JNU Questions

[RHIDIMA]

Someone plz match ur answers with me for the following questions...

Q1) A fair dice has given the number 6 on 5 consecutive throws. What is the probability that the next throw will also give the sam no 6?
a) 1/30
b) 1/6
c) 5/6
d) None of the above

Q2) A monopolist faces a demand curve q(p)=1/p. He incurs a cost of Rs 3 per unit of output produced. There is no fixed cost. His optimal output choice is-
a) 2
b) 3
c) 0
d) No such optimal output exists

Q3) If demand facing a monopolit is measured in kgs & the price is measured in Rs/kg, the DW loss due to the monopolist charging a profit maximizing price is measured;
a) Ln Rs
b) Ln kgs
c) Ln Rs/kg
d) As a pure no

Q4) The nature of the LR =m for a monopolistically  competitive firm differs from that of a perfectly competitive firm bcoz;
a) The presence of supernormal profits
b) The presence of excess capacity
c) The quality b/w MR & MC’
d) None of the above

Q5) A monopolist faces a demand curve with unit price elasticity of demand. For such a monopolist if MC are +ve;
a) Profit maximizing output dsn’t exist
b) Profit maximizing output is where MR=MC & MR is decreasing
c) Profit maximizing output is where AR=MR & AR is decreasing
d) None of the above

Q6) Suppose the monopolist has the C(q)=10q. Inverse demand fn is p(q)=20/q. What is the monopolist’s profit maximizing q?
a) The problem dsn’t have a soln
b) 1
c) Infinity
d) 0

ANSWERS
1) b
2) d
3) d
4) a
5) a (if we consider the case of rectangular hyperbola with ed=1..)
6) a

[vandita24x7]

 6b

[Xiang]

how is 6th answer- b?
i got no solution.

[RHIDIMA]

I am also getting no solution. Plz confirm Vandita for this one & the rest..

[vandita24x7]

also 4b 5b

in q6, p*q=20 which is fixed. and if i produce only one commodity then, cost will be 10q=10*1=10
hence maximum profit will be if i produce 1 quantity.. TR-TC= 20-10=10

[Xiang]

Rhidima,

for this question:
Q5) A monopolist faces a demand curve with unit price elasticity of demand. For such a monopolist if MC are +ve;

did u use the formula- MR=p(1-1/e) which is 0 and hence the option?
Please clarify.
Thanks

[RHIDIMA]

yes i did use the same notion. But i am not sure. And the explaination for Q6(given by Vandita), i dn't think so it's correct..

[Xiang]

Ya i am not convinced :(

others, Please confirm !

[vandita24x7]

Read Varian Guys...!

[Xiang]

@vanditha,
I agree with you on the other answers  but i dont seem to understand the concept- 6b :(

[duck]

6) a
TR is always fixed . So, the only way in which monopolist can maximize his profits is by reducing his cost =10q i.e by reducing the quantity And if he produces zero units then, profit will be zero.
Hence,the problem dsn’t have a solution.

5)a
Same reasoning as above.

[sakshi]

6 is a only coa mr is zero so no at no output is producd.....

[vandita24x7]

see, for such a dd curve wher revenue is fixed..and cost function depends on o/t produced there to obtain the profit max level of o/t, u hav to go by trial methods, see here cost fn is 10q. hence if i produce q=2 then cost = 10*2=20 which is same as revenue(fixed in question) so at q=2 profit = tr-tc= 20-20=0, again if q>2 say q=3 is produced then profit is 20-30= -10 hence not possible. only at q=1 profit is maximized..

ur take agree or disagree..

[duck]

Supose, q=1/2.
His profits = 20-10*0.5 = 15 > profit at q=1. So, definitely q=1 is not profit maximising output.
Ur take..agree or disagree?

[RHIDIMA]

Duck, plz verify answers to Q2, 3 & 4..

[vandita24x7]

but why quantity in fraction?? is it practically feasible for a firm to produce say half or one fourth or for that matter .001 units of something, we have to talk in discrete terms dnt we? and moreover if profits for such dd fns are always 0 y such dd fucnts exist for that matter? if we would have fixed cost of production then what wud be ur response?

[duck]

Firstly, its nowhere mentioned in the question that good produced needs to be an integer!
Existence of such demand in real life..i cannot comment on that.
If there is fixed cost (lets say 10) then Profit will always be equal to 20-10 = 10. So, no matter what amount he produces, he'll always get 10rs.

[vandita24x7]

yes i agree its not mentioned about q being integer, but pls tell me do we say dat quantity produced by a firm is say 32.6, we make it discrete dnt we?

[taanya]

hey vandita
I dont think the answer can be (B) for ques 5...as per the formula mr=ar(1-1/e)...if e is unit then mr should be o and so we cannot obtain any profit maximizing output...ur thoughts??

[taanya]

ALSO someone please help me in doing question 27 of jnu 2011??