Applied Economics 2023 Board Question Paper

Distinguish between microeconomics and macroeconomics.

When the price of a commodity (Pₓ) rises from Rs. 100 to Rs. 200 per unit, the quantity demanded of another related commodity (Qᵧ) falls from 500 units to 400 units per month. Now,
(a) write whether you are computing price elasticity of demand (εQᵧ,Pₓ), income elasticity of demand (εQᵧ,M), or cross elasticity of demand (εQᵧ,Pₓ)
(b) compute the elasticity of demand that is appropriate;
(c) also say the nature of these related commodities (x and y), based on the sign taken by the value of the elasticity.

Define the income effect. Derive the income-consumption curve under the indifference curve analysis, assuming both goods x and y as normal.

Derive the long-run marginal cost curve. Explain the relationship between the LMC and the long-run average cost (LAC) curves.

Use the TR-TC approach to explain how a firm in the market of perfect competition reaches a short-run equilibrium.

Explain the causes and the adverse effects of high inflation, by considering the current global economic situation.

Explain the functions of money in modern-day economies.

(a) Derive MUₓ and MUᵧ from the total utility (TU) schedule of the commodities x and y in Table 1, and
(b) find point of consumer's equilibrium from the derived-marginal utility (MU) schedule for the two-commodity model under the cardinal utility analysis if M = Rs. 5 and Pₓ = Pᵧ = Rs. 1 where M = the consumer's money income; Pₓ = the price of the commodity x; Pᵧ = price of the commodity y; MU = Marginal Utility.
Table 1

From the following data in Table 2, compute these four concepts of national income by using the Expenditure Method:
(a) GDPₘₚ,
(b) GNPₘₚ,
(c) NNPₘₚ, and
(d) NNP𝒻𝒸 (= NI)
Table 2
Components for Computing the Four Concepts of National Income by Expenditure Method

Explain how a monopolist is in equilibrium in the long run with appropriate diagram.