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Use the aggregate demand-aggregate supply model to explain how an expansionary monetary policy can affect output/income
Quantity demanded= 20000-3P
quantity supplied= 15000+2P
a. calculate the equilibrium price and quantity.
b. calculate the price elasticity of supply using the point method when the economy is in equilibrium.
If history repeats itself and we see a decline in the rate of money growth, what might you expect to happen to
a. Real output?
b. The inflation rate?
c. Interest rates?
In the year 2015, Maggie was banned in India for using more than permissible limits of harmful chemicals such as lead, MSG (Monosodium glutamate). After a few months the ban was lifted. However, this controversy made Indian consumers aware of harmful ingredients such as lead, MSG and their effects.a) What could be possible effects of this increasing awareness on the equilibrium quantity and price of Ching’s noodles with one of the ingredients as MSG? Explain with the help of a demand-supply graph.
B)One of the main ingredients used in Ching’s noodle is Maida (refined wheat flour). Suppose in the same year there was a very good harvest of wheat, so prices of wheat fell. How will it affect Ching’s noodle market (compare with part a)?
Q2. Suppose you are on a three-day trip to Rome (from Monday to Wednesday) and during your stay you decide to consume only Waffle and Ravioli (measured on the horizontal and vertical axes respectively). You have a given amount of money (some constant) to spend on each of the three days. Suppose that the price of Waffle rises between Monday and Tuesday. If your optimum points of consumption on Monday and Tuesday are respectively called M and T, such that M to the left of T, what does it say about both the commodities? Illustrate your answer using an appropriate diagram. [3 MARKS, Word limit: 200]
Sanjana loves to read books(B) and likes to watch movies(M) as well. She derives double the satisfaction from reading a book than watching a movie. Her utility function is as follows
U(B, M) = 2B + M
Where B and M are the number of books and movies respectively.
a. Explain the shape of the indifference curve using diagrams. [ Word limit: 200]
b. The income available with her is INR60. And price of movie ticket is INR 10 and that of a book is INR 15. Will she spend her entire budget and why? What will be her consumption, explain why?
Given P = 24-0.1Q, where Q = q1+q2 and q1 = q2, TC1 = 0.075q1^2, TC2 = 0.05q2^2, (i) Show the profit equation of each form. (ii) Determine the output and price of low cost firm. (iii) Calculate the profit of low cost firm. (iv) What profit maximizing price level the high cost firm would have charged had it been a leader?
The income available with her is INR60. And price of movie ticket is INR 10 and that of a book is INR 15. Will she spend her entire budget and why? What will be her consumption, explain why?
Two sisters, Joan and Jocelyn decided to save money in funds that earns 14% compounded annually but on different ways. Joan decided to save by making an end-of-year deposit of P1,000 on the first year, P1,100 on the second year, P1,210 on the third year and so on increasing the next year’s deposit by 10% of the deposit in the preceding year until the end of the 10th year. Jocelyn decided to save by just making an equal deposit of P1,400 annually for 10 years. Who has more savings at the end of 10 years and by how much bigger compared to the other sister?
Q1. Sanjana loves to read books(B) and likes to watch movies(M) as well. She derives double the satisfaction from reading a book than watching a movie. Her utility function is as follows U(B, M) = 2B + M Where B and M are the number of books and movies respectively. a. Explain the shape of the indifference curve using diagrams. [3 MARKS, Word limit: 200] b. The income available with her is INR60. And price of movie ticket is INR 10 and that of a book is INR 15. Will she spend her entire budget and why? What will be her consumption, explain why
