DSE 2007-paper Discussion

[kangkan]

I have these doubts.

http://economicsentrance.weebly.com/uploads/1/1/0/5/1105777/30_jun_2007_option_a.pdf

3....i am getting c... have double checked...also by varian for u=min(x1,x2/2), the optimal useage is 2 units of x2 for 1 unit of x1

41,44,45..i am unable to make any headway

will appreciate any help :)

[mrittik]

No baba Kangkan...have u heard abt Duality....basically Utility Fn & Prod Fn both are same....so 2K=3L=>K=3/2 L

41. have u idea of Quasi-convexity or The upper Contour part of Utility Fn where more of goods are better...by easy visualization of more quantity demanded you may find that Opt B is the right thinking.

44. You may use the easy one...(-1-alpha, 1+ alpha)=>[-1,1]....moreover as per the rule of Sequence states that intersection of infinite open sets is closed set. This property contra-intuitively states that union of infinite closed sets is open sets=> this idea gives you the prob 45.

[mrittik]

sry qsn 41 is Quasi-concavity....lapus

[kangkan]

Duality as in linear programming duality?

[mrittik]

Duality is the Same interpretation of Cobb-Douglas in 2 diff way...u may follow Varian's analysis book...u may got this idea....no way related with linear programming duality

[akanksha]

can somebody plz help me with q 28..cant understand
Q31-34.40,45 Thanks :)

[kangkan]

@akansha

31.
if workers can guess correctly, pe=p
W=(1+l)W(1-au)

Solving we get u= l/(1+l)a

where a=alpha and l=lamba...this is the optio given in amit sirs key

[kangkan]

@40

for a flexible exchange rate and capital mobility, a lump sum tax increase will shift the IS curve to the left....capital outflow will lead to currency depreciation till the IS curve is back at the starting point..you can refer to donbausch for this

[kangkan]

@45

Set 1(n=1)= [0,0] null set
Set 2        =[-1/2 ,1/2]
Set 3        =[-2/3 to 2/3] and so on


As n keeps increasing set k approaches [-1,1] ..now this will be all points on the number line for -1 to 1.Also, it will include all points of the previous sets.....hence the option is (-1,1) since the set (k) never only tends to [-1,1] but never quite reaches those values

I hope this helps :)

[akanksha]

awesome..thanku so much kangkan.
can u also plz take a look at 28th

[kangkan]

did you solve 27.?.it follows directly from there

[akanksha]

ya i did..i.got the answer also..
for 28th..is the bound it is talking bt is budget constraint
does having a bound implies pareto efficiency?
can u explain plz

[kangkan]

yes..

Now the U1=X^2*y

here x=root 8=2.82 and y=2

Now ,to keep agent 2 at the same level, we wud take delta x1 from him and give delta x2

but

(2.82+delta x)^2 + (2-delta)^2>=12 for all deltas

hence,the constraint makes this particular allocation optimal :)

[rongmon]

Questions 25 and 26!

[rongmon]

Could you share the solution for Questions 27 -30?

Thank you.

[rongmon]

Question 36 anyone?

[rongmon]

and 39!

[ViV]

find i from M/P equation. Put this i  into the Y equation(Y=C+I+G) and take derivative w.r.t G.

[ViV]

Dude!! these are easy questions... You may be exhausted take a rest then give it a try...

[rongmon]

thanks viv