Economics Answers

1. utility function u = x1^1/3 x2^2/3. and income = $60.

a) Solve for MU, and MU2 and use these to determine the MRS. Now use the tangency condition MRS = -p1/p2 together with budget line to solve for the demand functions for x1 and x2 for this consumer.

b) Initially we have p1 = 2 and p2 = 1, but then p1 falls to 1. Use your demands to solve for points A and C (the optimal points pre and post price change). Show these points on a clear well-labelled graph

c) Now determine the Slutsky demand by computing the income that would make point A just affordable with the new prices. Plug this hypothetical income and the new prices into your demands to solve for point B, as done in class. Show both the hypothetical budget line and point B on either your graph in a) or a new graph. Show the substitution and income effects on your graph, and compute them.

d) Graphically, do the same analysis using the Hicks decomposition method ( show it on a graph). Show the income and substitution effects on your graph.

A Corporate customer, A Retail Bank customer, A customer, Mr Raju who has a Savings Bank account with ‘Indian Bank’ Chennai, A corporate customer

For each of the 4 items listed above, as an advisor, what will be your high-level advice

on the process involved and the benefits to the payer and the beneficiary

Assume that you are one of the advisors to customers on Payment options.

a. There are multiple Electronic Payment options available in India. What electronic

payment option will you recommend for the following

1. A customer, Mr Raju who has a Savings Bank account with ‘Indian Bank’ Chennai wants

to make a one-off payment of Rs 10,000 urgently to Mr Alex who has a Savings Bank

account with Citi Bank Mumbai.

2. A corporate customer, ABC automobiles Limited that has a Current account with ‘Bank

of India’ Bangalore wants to pay a sum of Rs 1 crore urgently to another company called

XYZ automobiles who has a current account with State Bank of India, New Delhi.

Assume that you are one of the advisors to customers on Payment options.

a. There are multiple Electronic Payment options available in India. What electronic

payment option will you recommend for the following

1. A Corporate customer (ABC automobiles Limited) wants to pay dividend of varying

amounts to its 10,000 shareholders. ABC Automobiles maintains a current with SBI,

Kolkatta.

2. A Retail Bank customer (Mr Gupta) wants to make monthly repayment (EMI of Rs

15,000 per month) towards Housing Loan taken from Punjab National Bank, Pune

whereas the customer has his Savings Bank account with HSBC Bank, Mumbai

The organization structure of a Bank’s Treasury unit involves designing of its operations

across Front office, Mid-office, and Back office. Describe each of these three operating

arms in terms of its nature, purpose / objectives, and the skills / qualifications of the

people employed in these 3 operating arms

Historically, only larger Banks had the strength of providing Treasury products &

services. Now even smaller banks are into it in a strong way. Enumerate and describe at

least 5 purposes for which a Bank Treasury exists

calculate Mckesson corporation ratios to state its short-term solvency, long term solvency , activity and the profitability .

HOW TO CALCULATE MANUFACTURING OVERHEAD

Assume we have three state economy and two assets :

P(0) = [110.2472 111.7749] 108.5714 131.9048 P(1) = 117.3077 105.7692 119.4175 105.8252

Can you find a set of pseudo-probability consistent with this economy. Is this set unique ? Explain

In attempt to increase revenue and profits, a firm is considering a 4 percent increase in price and 11 percent increase in advertising. If the price elasticity of demand is -1.5 and the advertising elasticity of demand is +0.6, would you expect an increase or decrease in total revenues?