MCQ Economics Paper 1 October/N Q 24

[Xenon]

dude, i will solve the remaining ones latter/soon.

 

[nirajgrg]

Re: MCQ for economics 2007 May Q11

goods X and Y are complements

what will be the effect on the equilibrium price and quntity of good X of an increase in the supply of good Y?
Equilibrium price of X/ equi Quantity of X

A-decrease/decrease
B-decrease/increase
C- increase/ decrease
D- increase/ increase

Increase in the supply of Y will decrease its price as the supply curve shifts to the right
since X and Y are complements, the demand for X will rise as the price of Y has fallen
so now the demand curve for X will also shift to the right which will increase both the eq. price and quantity of X
ans - D

 

[nirajgrg]

Re: MCQ Economics 2007 Paper 1 May/june Q 4

A farmer can produce both beef and lamb. The opportunity cost of a kilo of beef is 3 kilos of lamb. The price of a kilo of beef is twice that of lamb.

What should he do if he aims to maximise his revenue?
A-concentrate on beef
B- concentrate on lamb
C- produce beef and lamb in the ratio 3:2
D- produce twice as much beef as lamb
ANSWER IS B could someone please do the calculation.

lets suppose the farmer earns $1 for a kilo of lamb, thus he will earn $2 for a kilo of beef

option A
it will not maximise his revenue as for every kilo of beef, he will only earn $2
he can produce 3 kilos of lamb for every kilo of beef and can earn $3 in this case

option C
if he produces 3 kilos of beef and 2 kilos of lamb, he will earn 3*2 + 2 = $8
if he produced 11 kilos of lamb instead (3 kilos of beef=9 kilos of lamb) he would earn $11 with the same resources

option D
if he produces 2 kg beef and 1 kg lamb, he will earn $5
again if he produced 7 kg of lamb instead, he would earn $7

thus it is necessary to only produce lamb if he wants to maximise his revenue
ans - option B

 

[Nobody]

MCQ Economic 2008 November Questions Paper1

Q 27 Acountry succeeds in attracting foreign direct investment. How is the effect recorded in its BOP in the short run and long run?

SHORT /LONG RUN
A- a credit item in the current account / a debit in the financial account
B- adebit in the current account / a credit in the finacial account
C- a credit item in the finacial account / a debit in the current account
D- a debit item in the finacial account / a credit in the current account.

the answer is C, please explain/

Q 29) with an exchange rate of 5 Eqyptiaan pounds (EGP)= 1 US ($), an american product sells in Egypt for EGP100

Assuming the dollar price remain unchanged, what will be the price of the product in Egypt if the Egyptian pound appreciated to EGP 4= 1 US $?

A- EGP75 B-EGP80 C-EGP120 D-EGP125

 

[nirajgrg]

For q27, correct ans is option C because, in the short run the country has received funds in the form of investment. Any amount received is recorded as credit item. the inflow of investment funds is recorded in the financial account. in the long run though, the country will have to pay back some return for that investment. this amount will be recorded as debit item in the current account as it comes under income section of current account.

for q29, EGP 100 = US $ 20, since the dollar price remains same, later US $ 20= EGP 80 ($1 = EGP 4), so ans - option B

 

[Nobody]

MCQ Economics 2004 October Paper 1

Q7) this involves a simple diagram would someone please explain. the answer which is A,,,,and would someone please briefly explain to me the difference between unitary income and unitary demand and unitary supply,, thanks

 

[Xenon]

Re: MCQ Economics 2004 October Paper 1

Q7) this involves a simple diagram would someone please explain. the answer which is A,,,,and would someone please briefly explain to me the difference between unitary income and unitary demand and unitary supply,, thanks

one key concept associated with unitary price elasticity of demand is that the expenditure remains same whatever quantity is consumed. this is because a percentage rise in price is matched by an equal percentage fall in demand and vice versa. therefore, an expenditure against quantity diagram should be a horizontal line.

unitary refers to 1. so unitary income should mean that when there is a percentage change in income, the % change in demand for a good is same. for unitary demand, the % change in price is equal to % change to demand. the same is for unitary supply except that instead of demand it is % change in quantity supply. the diagram for unitary supply is a straight line through origin.

