jnu 2017 answers sss, let's discuss

[Rayee]

^hey, its d

[Econenthusiast]

yes, I'm getting d as well :)

[soimmoi]

me too:)
have you also done 44 in the same manner?

[Econenthusiast]

yes that seems like the right method, GDP = Sales + Net stock - Intermediate consumption
but I haven a doubt here, shouldn't we include the IC for firm A as well, since it forms a part of the total output produced ( even though its final sales is zero ) ? ( double counting doesn't become a problem since final good for A is not included )
so we'll get something like this

10,000 + (20-10) x 10 - (20-10) x 5 + (25-20) x 5

[soimmoi]

SIS 2014,
24)Free trade is a optimal policy for: a) small country b) large country c) both a &b  d) cannot say
and if andyone could tell the for q25, 2014 sis too

[Econenthusiast]

won't be writing sis most probably.. I'll try answering them and will let you know the answers soon though, do you know how Q47 from sss 2017 is done ?, the one on monopoly. I'm getting infinite output since the MR will converge to zero only at an infinite level of output

[soimmoi]

because P = e^-Q
so, ln P= -Q
1/P (dp) = - dQ
(dq/dp) (P/q) = -1/q
so e= -1/q
P[1-1/e) = MC
mc here = 0
so, 1-1/e= 0
q= 1

[Econenthusiast]

thanks a lot soimmoi!!! :)

[Pravin]

I think its (d).  this  optimal trade policy is explained a bit in krugman. I also think that if there are some people who gain then there are some people who also loose from trade. Optimal policy is very difficult to explain. Please suggest. Is this reasoning correct ?

[soimmoi]

I think so it's A
A because small country cannot effect ToT so, it cannot use any restrictions to improve trade balance whereas a large country can benefit in some cases from imposing restrictions on trade.

[Pravin]

Hi, here it is written small or large country. In terms of capital or labour ? Or geographically ? Don't you think this reasoning say it must be (d)

[soimmoi]

In an economy where 20% of income is taxed, consumption is 75% of post tax income. level of Investment is 500 and government expenditure is 1100 then, a) what is level of income  my ans - 4000
b) what will be the level of income when with unchanged investment and tax rate, government expenditure is such that the budget is balanced? my ans - 3100   what I've done is   Y= 0.75(Y - G) + 500 + G
HERE, T = 0.2Y = G
Kindly check if you people are also getting 3100 for b part

[Econenthusiast]

I did the same here but my ans turns out to be 2500

Y = 3/4(4/5Y ) + 500 + 1/5Y
Y = 3/5Y + 500 + 1/5Y
Y - 4/5 Y = 500
1/5 Y = 500
Y = 2500

[soimmoi]

Hey! you're suppose to take t= g (balanced budget multiplier), Y has no role to play, you can't replace G by Y

[Econenthusiast]

okay but I equated G = 0.2 Y in the end, ans is still turning out as 2500

[Rayee]

Can someone help me with this?

in an economy where all commodities are produced with labor alone, 0.5 units of labour is required to produce a unit of comdty A and 1 unit of labor is required to produce a unit of comdty B. if the international price of B is 2.5 units of A(and unaffected by how much the economy trades) and if the total amount of labor in the economy is 100 units how much of the commodities will the economy produce?
a) 200 units of A and 0 units of B
b)57.14 units of A, 71.04 units of B
c)57.14 units of B, 71.04 units of A
d)0 unit of A, 100 units of B

is the answer d? under what circumstance will the economy produce both A and B?

[soimmoi]

Yes, It will produce both A & B, only when Price ratio is equal to opportunity cost

[Rayee]

oh thanks, so suppose P_b/P_a = 2 instead of 2.5, how would the answer change?

[soimmoi]

The countries will not trade in such a situation

[Rayee]

i'm a little confused :-(
i don't know trade much. what do you mean by opportunity cost? isn't that is terms of labor ratio?
can you pleasee provide a mathematical explanation as to under what circumstance i might get answers like option (b) or (c)?