economics question

[Chakshu]

1) The demand for spring water is given by P = 1000- Q. Assume that the cost of
    production to be zero. What is the equilibrium price for the industry if there are four
    firms in the industry?
a) Rs. 800
b) Rs. 200
c) Rs.100
d) Rs.100

2) From the following National income data, what will be the value of net factor
    income from abroad?
   GNP at factor cost -         172250
   Subsidies-                        520
   NNP at market price-       163740
   Depreciation-                  12180
   NDP at factor cost-          157170

a) 2750
b) 2600
c) 2900
d) 2850

3) For an economy, goods market equilibrium is : 0.5 Y = 3125 – 25 i
    If expansionary monetary policies decrease the rate of interest in the economy by one
    percentage point, the equilibrium income will

a) decrease by 25
b) increase by 25
c) decrease by 50
d) insufficient data

[Anviksha]

1..
P= 100-Q
i th firm maximizes its profit given others quantity.
πi = qi(1000-Q)
   =1000qi-Qqi
   = 1000qi-qi(qi+summation qi but not i )
    = 1000qi-qi^2-qi( summ other qi)
First order condition:
1000-2qi- summ other qi=0
Since production cost is zero and same for all.. Each firm priduces same quantity in equilibrium..(symmetric firms).
And in equilibrium foc is also satisfied.
Thus all qi* are same..
Using this in foc: 1000-2qi-3qi=0
Thys, 5qi=1000 and qi*= 200
Q= 4x200 = 800
Hence P = 1000-800= 200

[Anviksha]

3..
0.5Y=3125-25i
deriving the IS equation:
25i=3125-0.5Y
i=125-0.02Y  - 1

deriving the LM equation:
M demand = kY-hi where k & h represent income and interest sensitivities of money demand..
for eqm in money market kY-hi=exogenous money supply.
let this exogenous money supply be X
thus, X= kY-hi for eqm in money mkt.
i=(k/h)Y-(X/h)   -2

for eqm as whole same i must exist in both goods and money mkt..
equating eqn 1 and 2
125-0.02Y= (k/h)Y-(X/h)

Solving for eqm Y here:
Y = [125/{0.02+(k/h)}]+[X/h{0.02+(k/h)}]
 Diff y wrt X
we get the monetary policy multiplier as [1/h{0.02+(k/h)}]
Clearly this depends on both k and h..
insufficient data wont be able to tell the exact change in eqm income.. so d is the answer