economics paper31 discussion

[biseshbhattarai]

hey could you plz help be with the question no.19 on http://www.xtremepapers.me/CIE/index.ph ... _qp_31.pdf .
how???

 

[djdead1]

ok buddy. this is simple. U do know one thing for a fact that mps is always constant along a consumption function, not aps. so eliminate option A. and if thats true then how can the mps be equal to the aps? eliminate C. also, the aps along a consumption keeps falling because as we earn more our consumption becomes a smaller fraction of our income and aps = consumption/income ryt? so eliminate option B. there, the answer is D

always remember this for a fact, k?


hope dt helped.

 

[djdead1]

ok could sumbudy help me wid q4 here? :S http://www.xtremepapers.me/CIE/Internat ... _qp_31.pdf the answer is B

 

[djdead1]

alos, smbudy teme wht deadweight loss refers to in the context of market sructures..

too lazyyy to open my notes

 

[djdead1]

how is undistributed profits a leakage from the circular flow ? :S

ref: http://www.xtremepapers.me/CIE/Internat ... _qp_31.pdf q16 answer is D i get that buh C ??wsup wid dat

 

[Xenon]

ok could sumbudy help me wid q4 here? :S http://www.xtremepapers.me/CIE/Internat ... _qp_31.pdf the answer is B

MPP of factor X is less than its cost, so it should be raised, to rise MPP of X less of X needs to be employed, (think of the MP curve)
likewise MPP of factor Y is more than its cost, so addition gain is possible by employing more of Y.

u can also make use of the least cost combination of factors of production for this. it is same as the equi-marginal principle, except that instead of MU, it makes use of MP of the factor of production and P is the cost of the factor

 

[Xenon]

how is undistributed profits a leakage from the circular flow ? :S

ref: http://www.xtremepapers.me/CIE/Internat ... _qp_31.pdf q16 answer is D i get that buh C ??wsup wid dat

unemployment benefit is one form of government expenditure which is a injection. thus definitely this is the answer.
about, undistributed profit...... first of all it does not fall in any category of withdrawal or injection(that is what I think)... however, the profit might be saved(W) or invested(J)... rather a uncertain outcome.... but why bother when u have a definite answer

 

[djdead1]

ok could sumbudy help me wid q4 here? :S http://www.xtremepapers.me/CIE/Internat ... _qp_31.pdf the answer is B

MPP of factor X is less than its cost, so it should be raised, to rise MPP of X less of X needs to be employed, (think of the MP curve)
likewise MPP of factor Y is more than its cost, so addition gain is possible by employing more of Y.

u can also make use of the least cost combination of factors of production for this. it is same as the equi-marginal principle, except that instead of MU, it makes use of MP of the factor of production and P is the cost of the factor

life savior

i undrstood the frst one, didnt quite get the second method u mntioned, but still helped alot thanks

 

[djdead1]

just wondering, what is the effect on increase in net exports on Aggregate Supply (in the long run) ...is there an effect?

 

[Xenon]

i undrstood the frst one, didnt quite get the second method u mntioned, but still helped alot thanks

MPa/Pa = MPb/Pb =......= MPn/Pn where a, b......n are factors of production while MP is marginal product and P is price

 

[djdead1]

i undrstood the frst one, didnt quite get the second method u mntioned, but still helped alot thanks

MPa/Pa = MPb/Pb =......= MPn/Pn where a, b......n are factors of production while MP is marginal product and P is price

roger that !

 

[Xenon]

just wondering, what is the effect on increase in net exports on Aggregate Supply (in the long run) ...is there an effect?

I don't think there will be an effect whether short or long run.... that is why supply-side policies are used

 

[djdead1]

http://www.xtremepapers.me/CIE/Internat ... _qp_32.pdf q1. help !!

 

[JamesSmith]

it is going to be A, here the consumer is able to maximize the total utility.
use the formula: (MU/P)
the answer will be where the ratio is highest and in the question above it is only when 2 units are consumed

 

[djdead1]

it is going to be A, here the consumer is able to maximize the total utility.
use the formula: (MU/P)
the answer will be where the ratio is highest and in the question above it is only when 2 units are consumed

i know that ive done similar questions which have the price in dollars......but here the price is in cents the utilities come out in decimals..and i still dont get how da answer is A...funny tho sinc ive done questions like this one :S

 

[JamesSmith]

it is simple. use the price in cents. it is no where mentioned that the price should be in dollars or pounds or yen. it can be anything which fulfills the functions of money.
and it was clearly evident as the marginal utility was continuously decreasing.

 

[djdead1]

it is simple. use the price in cents. it is no where mentioned that the price should be in dollars or pounds or yen. it can be anything which fulfills the functions of money.
and it was clearly evident as the marginal utility was continuously decreasing.

ya buh could u elaborate that highest ratio thing a lil more?

 

[JamesSmith]

2,1.67, 1.3, ...... 0.5!

now in between it was all decreasing. so the ratio was highest and the consumer is RATIONAL and would buy the quantity where the ratio is highest!

 

[djdead1]

2,1.67, 1.3, ...... 0.5!

now in between it was all decreasing. so the ratio was highest and the consumer is RATIONAL and would buy the quantity where the ratio is highest!

listen, this is how u do it ryt??

1st unit = tu = 28
divide 28 by 6 (price) = 4.7?

 

[JamesSmith]

no.
take out the marginal utility (MU) that is :
utility of Unit 2 -utility of unit 1
then divide the answer with the price (i.e. 6 cents)

in the case above:
marginal utility is : 40 -28 = 12
price = 6
ratio: (MU/P) = (12/6)
answer: 2