# D.S.E paper 2005,question no. 15

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## D.S.E paper 2005,question no. 15

 consider Ms. Bijlee ,whose utility function is min(E,W),where E is her electricity consumption and W is her consumption of widgets.Suppose Ms. Bijlee's income isRs. 10 and price of eletricity is 1 and  price of widgets is 1.In order to curb Ms. Bijlee's electricity consumption the electricity company decides to impose a surcharge of rs.1 on every unit of electricity consumed in excess of 4 units.What is the resulting reduction in  Ms. Bijlee's electricity consumption ? a.1/4   b.1/5 c.1/3 d.1/6 sir i am not getting any of the options as my answer,i am explaining what i have done below. u=min(e,W) Budget line E+W=10 for E<4 and E=4 , 2E+W=10 for E>4 from here we are getting E=10/3, before surcharge E=5,so reduction=5/3.
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## Re: D.S.E paper 2005,question no. 15

 Hello Rishita :) The answer is 1/3 When there was no surcharge, they consumed E=W= 5 units Now, >For first four units, the budget line is E+W=8 => E=W=4 while after four units, it will be> 2E+W=2 => E=W= 2/3 Therefore,  E=4+2/3= 14/3 and W=4+2/3=14/3 Hence, the change= 5-14/3 = 1/3 You have basically taken the price of E to be rs 2 for every unit of E but the ques says imposing a surcharge of rs.1 on every unit of electricity consumed in excess of 4 units:) :)
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## Re: D.S.E paper 2010,question no. 44

 Sir , Please give me the solution of the problem Consider an economy with the aggregate production function Y= alphaK+betaL ,where alpha and beta are positive constants , K is capital , L is labour and Y is output . K is fixed in short run . Perfect competitive producers take the nominal wage rate W and the price level P as given , and employ labour so as to maximize profit .This generates the labour demand schedule .The labour supply schedule is Ls = -gama+ deltaW/P , where gama and delta are positive constants .Producers and workers have perfect information about P and W . 43.The labour market will clear if and only if a.beta >gama/delta b.betadelta/gama d.beta
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## Re: D.S.E paper 2010,question no. 44

 Administrator Vary P and solve for the equilibrium level of wage and employment as a function of P. Take this equilibrium employment level as a function of P, put it in the production function to get the total output as a function of P. And thats your aggregate supply.
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## Re: D.S.E paper 2004

 Sir,    I can not understand how to solve the problerm no 14. and 15 of of D.S. E 2004 .Please explain..Please reply....
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## Re: D.S.E paper 2004

 Administrator Please post the complete question if you want me to answer something.
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## Re: D.S.E paper 2004

 Consider a Person who consumes water and bread , deriving utility xy if x is the amount of water is consumed and y is the amount of bread is consumed .Suppose this person's income is Rs.10 ,the unit price of bread is Rs. 3 and the unit price of water is Rs. 1 .The price of water incorporates a per unit subsidy of Rs.1 i.e for every unit of water consumed by the person ,she pays Re.1 to the water supplier .Suppose this person's demand is (x0 , y0 ). Â  13.Suppose the water subsidy is removed and she has to pay Rs.2 for each unit of water . Let (x1 , y1) be the new demand , what is the resulting change in this person's demand i.e (x1-x0 , y1-y0) ? a.(-5/2 ,0) b.(-5/2 , 10/9 ) c.(-10/3 , 10/9 ) d.(-10/3 ,0) Â  14.If the Gove provide this person a lumpsumÂ incomeÂ subsidy that exactly offsets her utility loss on account of removal of the water subsidy , then the required lumpsum subsidy is a.9/4 b.5/3 c.root(56)+4 d.root(200)-10 Â  15. The income effect of the removal of water subsidy is a.(10+root(200)/4 , 10+root(200)/6 ) b.(10-root200/4 , 10-root(200)/6) c.(-1/2 , -1/3 ) d.(5-root(200)/4 ,15 -root(200)/6 ) Â No.13 I have done.But I can not understand how to solve 14 and 15. Please explain... Â
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## Re: D.S.E paper 2004

 hi demand function for water x = M/2p_x y= M/p_y so for ques 13 using these function you should get ans as (-5/2,0) ques 14 take U* = xy       (i), where U* is level of utility derived by consuming x and y at price (p_x,P_y) = (1,3). so, find out its value. now u have to derive that level of income for which u will get same utility at prices (2,3) use the fact that MRS= price ratio          (ii) use (i) and (ii) to find M' = 2x+3y now calculate difference between M and M' following these steps u will get ans as 200^1/2-10 ques 15 find out difference between demand at M and prices (2,3)  and demand at M' and prices (2,3) using this u should get (b) ((10-:200)/4, (10-:200)/6) as your ans
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## Re: D.S.E paper 2004

 sorry by mistake i have written demand function of y = M/P_y it should be Y= M/2P_y
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## Re: D.S.E paper 2004

 Thank u very much....
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## Re: D.S.E paper 2003

 An analyst ,using a simple random sample ,obtained a 99%confidence interval for mean monthly family income , y with the following results :Rs. 3200
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## Re: D.S.E paper 2003

 30. The shift in the LM curve as a result of an increase in the money supply is : a.equal to the increase in the moner supply. b.exactly proportionate to the increase in the money supply. c.less than proportionate to the increase in the money supply. d.More than proportionate to the increase in the money supply.   Ans. let m=K(y) +l(r)           dm=k'dy+l'dr           let dr=0           dy/dm=1/k' >1 So ans is d. Is it correct??? please reply..
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## Re: D.S.E paper 2003

 Administrator In reply to this post by Rishita Saha Its (a). You are right.
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## Re: D.S.E paper 2003

 Administrator In reply to this post by Rishita Saha Lets see what is going on in this problem. Assuming linear LM schedule: M = ky - hi,  k>0 and h>0 can be rewritten as y = M/k + hi/k Clearly if you double the money supply the output less than doubles (at a fixed positive i) Hence given the information that is provided in the problem, (c) seems to be the most appropriate choice. i.e. shift in the LM curve as a result of an increase in the money supply is less than proportionate to the increase in the money supply.
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## Re: D.S.E paper 2005,question no. 15

 In reply to this post by Rishita hi rishita can u pls tell me that which book has this type of topic and answers, i mean which books has solution of this question if u dont mind i m a new member and starting the self study so i really need help
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## Re: D.S.E paper 2005,question no. 15

 For Microeconomics you can follow Hall Varian , Pyndick mainly. For macroeconomics Mankiew. I think this is enough..
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## Re: D.S.E paper 2005,question no. 15

 and rishita for maths i am relying on 11,12 rd sharma and 1st year chiang..... its ok??????
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## Re: D.S.E paper 2005,question no. 15

 Yes.For Stat u cn follow N.G.Das..
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## Re: D.S.E paper 2010,question no. 44

 In reply to this post by Amit Goyal Hello Sir, in this case can you please specify the equilibrium case? I haven't understood how P varies and how it changes the equilibrium employment. The labour demand curve is a horizontal line and varying P doesn't seem to change anything.