dse 2012 doubts

[maahi]

q1 .
q2 why is option c ruled out
q4 why not option b ??
q16
q17
q20 why not option b ??
http://economicsentrance.weebly.com/uploads/1/1/0/5/1105777/2012-option-a.pdf

[Sumit]

Q1. Suppose Landowner have Rs.100 Saving n As he deposits it in Bank he will get 8% interest rate....So, At the end he will get 108 in total....

Now, consider the case in which he made a single loan of all his saving i.e Rs.100 to a villager but as the question mention only 60% of this principle amount is repaid.
So, the int. rate that make his earning equal=(108-60)*100/60=80%.

Q2.let consider an example suppose If person A n Person B both have Rs.1....& If we convert person A one rupee in Paise i.e 100 paise would this make any difference...?????

Q4. Bcoz we need the person should have a utility function in which cheese  drive maximum utility.w.hich only option a) is doing...

Q16.this question is discussed few weeks back.

Q20.If you consider fishers effect i.e i=r+Expected inflation, so if real interest rate falls that could mean expected inflation increase  in order to keep nominal int. rate constant....any ways if we consider the nominal int rate decrease due to fall in real int. rate in this case too...investment demand cure will not shift bcoz investment demand curve shift only when investors find a way to increase there profit for same cost of borrowing i.e int rate....e.g tax rebate on investment by govt, technological advancement etc...

[maahi]

hi
  thanks

in q1 why have u multiplied by 100/60 ?
in q20 i m nt yet convinced

[Sumit]

Q1. 100 to get percentage of 48/60 n 60 for amount repaid...

Q20. what do you think why it should  b)real int rate to falls???????

[maahi]

investment depends on real interest rate as the amt d firm can can purchase is affected by inflation rate and nominal interest rate . so r=i -inflation goes down then u can buy more with less money and cost of borrowing has gone down so invest shd increase

[maahi]

do u know this 1 ?
How many 5-digit zip codes can be made where all digits are different?
The possible digits are the numbers 0 through 9.

[Sumit]

@Mahi:
Suppose if we take investment depends upon real interest rate{which usually not bcoz for a investor cost of borrowing is equal to real int.rate(the real cost of borrowing)+expected inflation(this inculde in cost boz due to it in future he need to pay with less valuable money which indirectly increase it cost or we can say he need to pay more due to inflation boz Purchasing power of money is reduce) which is equal to nominal int. rate}..In the case where there is no inflation we can consider investment depends upon the real int rate...

Now, suppose if real int. rate falls as you mention investment increase you r absolutely correct about it...but I think the mistake you making here is that the investment demand curve will shift due to fall in int. rate but it is not like that there will me movement along a investment demand cure not shift...

[Sumit]

I think it should be 10*9*8*7*6=30240..

[maahi]

but shouldn't d first no. be chosen in 9 ways as if we take 0 then it wud be a 4 digit no . ??

[maahi]

ohh yeah i got my mistake thanks

[maahi]

can u do this one ?
If, for a given experiment, O1;O2;O3;


is an infinite sequence of outcomes,
verify that
P(Oi) =1/2 i( i is d superscript ) ,  i= 1,2,3....

is a probability measure.

[Sinistral]

The way u put up the ques is vague. What i understood is :
O1,O2,O3.... ∞, are outcomes of an experiment with Probability of each outcome being
P(Oi)= (1/2)^i
Is this so??

If yes, then its obvious that it is a probability measure because:
P(Oi)  ∈ (0,1) ∀ i
and ΣP(Oi) ∀ i = 1/2 + (1/2)^2  (1/2)^3 .... ∞ =1 (sum of infinite GP)
hence P(Oi) is a probability measure.

[Sumit]

@mahi, my bad u r right...It will be 9*9*8*7*6.

[Sinistral]

for Q 16)
see function f(x) = x^7 - x - 1
note that it is negative at x=0, f(0)= -1
it is positive at x=2 , f(2) >0
so at least one real root when x  ∈ (0,2)
option c

[maahi]

wow that was so easily explained thanks :-)

@sumit thanks :-)

q17 anyone ??/

[Sinistral]

ques number 17 remained unanswered I think.

F(x) has slope 1 when x  ∈ [0,1]
since it is closed interval we can conveniently say that F(x) =  0, x<0
                                                                                    x , 0 <= x <= 1
                                                                                    1 , x>1
differenting F(x) to get f(x)
f(x) = 1 , 0 <= x <= 1
      = 0, elsewhere

hence option b

[maahi]

thanks :-)

[duck]

Hey Sumit..:)
For q2) The basic argument is monotonic transformation of a utility function doesnt change the order of ranking. So, PE points will remain the same.
Eg: Utility of A = x+y. If you tranform the utility of A to (2x+2y). It will not make a difference.

[riddhima]

Hey guys
Explain me q2, I do get the logic for option c, but for option a and b have doubts.

Thanks!