Economics-entrance past year problems

[Amit Goyal]

We can discuss the past year problems here. Feel free to post the problem and the suggested solution. (Please post the complete problem and not just problem numbers)

[Khushboo]

1- Experience shows that 20% of the ppl reserving tables at a certain restaurant never show up. If the restaurant has 50 tables and takes 52 reservations, then the probability that it will be able to accommodate everyone is what?

[Amit Goyal]

Prob all 52 comes= (4/5)**52
Prob 51 comes= 52(1/5)(4/5)**51=13(4/5)**52
Prob that it will accomodate all=1-Prob(more than 50 turns up)=1-14(4/5)**52

[kirti]

In the Is-lm model,if the economy is in liquidity trap and agg. Investment expenditure is unaffected by current income,a rise in govt expenditure would lead to a rise in the equilibrium value of.   A) demand for money. B) agg savings. C) agg investment                                                                                                                                      

[Kanika]

 B)Aggreagate savings.In the liquidity trap LM curve is horizontal,Hence an increase in govt expenditutre will shift IS curve to the right which would lead to increase in income/ouput,and lead to a rise in aggregate savings as Y=C+S.

The other options would be eliminated as an increase in income does lead to increase in money demend due to which the interest rate should rise but that is not possible in the liquidity trap also investment would not incerase as investment is not a function of income and the interest is unaffected.

[deepti]

sir plz explain the question no. 1 in peb 2012

[Rajat]

Hi Amit,

For the probability question, can you please help me understand how probability of someone who has made reservation actually not turning up = 20 % ?

From the information provided, what i understood is if 10 people make reservations, 2 will not turn up.
I am not able to comprehend how this same information also means that the probability for each person of not going is 20 %

[Sris]

Pre trade relative prices in Ricardian model are....
A) determined by the dd behaviour of the economy
B) determined by composition of production of the economy
C) independent of the dd behaviour of the economy
D) dependent on the social utility function

[siddharth]

Do we add both remittances and repatriation of profit in calculation of GNP???

[Sris]

Amit sir plz reply to my question..jnu entrance is round d corner

[Var1995]

sir, in the second expression, shouldn't it be (4/5)^51 ?