimum level net welfare gain will be the outer triangle. Deadweight loss and gains are always triangles with losses lying in the inside and gains in the outside in case of taxation. This is a question of taxation otherwise supply would not decrease. In case of subsidy losses are outside and gains inside triangle.

The fourth question is 14. The answer is D. This is easy! Real GDP is calculated by multiplying nominal GDP with (price index of the base year divided by the index of this year). Just go through any Economics book for the formula.

Your fifth one is 19, the answer is A. For this one you only needed to remember the definition of accelerator. Accelerator is the change in investment due to change in national income. The capital (investment) : output (national income) is another form of accelerator.

The next one is 20. The answer is A. Only needed to remember Y=C+I+G+X-M. Which can be written as:
90= 2/3 * 90 + (40-3r). r will come as 10%.

Seventh one was 21. The answer is C. Needed the Fisher's equation or quantity theory of money to solve this. If you do not know search the Cambridge economics book.
Fisher's equation is MV=PT. The money supply(M) is given as 6%. PT or MV is also the national income so PT is given as 4%. If you break this equation you can write it as 6%+V=4%. So V = -2% which means that velocity of circulation has decreased. This is the method I follow for understanding but many people do not understand this but this is an ideal method for this question.

Well eighth is 25. The answer is C. If firms keep a constant ratio of stocks to sales it sounds decent but it is actually not. In times of recession we all know that demand decrease as well as price but if a constant stocks to sales ratio is kept price is adjusted to the demand and will not reduce enough for the consumer to buy. The burden of the price will remain the same even though the price may decrease so this will only worsen the situation.

At last 28. What a surprise it is the good old Phillips Curve. Answer:D. I do not want to go into explaining the whole concept of the Phillips curve as this will only confuse you. You just need to remember that the short-run Phillips Curve shifts due to change in expectations and nothing else. The long run one will shift only due supply-side policy.

I hope this helped you. You may ask me anything!
 
Messages
318
Reaction score
1,937
Points
253
Please can anyone clear my doubt
In Paper 31 oct/nov 2011 business studies there is a question 4 that indirectly requires us to calculate price elasticity of demand.
In the mark scheme they have used a different formula
like %change in p/% change in q.
Shouldnt it be the other way round
please if anyone has done the working let me know

That year was the hardest
 
Messages
318
Reaction score
1,937
Points
253
Your avatar avatar looks so sluggish. Its 12:30 in Bangladesh and your avatar has made me sleepy.
 
Messages
318
Reaction score
1,937
Points
253
Deadly in what sense? All I can see a sleeping student. Hey why are you keeping no changing avatars
 
Messages
318
Reaction score
1,937
Points
253
You do have a marvelous sense of humour. Shabash Pakistani. Shabash means well done in Bangla.
 
Messages
399
Reaction score
170
Points
43
dude great work
you eco skills are sexy !
from which u studies eco
i have to read everything again
getting 17 on avg !
 
Top