 

[Nobody]

MCQ Economics 2002 Q 24

the table shows information about a country whose consumers spend their income on three commodities, P, Q, and R

Commodity / Index of price in year 1 / Index of price in Year 2
P / 100 / 160 /$ 100million
Q /100 /80 / $ 300 m
R / 100 / 100/ $100 m.

Between year 1 and year 2 how has the general level of prices changed ?
A- it has risen by 40 %
B- it has risen by 10 %
C- it remained the same
D- it has fallen by 5 %
would someone please explain.

 

[Nobody]

MCQ Economics 2003 n0vember

the table showws alternative price elasticitiees of demand for exports and imports of country X

there is a depreciation of the currency of country X

Assuming there are no supply bottlenecks, which combination of price elasticities offers the best prospect for an improvement in the balance of trade

Combination /exports /imports
A/ 0.5 /0.5
B/ 0.8/1.2
C/1.5/1.5
D / 2.0/ 0.5
the answer is C??

 

[Xenon]

Re: MCQ Economics 2002 Q 24

the table shows information about a country whose consumers spend their income on three commodities, P, Q, and R

Commodity / Index of price in year 1 / Index of price in Year 2
P / 100 / 160 /$ 100million
Q /100 /80 / $ 300 m
R / 100 / 100/ $100 m.

Between year 1 and year 2 how has the general level of prices changed ?
A- it has risen by 40 %
B- it has risen by 10 %
C- it remained the same
D- it has fallen by 5 %
would someone please explain.

price of P rose by 60%, q reduced by 20%, R remained unchanged
change in expenditure = 60x100m - 20x300m + 0x100 = 0
since there is no change in expenditure, prices remained unchanged, ans:

 

[Xenon]

Re: MCQ Economics 2002 Q 24

the table shows information about a country whose consumers spend their income on three commodities, P, Q, and R

Commodity / Index of price in year 1 / Index of price in Year 2
P / 100 / 160 /$ 100million
Q /100 /80 / $ 300 m
R / 100 / 100/ $100 m.

Between year 1 and year 2 how has the general level of prices changed ?
A- it has risen by 40 %
B- it has risen by 10 %
C- it remained the same
D- it has fallen by 5 %
would someone please explain.

price of P rose by 60%, q reduced by 20%, R remained unchanged
change in expenditure = 60x100m - 20x300m + 0x100 = 0
since there is no change in expenditure, prices remained unchanged, ans: C

 

[Xenon]

Re: MCQ Economics 2003 n0vember

the table showws alternative price elasticitiees of demand for exports and imports of country X

there is a depreciation of the currency of country X

Assuming there are no supply bottlenecks, which combination of price elasticities offers the best prospect for an improvement in the balance of trade

Combination /exports /imports
A/ 0.5 /0.5
B/ 0.8/1.2
C/1.5/1.5
D / 2.0/ 0.5
the answer is C??

depreciation of currency will improve BOP if the country first of all fulfills the marshall-lerner condition which says that BOP will improve if (PED of export,X + PED of import, M)> 1
C and D fuldfills this condidtion.
But in D, the PED of M is inelastic, depreciation will not be effective enough to reduce expenditure in imports unlike in C.
thus C is correct.

 

[Nobody]

Re: MCQ Economics 2003 n0vember

the table showws alternative price elasticitiees of demand for exports and imports of country X

there is a depreciation of the currency of country X

Assuming there are no supply bottlenecks, which combination of price elasticities offers the best prospect for an improvement in the balance of trade

Combination /exports /imports
A/ 0.5 /0.5
B/ 0.8/1.2
C/1.5/1.5
D / 2.0/ 0.5
the answer is C??

depreciation of currency will improve BOP if the country first of all fulfills the marshall-lerner condition which says that BOP will improve if (PED of export,X + PED of import, M)> 1
C and D fuldfills this condidtion.
But in D, the PED of M is inelastic, depreciation will not be effective enough to reduce expenditure in imports unlike in C.
thus C is correct.

if so then for B= 0.8+1.2=2.0 which is greater than 1?

 

[Xenon]

oh, forgot about B. yes, B,C and D fulfills marshall-lerner condition but with C the depreciation will be most effective.

well, in B, PED X is inelastic. so a fall in price will cause demand to change by small amount n since it is <1, income will rather fall as we know when PED<1, income/expenditure and price moves in opposite way. the same is for M of D, import expenditure will not fall much. but since both PED are >1 in C, it is the most effective.