Points of discontinuity (holes and vertical asymtotes)

[soimmoi]

Hey!2004 Paper b,c,d match but for a) 1200-100-50+ 200(we add transfers from government and ROW in personal income)
AND A is preferred over B&C but how can you say anything abou B&C prefrence order
there is one more ques. A monopolist faces 2 dd curves  q1 = 10/p1   and q2 = 100 - p2  MC =CONSTANT at 20 So, in 2nd market it'll produce 490 units and price 510 what about the 1st market will he produce anything in 1st?

[soimmoi]

for the ques Vidhya asked no such output does not exist because,  0.5 gives you higher profit than 1 and 0.25 gives you even higher than 0.5 and so on.

[Econenthusiast]

For 1, I'm getting that the consumer's preferences violate WARP. He does not show maximising behaviour.

[Econenthusiast]

You're right soimmoi, made some hasty calculation mistakes earlier.

Bundle A, B and C at A's prices: A - 200 B - 200  C-240
At B's prices A- 510  B-265  C-220

At C's prices  A- 440 B- 260 C-240

For A and B, A is chosen even when B was affordable in case 1. By WARP, A becomes unaffordable when B is preferred. A is preferred over B.

Similarly, B is preferred over C. By transitivity A is preferred over C.

[soimmoi]

Thank you 
5.a person's income increased by 70% over a 2 year period.during this period the consumer price index increased by 50% in first yr nd 20% in second year.what is person's real income compared to beginning
a 10% lower  b unchanged  c 5.56% lower  d none of above

[Econenthusiast]

how did you get 510 and 490 for the monopolist question, by equating MR and MC shouldn't it be 40 and 60 ??

[Econenthusiast]

Anytime

I'm getting option a

[Vidhya]

But we can't consider non-integer values for q (as 0.5), can we? For the monopolist question with a hyperbolic demand curve.

In a closed economy, the marginal propensity to consume halves but the level of investment remains the same. Assuming all other things do not change, at the new equilibrium, in comparison to the earlier one.
(a) Savings doubles.
(b) Income halves.
(c) Savings is unchanged.
(d) We cannot necessarily claim any of the above.

Since investment remains same, can the answer be c)?

[Econenthusiast]

hmm..  I see, that makes sense, yes. Vidhya, so I guess it should be option a

[soimmoi]

hey! yes savings remains unchanged i did it using an example
by mistake I wrote 510, sorry  q= 40 p = 60
and to my knowledge we can take non integer values as well.
what's the ans for real income please tell the procedure

[Econenthusiast]

Growth in nom income = 70 percent
growth in prices = 80 percent ( 150 x 120/100 = 180/100)

Growth in real income = Growth in nom income - growth in prices = 70 - 80 = -10 percent

[Rayee]

Soimmoi,For 2004 wala question, I calculated PDI and then PI. I don't understand your method. and based on that answer after a series of adjustments I arrived at the other answers. So if the others match and (a) doesn't that would be a little odd.
 
Econenthusiast, he doesn't violate warp:) your calculations are fine.
Also for hyperbolic demand curves I don't think there usually exists any profit maximizing output.

[Rayee]

Ummm.. Why would you take the product to calculate the growth in price?

[soimmoi]

Rayee, for b) NNP it's direct personal consumption expenditure 1200 so, ans 1200 no other component given to calculate that
c)NNP - NIT = 1200 - 200
D)1200 + 200 = 1400
A) personal income and personal disposable income are different concepts in personal disposable income you sub. direct taxes too
and please see this ques too, All other things remaining constant a rise in exchange rate of rupee againt dollar implies
a) depreciation of rupee against dollar   b) depriciation of dollar against rupee   c) both    d) none
my sol:  a
Hey! even i've a lil doubt about that multiplication of prices, can you please explain

[Econenthusiast]

I took 100 as the base price, by the end of first year it becomes 150 and by the end of second year this becomes 120/100 x 150 = 180. Overall there is an 80 percent increase in price

[Econenthusiast]

Okay :D

[Rayee]

Thanks enthusiast :D
Rupee depreciates soimmoi

[soimmoi]

Thank you, Econenthusiast and Rayee

[Rayee]

Anybody mind sharing what they are doing about the current affairs questions. Where do I get the data from?

[Econenthusiast]

I might stick to Uma Kapila alone, and a brief reading of some financial newspapers