0901 Eco (CFA520) - Page 1 of 31 Question Paper...

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Unformatted text preview: Page 1 of 31 Question Paper Economics (CFA520): January 2009  Answer all 81 questions.  Marks are indicated against each question. Total Marks : 100 1. Refer to the following table: Price per Kg. (Rs.) Quantity Demanded (Kg.) Quantity Supplied (Kg.) 2.80 2.50 2.20 1.90 1.60 1,000 2,000 3,000 4,000 5,000 7,000 6,000 5,000 4,000 3,000 Using the numbers in this table, which of the following is true ? (a) If the price is Rs.2.20, there would be a shortage of 2,000 Kg. (b) If the price is Rs.1.60, there would be a surplus of 2,000 Kg. (c) If the price is Rs.2.80, there would be a shortage of 6,000 Kg. (d) If the price is Rs.2.50, there would be a shortage of 4,000 Kg. (e) The equilibrium price is Rs.1.90. (1 mark) <Answer> 2. A book publishing company has found that the demand for its fiction book is given by the following equation: Qf = 20,000 – 500Pa + 5I + 500Pt Where Qf = Quantity demanded of fiction books, Pa = Price of fiction book, I = Income, Pt = Price of textbook. Given the price of fiction book as Rs.10, income as Rs.10,000 and price of textbook as Rs.20, find the quantity of fiction books demanded ? (a) 50,000 units (b) 60,000 units (c) 65,000 units (d) 75,000 units (e) 70,000 units. (1 mark) <Answer> 3. A decrease in supply, accompanied by a decrease in demand (a) Reduces the equilibrium quantity, but price may either increase or decrease or remain the same (b) Reduces the equilibrium price, but quantity may either increase or decrease or remain the same (c) Definitely reduces both the equilibrium price and quantity (d) Definitely increases both the equilibrium price and quantity (e) Increases the equilibrium quantity, but price remains the same. (1 mark) <Answer> 4. A substantial rise in the production of door bell would tend to (a) Raise the price of door bells (b) Lower the price of door bells (c) Leave the price of door bells unchanged (d) Raise or lower the price of door bells depending on the magnitude of the change in the demand of substitute goods (e) Increase the cost of production of door bells. (1 mark) <Answer> Page 2 of 31 5. Ceteris Paribus, an increase in equilibrium rental prices of new apartments in Hyderabad city indicates that there is (a) An increase in the supply of new apartments coupled with an increase in demand for new apartments (b) Cost of construction is becoming cheaper in city (c) A fall in the rate of interest on housing loans in the city (d) An increase in construction of new apartments in the city (e) A fall in the income of the buyers. (1 mark) <Answer> 6. For a product, industry demand and supply functions are estimated to be Q d = 500 – 10P Q s = 300 + 10P If government puts a price ceiling of Rs.9 for the product (a) Equilibrium output for the industry is 410 (b) Equilibrium output for the industry is 400 (c) Equilibrium output for the industry is 390 (d) There will be excess supply in the industry (e) There will be shortage of supply in the industry. (1 mark) <Answer> 7....
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This note was uploaded on 07/20/2010 for the course ICFAI CFA taught by Professor Cfa during the Fall '09 term at Indian School of Business.

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0901 Eco (CFA520) - Page 1 of 31 Question Paper...

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