JNU SIS 2012

[Ashima]

 Viv: In 4th why are we increasing the price by the amount of subsidy, why aren't we decreasing it?

[Shefali]

Ashima,when d govt imposes tax ss fn becomes P-tax and when subsidy then it becomes P+tax.

[ViV]

@Ashima : Subsidies are like incentives to farmers to produce more. So always add subsidies in prices. If you look in current Indian scenario Govt. gives subsidies to farmers using minimum support price(MSP) because of this food prices are rising. "Providing Subsidy is a very controversial issue."
 

[ViV]

@Shefali : I think it's (b)
Though you show your working. I may be wrong.

[The Villain]

                 food           cloth
country a       7/5           5/7
country b       8/12     12/8



hpe u got :))

[ViV]

Why you have posted this?

[divyajain]

can somebody explain q1-q4?

[ViV]

Q1
Qd =10-2P
Qs =3P-5
p* = 3
Q* = 4
Draw figure
X-intercept at Qd = 10
y-intercpet at Pd = 5 and Ps = 1.6
Using Area of a triangle = 1/2*b*h
CS = 1/2*2*4 = 4
PS = 1/2*1.4*4 = 2.8

Govt support Price is Rs.4(put this P=4 in DD and SS equations given)
So, New Qd =2 and New Qs =7
New CS = 1/2*1*2 = 1
New PS = 1/2*2.4*7=8.4
Gain in PS = 8.4-2.8 = 5.6=11/2 (c)

Q2
Change in CS = 4-1=3 (c)

Q3
Total SS =7 at Rs. 4
Total DD(private) =2 at Rs.4
Excess SS = 7-2=5 which govt has to take care.
Cost to the Govt. 4*5 = 20 (b)
Q4
Govt. Subsidy will increase the price so Qs = 3(P+5/3)-5 = 3P and Qd = 10-2P
P* = 2 and Q* = 6
Cost to the govt. = 5/3*6 = 10 (a)

[ViV]

Fig for the same..
2014-05-08_12.jpg

[Ridhika]

viv,

In ans 4 how are you getting  Qs = 3(P+5/3)-5 = 3P ? where did the 3P in RHS appear from, and what is its purpose? I thought we have to just set Qd = Qs --> so  3(P+5/3)-5 =  10-2P . This gives p*=2 and q*= 6.. and cost of subsidy = 10..

[Ridhika]

Someone, please explain 18?

And what is the verdict on 23? I think its (A) using the same reasoning as Viv..

[The Villain]

Ridhika.
q18..
phi of .8 should be.288
Find Z which is -.8
now,
p(Z<-0.8)=p(z>.8)
                   =.5-p(z<.8)=.5-.288=.212

[The Villain]

q 23 is b..

[Ridhika]

Thanks Ron !

----- Reply message -----
From: "Ron [via Discussion forum]" <ml-node+[hidden email]>
To: "Ridhika" <[hidden email]>
Subject: JNU SIS 2012
Date: Mon, May 12, 2014 2:14 PM

Ridhika.
q18..
phi of .8 should be.288
Find Z which is -.8
now,
p(Z<-0.8)=p(z>.8)
                   =.5-p(z<.8)=.5-.288=.212

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NAML

[ViV]

@Ridhika: Solve this  Qs = 3(P+5/3)-5. You will get Qs= 3P and Qd = 10-2P.
Equating Qs = 3P and Qd = 10-2P
P* = 2 and Q* = 6

[Ridhika]

Oh..haha ! Sorry didn't realize that that's what u mean ! Thanks :)

----- Reply message -----
From: "ViV [via Discussion forum]" <ml-node+[hidden email]>
To: "Ridhika" <[hidden email]>
Subject: JNU SIS 2012
Date: Mon, May 12, 2014 3:05 PM

@Ridhika: Solve this  Qs = 3(P+5/3)-5. You will get Qs= 3P and Qd = 10-2P.
Equating Qs = 3P and Qd = 10-2P
P* = 2 and Q* = 6

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[ViV]

23rd is (b). I did mistake...

[Ridhika]

Okay ya .. I also got it ! 

----- Reply message -----
From: "ViV [via Discussion forum]" <ml-node+[hidden email]>
To: "Ridhika" <[hidden email]>
Subject: JNU SIS 2012
Date: Mon, May 12, 2014 4:15 PM

23rd is (b). I did mistake...

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NAML

[akanksha]

can somebody olz explain q 21.. m not getting it

[Ridhika]

Even I'm not getting it.. do you guys think something might be wrong with the question ? Because right now money market isn't based on Y at all.. which is weird right ?

----- Reply message -----
From: "akanksha [via Discussion forum]" <ml-node+[hidden email]>
To: "Ridhika" <[hidden email]>
Subject: JNU SIS 2012
Date: Tue, May 13, 2014 8:37 AM

can somebody olz explain q 21.. m not getting it

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NAML