Re: JNU SIS 2012

Posted by ViV on May 08, 2014; 6:50am
URL: http://discussion-forum.276.s1.nabble.com/JNU-SIS-2012-tp7588140p7588952.html

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)