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Given the Following output schedule of a firm, calculate its marginal cost at different levels of output.
Units of Fixed Input-2
Units of Variable input - 0,1,2,3,4,5
Total output-0,10,25,50,65,70
Further, the price of fixed input is Rs. 200 per unit. And the price of a variable input is Rs. 100 per unit.
Assume that maize is a normal good. If the price of maize rises, then the substitution effect results in the person buying … of the good, and the income effect results in the person buying … of the good.
1.
more, more
2.
more, less
3.
less, more
4.
less, less
The sum of consumer and producer surplus is a measure of the economic well-being of a society.
Select one:
True
False
If the cost of producing an inferior product rises, and people’s incomes increase at the same time, the equilibrium price will …
1.
decrease.
2.
increase.
3.
stay the same.
4.
be indeterminate.
A trader collects the below information to devise his forex management strategy during
the next year:
Spot Rate of USD: INR 74.40
Interest rates in USA: 2.5%
Interest rates in India: 6.5%
a) What is Interest Rate Parity Theory? What will be the expected exchange rate in the above
case, if the interest rate parity theory is assumed to hold good. Also calculate the forward
premium or discount.
b) What is covered interest arbitrage? If there is a one-year forward contract available at
INR 75.60, is there a CIA possible, and if yes, write the steps to earn arbitrage profit (use
an equivalent amount of INR 1000000)
Use a graph to explain how the equimarginal principle can be applied to minimise production costs
What is contigent valuation and what are the potential problems of this method?
for the following pair of equations determine algebraically the equilibrium price and output Q=6-p, QS=3P-2
Draw a demand curve for MP3 downloads. In your diagram, show a price of MP3 downloads per tune and the consumer surplus that results from that price. Explain in words what this consumer surplus measures.
Draw a supply curve for MP3 downloads. In your diagram show a price of MP3 downloads and the producer surplus that results from that price. Explain in words what this producer surplus measures.
The cost of producing Blu-ray DVD players has fallen over the past few years. Let’s consider some implications of this fact.
a. Use a supply-and-demand diagram to show the effect of falling production costs on the price and quantity of Blu-ray DVD players sold.
b. In your diagram, show what happens to consumer surplus and producer surplus.
c. Suppose the supply of Blu-ray DVD players is very price elastic. Who benefits most from falling production costs – consumers or producers of Blu-ray DVD players?
