Part 1 lnetructions. » Check that this booklet has pages 1 through 29. Also check that the bottom of each page b marked with BEE 2006 A og. This part of the examination consists of 20 multiple-choice questions. Each question is followed by four possible answers, one of which is correct. Indicate the correct answer 94 the bubblesheet, not on this booklet, » Each correct choice will carn you 1 mark. However, you will lose 1/3 mark for cach incorrect choice. If you shade none of the bubbles or more than one bubble, you will get 0 for that question. = Use pages 18 through 29 of this booklet, marked Rough work, to do your calcula. tions, drawings, ete. The “Rough work" will not be read or checked. ‘You may begin now, Good lick! 1. A situation in which all electricity generators in a state can sell their output only to the State Electricity Board is described as (a) a monopoly (b) @ monopsony {c) an obigopolistic market (d) a monopolistically competitive market 2. Consider a firm that produces a single good using labour and capital, Let C, Q, , K, uw, rand g denote cost of production, output, labour input, capital input, the wage rate, ‘the price of capital and the price of the output respectively, An example of a cost function for the fire is (a) C= wh + rk (b) C= minfwl, rk} (ec) C= pQ/ [wh + rk] (dl) C= Q,far 4 I the 15 curve is downward shoping and the LAL curve is vertical, unit increase iin government expenditure results in (a) crowding in and higher inerease in equilsbrinus jrseome (li) 20 crowding out and equivalent increase: im the expaititirinns income ERE 2008 A ogag {3 fe) partlal crowding owt and lower increase in equilibritsm income (a) complete crowding out sxx no increase in equilibrium income 4. Mocetary policy Is completely Ineffective in raising output if (a) the IS curve ls horizontal asd the LM curve is upward sloping (b) the 19 curve is wertieal and the LM carve is upward sloping =~ (6) the IS curve is downward sloping asd the LM curve is upward sloping () the 18 carve is downward aloping and the LM curve is vertical 5. The price and quantity combinaticas of two services (trim and perm) sold at the “Be Handsome" beauty parlour are aa follows (PF; and @, denote the price and quantity respectively of a given service at time ¢): Service = Fy A ‘Qs a Trim 0 oo 10 6 Pera a nk 12 ‘The Laspeyres price kndex for time t= 1 is (a) 117.2 (b) 115.3 (ec) 121.8 (a) 1186 ‘8. Suppose we Bip a falr cola three times. The probability of gesting two bends is (a) 2/8 (b) 1/3 (2/3 (a) ays 7. Which one of the following is tru? (a) A consurser never buys an inferior good. (b) A consumer's bedget share for an inferior good is necessarily bess than half (c) A consumer's budget abare for an inferior good is constant, (4) A consumer's budget. share for an inferior good decreases with an increase in tmoney income. & Set coma with the utility function u(z,y) = 2474». Which owe of the (a) Income elasticity of both goods x and y is 1 ‘{b) Income elasticity of good s ix 0. BBE 2006.4. 02 adaaticity of good y is 0. e: (ete ay of ond i and of god yO: ai ee Consider the experiment of tossing two unbiased coins in succession Eo srotahty of cbainng two hes, ven that a est one of he colns comet (a) 1/2 (b) 1/4 1/8 {d) 2/3 10, Suppose all input prices as well as output price double. The level of output produced by a profitemaxiiiaing firm which ses « decreasing returns to scale technology will (0) be double of its original level (b) increase, but not necessarily double (c) remain constazt (4) change, but we cannot say in which direction U1, Consider ann x-n matrix A with real entries, A is non-singular if and only if (a) the determinast of A is not equal to 0 (b) the colusnna vectors of A are linearly independent (c) the row vectors of A are linearly independent {d) any of the above three conditions is satisfied 12 Consider a function f : R —+ ®, where % denotes the set of real numbers. Uf f is increasing, i.e. x > y implies f(z) > f(p), then (a) fis concave (b) f is convex (ch J is quasi-convex: (4) f ia comtinaous 13. Consider a singular n x n matrix A with real entries. Interchanging the positions of a pair of adjacent columns of A (a) does not change the value of the determinant of A (bh) changes the sign of the determinant (c) increases the value of the determinant {d) docrenses the value of the determinant