12/22/2020 ECON F211 POE_ Comprehensive Examination 10th December 2020 at 9:00 am

Dashboard / My courses / ECON F211 / General / ECON F211 POE_ Comprehensive Examination 10th December 2020 at 9:00 am

Started on Thursday, 10 December 2020, 9:10 AM

State Finished
Completed on Thursday, 10 December 2020, 10:26 AM
Time taken 1 hour 16 mins
Grade 21.17 out of 30.00 (71%)

Question 1
A consumer eats 5 units of apple on a day night but admits each unit of apple doesn't taste as good as the previous one.
Complete
This suggests that for the consumer the
Mark 1.00 out of
1.00

Select one:
marginal utility of a unit of apple is positive but decreasing

total utility of units of apple is declining

None of the above/below

total utility of units of apple is increasing by larger and larger increments

marginal utility of a unit of apple is negative

The correct answer is: marginal utility of a unit of apple is positive but decreasing

Question 2
As stated in the table, suppose a typical consumer basket in a country contains 20 Kg Rice, 10 Kg Wheat, and 30 units of
Complete
electricity per year.
Mark 0.00 out of
1.00 Year Prices

Rice (per KG) Wheat (per KG) Electricity (per Unit)

2014 30 10 5

2015 35 20 5

2016 40 30 5

2017 80 40 10

 Based on the estimated consumer price index (CPI) from the table, what is the inflation in year 2017 as compared to year
2016 (in percentage)?
[Notes: 1) Please round your answer for 2 decimal places, 2) Write only the numerical value as the answer, and please
don't write 'percent' or use the symbol % at the end of your numerical answer because quanta won't accept those symbol
or words in the given answer space for this particular question]

Answer: 184

The correct answer is: 83.67

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12/22/2020 ECON F211 POE_ Comprehensive Examination 10th December 2020 at 9:00 am

Question 3
State TRUE or FALSE
Complete

Mark 0.67 out of

1.00
The long-run industry supply curve is made up of the zero-profit equilibrium levels of output as
the industry expands due to the entry of new firms. TRUE

Information on MC of production is all that is necessary to obtain the long-run industry supply
curve, because P = MC is the profit-maximization condition for all firms. TRUE

In the long-run, expansion in an industry may cause input prices to increase. This is one reason for
external economics of scale—in this case, external diseconomies. TRUE

When a firm shuts down in the short run, it breaks even. FALSE

When the price is sufficient to cover average variable costs, firms suffering from short-run losses
will continue to operate rather than shut down. TRUE

A firm must earn an economic profit in order to receive a normal rate of return. FALSE

The correct answer is: The long-run industry supply curve is made up of the zero-profit equilibrium levels of output as the
industry expands due to the entry of new firms. → TRUE, Information on MC of production is all that is necessary to obtain
the long-run industry supply curve, because P = MC is the profit-maximization condition for all firms. → FALSE, In the
long-run, expansion in an industry may cause input prices to increase. This is one reason for external economics of scale—
in this case, external diseconomies. → FALSE, When a firm shuts down in the short run, it breaks even. → FALSE, When the
price is sufficient to cover average variable costs, firms suffering from short-run losses will continue to operate rather than
shut down. → TRUE, A firm must earn an economic profit in order to receive a normal rate of return. → FALSE

Question 4
Suppose that for a particular economy and period, the income received by the owners of all factors of production = 8660
Complete
(assume that there is no income tax deduction at source. That is, the owners of the factors of production may have to
Mark 0.00 out of make the tax payment after receiving their income), export = 400, depreciation of machines and buildings = 600, total
2.00
indirect tax = 450, and total direct tax = 900. What is the GDP at market price? (All values are in Indian rupees)

(write only the numerical values, and don't write any text or insert symbols in your answer)

