JNU 2010

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JNU 2010

Ankit Agrawal
Hey guys. I was thinking that if you post all your doubts relating to a particular paper/category at one place, it will greatly ease things and avoid double posting of the same questions. Hence, If you have any doubts related to JNU 2010 paper then please post it here.

Q18 A monopolist faces the following demand function D(P):
D(P)= 10 for P in the interval [0,10]
         20-P for P in the interval (10,20)
        0 for P in the interval [20, infinity)

Now suppose that the monopolist has zero-variable cost of production. However, if it produces any positive amount, it must incur a fixed cost of Rs. 50. What is the optimal monopoly price?

(a) 15
(b) 10
(c) 5
(d) There is no monopoly equilibrium


Q 22 A monopolist has a demand curve with constant price elasticity with absolute value 4. The monopolist charges a price of 60 per unit of output. What is its marginal cost at this level of output?

(a) 23.5
(b) 136
(c) 45
(d) 54

Other Doubts: (related to Q 19) Can a consumer's budget set include (0,0), where (x,y) are the units of consumption of x and y? Yes or No?

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Re: JNU 2010

Ayushya Kaul
Are the answers of 18 and 22, (b) and (c) respectively?
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Re: JNU 2010

Ankit Agrawal
I have no idea about Q 22.

In Q 18, I am confused between (b) and (d). Though I am leaning toward (b).
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Re: JNU 2010

Sumit
In reply to this post by Ankit Agrawal
Q18. b)
Q19. b)
Q22. c)
M.A Economics
Delhi School of Economics
2013-15
Email Id:sumit.sharmagi@gmail.com
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Re: JNU 2010

Ankit Agrawal

Hi sumit

Can you tell me how you solved q 22?

On 15 May 2013 21:19, "Sumit [via Discussion forum]" <[hidden email]> wrote:
Q18. b)
Q19. b)
Q22. c)


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Re: JNU 2010

RHIDIMA
In reply to this post by Sumit
Can u plz explain how did u do Q18...
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Re: JNU 2010

Akshay Jain
In reply to this post by Ankit Agrawal
sol 22. in any market price and mc relation is given by MC=P(1-1/Ed)
substitute the values of P=60 and Ed=4 and get mc=45
Akshay Jain
Masters in Economics
Delhi School of Economics
2013-15
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Re: JNU 2010

Ayushya Kaul
In reply to this post by Ankit Agrawal
There's a formula mate:
MR= MC=p(1-1/elasticity)
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Re: JNU 2010

RHIDIMA
In reply to this post by Akshay Jain
Can u plz solve Q 18..
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Re: JNU 2010

Akshay Jain
In reply to this post by Akshay Jain
for ques no. 18 try to construct the demand curve on X Y plane
the vertical intercept will be at p=20 and horizontal intercept will be at q=10 with a kink at p=q=10
total cost will remain fixed=50
now consider option A..TR=15*5=75
if we decrease price by 1 unit and thus increase quantity by 1 unit we will get larger profit
at p=14 TR=14*6= 84 and so on
finally we will reach at p=q=10 with TR=100
at a price less then 10 q will remain constant at any price so TR will decrese
so ans is P=10 which max profit
Akshay Jain
Masters in Economics
Delhi School of Economics
2013-15
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Re: JNU 2010

RHIDIMA
In the evaluation of option A, u  took TR=15*5. Can u plz tell me what is this 5 here?