ISI 2010

[neha.]

Hi,

In ISI 2010, in part b of question number 3 we are given one point each  that lies on the respective demand curves so i could find out linear demand functions but they have constants,,, so any thoughts around that?

can someone please confirm the following answers thati am getting for the following?

Q4: X1/X2= P1*K bar/ P2* L bar
 
Q6: equation of the expansion path : 2L=K

http://economicsentrance.weebly.com/uploads/1/1/0/5/1105777/msqe2010.pdf 

[Ram]

Hi, the answers I got for Question 3 b part are
For business class tickets   P=350-(q/10)
For Economy class tickets   P=110-(q/200)
I have taken it as normal linear inverse demand function which is P=a-bq and we know one point on the curve and we also know the MC of both. So we will get two equations in two unknowns i.e. from substituting the point on the curve we will get one eq and by equating MR=MC we will get eq.

[neha.]

Hi ram, thanks for replying
but i tried this before but the second equation that we get by equating MR = MC has q in it, so there are three variables,,, plus this condition dont u thinks holds true only at eq. value of which is not given,, so can u please explain how did u find them?

[SHIKHA]

u need to put q=1500...den two equations two variables

[neha.]

Hey shikha,, i get that but how are u so sure that 1500 is the equilibrium quantity as nothing of that sort is given

[Ram]

Hi Neha,
Here the inverse demand function is P=a-bQ so now here we know one point on the line i.e. equilibrium point (1500,200) and now we get
200=a-1500b ------- (1)
now equate MR=MC
here MR is a-2bq=50 but q=1500 so a-3000b=50-------(2)
by solving eqs (1) & (2) you will get the equation..similarly you can find the demand function for Economy class as well..
Hope it helps :)

[AJ]

@ neha...

hiii.. can u pls explain how u got answer for Q.no. 4

and for question no.. 6 .. ya expansion path is same.. and did u got input prices as (4,4)...???

[neha.]

thanks for replying:)

yeah i am getting 4,4 as input prices...

actually the answer for question 4 that i was getting is  (p1*K bar)/ (p2 *T bar),,,,, what answer are u getting?

[AJ]

I am not getting anything for that question...

I dont know how to proceed....

And have u solved all from 2010.. i vl post the answers if u have.. and u just match them..
then i vl know if i am thinking along the right lines or not for these answers......

[neha.]

@AJ,, this is how i have done question 4,,

since the factor markets are competitive and labor is mobile,, VMPL for X1= VMPL for X2,,  and since land and capital are specific factors,, they will only be used in their respective markets,,,

solving the above equation and subsituting the value of L1 as Lbar -L2 should take u to that answer,,, this is how i thought of doing this question,,,

and yeah u post the answers of 2010,, i have done some of them

[tim]

cn someone temme if m dng q9 of me 2 2010 correctly ?
 
ive used lagrange here. objective being - (x1-s1)^.5(x2-s2)^.5 and constraint is M-xp1-xp2.