Answer: 10110

The correct answer is: 9110

Question 5 The ratio of the marginal utility of ice cream to the marginal utility of sandwich is four for a consumer for maximizing
Complete utility. This implies that
Mark 1.00 out of
1.00 Select one:
the ice cream  to sandwich price ratio is one to four

the ice cream  to sandwich price ratio is four to one

a sandwich is four times more valuable than a units of ice cream

this person always eats sandwich with ice cream

None of the above/below

The correct answer is: the ice cream  to sandwich price ratio is four to one

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12/22/2020 ECON F211 POE_ Comprehensive Examination 10th December 2020 at 9:00 am

Question 6 Suppose in a particular economy and period, there are only three firms. Firm A grows crops and extracts minerals from its
Complete land with no inputs from other firms. Its sales are 100, half of which goes to consumers and half to firm B and C in equal
Mark 2.00 out of amounts. Firm B buys inputs from firm A and sells its entire output of 200 million to Firm C. Firm C buys inputs from A and
2.00 B, and sells its 450 output directly to consumers. Also suppose that there is no tax. What is the GDP at factor?   

Answer: 500

The correct answer is: 500

Question 7
Assume that India produces only two types of commodities in every year: Rice and Apple. The table below shows the price
Complete
and the total quantity of Rice and Apple produced in year 2010 and 2017.  
Mark 1.00 out of
1.00   Year 2010 Year 2017

Product Quantity (KG) Price (INR) Quantity (KG) Price (INR)

Rice 500 10 700 20

Apple 150 20 250 40

What is the Real GDP in 2017 at 2010 prices?

Answer: 12000

The correct answer is: 12000

Question 8
Assume that you have been appointed as the economist for Indian government. The government now imposes a price
Complete
ceiling on rice that is above the market price. You are requested to suggest a rationing scheme that will minimize the
Mark 0.00 out of misallocation of resources. Your recommendation is
1.00

Select one:
using rationing coupons that can be resold

None of the above/below

that no rationing system will be necessary

using rationing on a first-come, first-served basis

using rationing coupons that cannot be resold

The correct answer is: that no rationing system will be necessary

Question 9
If MR = MC at an output of 10 units. At this output, marginal revenue equals rupees 25, average variable cost equals
Complete
rupees 30, and average total cost equals rupees 40. In the short run, a profit-maximizing firm will earn a profit of
Mark 0.00 out of
1.00

NOTE: The answer must be a numerical value with + and/or - sign.

Answer: -10

The correct answer is: -100

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12/22/2020 ECON F211 POE_ Comprehensive Examination 10th December 2020 at 9:00 am

Question 10
In a two commodity model, assume that a consumer can buy chocolate and/or ice cream. If the prices of chocolate and
Complete
ice cream double and the consumer’s money income triples, we can conclude that the consumer's budget constraint will
Mark 1.00 out of
1.00

Select one:
shift out but remain parallel to the old one

remain unchanged

shift in but remain parallel to the old one

swivel in so that the slope of the budget constraint is doubled

None of the above/below

The correct answer is: shift out but remain parallel to the old one

Question 11
Suppose two firms W and B producing X and Y commodity. Each firm has a cost function given by C(q)=30q+ 1.5q^2. The
Complete
market demand for their products is represented by the inverse demand equation P = 300 - 3Q. where Q = q1 + q2, total
Mark 0.00 out of output. Suppose W can set its output level before B does.
1.00
What will be the market price the firms are facing?

Note: The answer must be written in numerical values only. Please don't use any symbols. Round off your answer
to one decimal points.

Answer: 198.75

The correct answer is: 158.7

Question 12
You are hired as an economic consultant to the book shop. The book Shop operates in a perfectly competitive industry.
Complete
This firm is currently producing at a point where market price equals its marginal cost. The Shop's total revenue exceeds
Mark 1.00 out of
its total variable cost but is less than its total cost. You should advise the firm to
1.00

Select one:
lower its price so that it can sell more units of output.

cease production immediately because it is incurring a loss.

the argument is wrong

produce in the short run to minimize its loss, but exit the industry in the long run.

raise its price until it breaks even.

