The firm will hire where MRP =MC......hence as wage (MC) is 140....it will employ 2 workers where MRP is 140 too! =)
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A2 ECONOMICS: Guess Paper-4
- Thread starter Qamar Baloch
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The firm will hire where MRP =MC......hence as wage (MC) is 140....it will employ 2 workers where MRP is 140 too! =)
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A very short cut method to solve this question is;
real output is the output after the removal of distorting effect of inflation.
So, it would be 8% - 5 % =+3%. Keep in mind if there is 5% rise in money supply or output and there is 8% rise in price level then the situation will be quite opposite i.e. 5% - 8% = - 3%. It is the final conclusion and the very short cut way without taking into account quantity theory of money.
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3A You can clearly see that the consumer is going to buy more of X goods after shift. It happens when there is fall in price of X. On the other hand consumer has decreased the quantity of Y even though its price is kept constant. So, what has made him to do so? that is his lower income. So, fall in price of X has shifted the graph on x-axis from K to H and fall in income has shifted the graph on y-axis from J to G.
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may june 05 question 21 pls help
B. Note that is is the demand for loanable funds not goods. If a oil reserve is discovered investors will invest more and so will demand for money. If the mps increase so it increases the savings. Savings increase the supply for loanable funds in bank.
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are you sure ur method is ryt ?
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21B Increase in marginal propensity to save results in increase in supply of loanable funds. Similarly, discovery of new oil reserves means investors will demand more funds to start new projects for extraction of oil. So, demand and supply both will rise and they will shift to the right determining new equilibrium at E2 where S2 and D2 are intersecting each other. Demand for loanable funds comes from private people, investors, households as well as the government.
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may june 05 question 22
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sir pls help me in may june 05 question 18 pls
but the answer is D which is 6 units.
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dear
5D When marginal revenue product (MRP) starts falling and becomes equal to the wage rate shows equilibrium. It is achieved at 6th worker when MRP is $140 and equal to wage rate that is $140. It can be seen on the second worker but at that stage MRP is higher. Equilibrium is determined when marginal product is falling and become equal to wage rate.
keep in mind that there are two options where MRP is 140. So, how you decided to select 2 workers option. the actual answer is like this;
5D When marginal revenue product (MRP) starts falling and becomes equal to the wage rate shows equilibrium. It is achieved at 6th worker when MRP is $140 and equal to wage rate that is $140. It can be seen on the second worker but at that stage MRP is higher. Equilibrium is determined when marginal product is falling and become equal to wage rate.
Oh gosh I forgot...they said maximum...so at 6 the MRP is 140
2 is the minimum
the concept is that hiring decision is when MRP = MC! =)
oct/nov 04 mcq 21 please!
http://www.xtremepapers.com/papers/...d AS Level/Economics (9708)/9708_w04_qp_3.pdf
http://www.xtremepapers.com/papers/...d AS Level/Economics (9708)/9708_w04_qp_3.pdf
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may june 05 question 23 I dont understnd this concept pls someone hlp
When observing the 0.40 tax payment for $1, this means that tax is $o.4. This means the consumer is using $0.6 of its disposable income. We need to find another leakage which is savings, if the consumer uses $0.6 of the income this means that savings which is 1/6 of total spending as 5/6 is given as spending. So if you multiply 0.6 with 5/6 you will get the mpc. Marginal propensity to consume is the desire to consume with the next $1 earned so using this definition obtain the result 0.5. We know that 1-mpc=mpw so the value of multiplier will be 1/(1-0.5) which is 2.
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23A Rightwards shift in LP curve (which is actually demand for money curve) has resulted in rise in interest rate. Now if people are buying more bonds in the open market then their demand for money (i.e. LP) will shift inwards and previous interest rate will be restored. Demand for money means holding of cash at home. Demand for money and demand for loanable funds are totally different from each other. Do not confuse them with each other. Relate it to Q 21 / June 2005
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