The correct answer is: produce in the short run to minimize its loss, but exit the industry in the long run.

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12/22/2020 ECON F211 POE_ Comprehensive Examination 10th December 2020 at 9:00 am

Question 13
The ABC company operates in a perfectly competitive environment, is currently producing where P = MC and is earning a
Complete
normal profit. The firm mainly employs minimum wage workers and the government just increased the minimum wage
Mark -0.50 out from 725 to 955 day. In the short run, this firm will most likely
of 1.00

Select one:
shut down because it will no longer be earning a normal profit.

None

continue to produce the same amount of output because only its fixed costs have increased.

reduce the amount of output it produces because its cost curves have shifted up and to the left.

produce more units of output to increase revenue to cover the additional fixed costs.

The correct answer is: reduce the amount of output it produces because its cost curves have shifted up and to the left.

Question 14
A firm sells in two distinct markets, which are sealed off from one another with demand curves as:
Complete
Firm 1 demand curve                         Q1 = 20 – P1/4
Mark 0.00 out of
1.00 Firm 2 demand curve                          Q2 = 20 – P2/2     

Marginal Cost function                      MC = 4Q

 

What price should they charge?

Note: The answer must be written in numerical values only. Please don't use any symbols. Provide don't give any
space between prices. Write your answer in the sequence of p1[no space]p2.

Answer: 4026.66

The correct answer is: 5636

Question 15
As stated in the table, suppose a typical consumer basket in a country contains 20 Kg Rice, 10 Kg Wheat, and 30 units of
Complete
electricity per year.
Mark 1.00 out of
1.00 Year Prices

Rice (per KG) Wheat (per KG) Electricity (per Unit)

2014 30 10 5

2015 35 20 5

2016 40 30 5

2017 80 40 10

Based on the above information, what is the consumer price index (CPI) for year  2016 where the year 2014 is the base
year?

Answer: 147

The correct answer is: 147

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12/22/2020 ECON F211 POE_ Comprehensive Examination 10th December 2020 at 9:00 am

Question 16
Of the given options below, which one of the following will most certainly occur when there is a decrease in supply of
Complete
sugar and an increase in demand for sugar?
Mark 1.00 out of
1.00

Select one:
a decrease in equilibrium price

an increase in equilibrium quantity

an increase in equilibrium price

a decrease in equilibrium quantity

The correct answer is: an increase in equilibrium price

Question 17
Because marginal cost is always ________ in the short run, total variable cost always ________ when output increases.
Complete

Mark 1.00 out of

1.00
Select one:
negative; decreases

negative; increases

positive; decreases

The information is incomplete

positive; increases

The correct answer is: positive; increases

Question 18 Refer to the following figure. Suppose the demand for wheat is initially D2. If the price of rice (a substitute for wheat) falls,
Complete then demand for wheat will shift to ________. This will ________ the equilibrium price of wheat and individual profit-
Mark 1.00 out of maximizing firms will produce ________ bushels of wheat.
1.00

Select one:
D1; decrease; 0

D3; increase; 15

D1; increase; 13

D3; decrease; 10

The correct answer is: D1; decrease; 0

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12/22/2020 ECON F211 POE_ Comprehensive Examination 10th December 2020 at 9:00 am

Question 19
A retailer purchases bookcases from a manufacturer at a price of rupees 500 per case. During the year, the retailer will try
Complete
to sell the cases at a price higher than rupees 500 but may not be able to sell all of the cases. At the end of the year, the
Mark 1.00 out of manufacturer will pay the retailer 30 percent of the original price for any unsold case. At the beginning of the year, before
1.00
the retailer has purchased any case, what is the opportunity cost of bookcases?
 

Note: The answer must be written in numerical values only. Please don't use any symbols.

Answer: 500

The correct answer is: 500

Question 20
Assume that India produces only two types of commodities in every year: Rice and Apple. The table below shows the price
Complete
and the total quantity of Rice and Apple produced in year 2010 and 2017.  
Mark 1.00 out of
1.00   Year 2010 Year 2017

Product Quantity (KG) Price (INR) Quantity (KG) Price (INR)

Rice 500 10 700 20

Apple 150 20 250 40

What is the GDP deflator?

Answer: 200

The correct answer is: 200

Question 21
Refer to Table below, assuming the price of labor (L) is rupees 5 per unit and the price of capital (K) is rupees 10 per unit.
Complete
Which of the following statements is true?
Mark 1.00 out of
1.00

Select one:
The firm will use production technique B to produce all three units of output.

The firm will use production technique A to produce the first unit and production technique B to produce the
second and third units of output.

The firm will use production technique A to produce all three units of output.

The firm will use production technique B to produce the first two units of output and production technique A to
produce the third unit of output.

The correct answer is: The firm will use production technique B to produce the first two units of output and production
technique A to produce the third unit of output.

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12/22/2020 ECON F211 POE_ Comprehensive Examination 10th December 2020 at 9:00 am

Question 22
Consider the information provided in the following table for Aryan's CD production. Assume that Aryan is producing CDs
Complete
in a perfectly competitive market and the market price for CD is rupees 60. To maximize profits Aryan should produce
Mark 2.00 out of
2.00 3 CDs.

Number of CDs TVC MC AVC TFC TC AFC ATC

1   50     100    

2             95

3     46.67        

4         300    

5 270            

Note: Write the numerical value only in the space given for the answer. Round off your answer.

The correct answer is: 3

Question 23
Miss Suzain uses three inputs to produce vegetables: land, labor, and capital. The production function for the farm, Q = KL
Complete
+ M, exhibits a diminishing marginal rate of technical substitution. The input prices of K, L, and M; are 4, 16, and 1,
Mark 1.00 out of
respectively. Using an interior solution, what is the long-run total cost of producing 400 units of output?
1.00

Note: The answer must be written in numerical values only. Please don't use any symbols.

Answer: 464

The correct answer is: 464

Question 24
Suppose a monopolist is facing a constant elasticity demand curve Q = aP^(-b) with MC = 50. Calculate the optimal price
Complete
of the monopolist with Q = 100P^(-5).
Mark 1.00 out of
1.00 Note: The answer must be written in numerical values only. Please don't use any symbols. Round off your answer
to one decimal point.

Answer: 62.5

The correct answer is: 62.5

Question 25
Assume Janita is initially in equilibrium and that A and B are normal goods for her. Then the price of A rises. For Janita to
Complete
move to a new equilibrium point, her consumption of
Mark 1.00 out of
1.00

Select one:
The consumption of both A and B must increase

The consumption of A must decrease

none of the above/below

The consumption of A must remain constant, but her consumption of B must increase

The consumption of A must increase

The correct answer is: The consumption of A must decrease

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12/22/2020 ECON F211 POE_ Comprehensive Examination 10th December 2020 at 9:00 am

Question 26
Mr. Sen is spending his entire income on goods A and B. His marginal utility from the last unit of A is 50 and the marginal
Complete
utility from the last unit of B that he consumes is 100. Sen's utility is only maximized if
Mark 1.00 out of
1.00

Select one:
the price of good B is twice that of good A

the prices of A and B are the same

the price of good A is twice that of good B

None of the above/below

The correct answer is: the price of good B is twice that of good A

Question 27
A monopolist operates in an industry where the demand curve is given by Q = 1000 - 20P. The monopolist’s constant
Complete
marginal cost is rupees 8. What is the monopolist’s profit-maximizing price?
Mark 1.00 out of
1.00  
Note: The answer must be written in numerical values only. Please don't use any symbols.

Answer: 29

The correct answer is: 29

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