International Economic Exam Paper
MN5118 / MN5118R
UNIVERSITY OF LONDON MSc EXAMINATION 2011
For Internal Students of Royal Holloway
DO NOT TURN OVER UNTIL TOLD TO BEGIN
MN5118 : INTERNATIONAL BUSINESS ECONOMICS MN5118R : INTERNATIONAL BUSINESS ECONOMICS - PAPER FOR RESIT
CANDIDATES
PAPER A
Time Allowed: THREE hours Answer THREE questions
No credit will be given for attempting any further questions.
This exam paper has been made available in electronic form strictly for the educational benefit of current Royal Holloway students on the course of study in question. No further copying, distribution or publication of this exam paper is permitted. By printing or downloading this exam paper, you are consenting to these restrictions. © Royal Holloway University of London 2011
Page 1 of 5 2010 -11
College Calculators are provided Important Copyright Notice
MN5118 / MN5118R
Answer only three questions. Please note that ALL answers must be accompanied by a short paragraph and diagrams where relevant. Question 1. a) How does a market economy solve the what, how and for whom to produce problems? Are there alternative solutions? Explain your answer. (5 marks) b) Explain what is wrong with the following figure and draw a corrected one. (5 marks)
Figure 1
AC(Q) P
P
Profits
MC(Q)
AC D Q
Q*
MR
c) What is cross-price elasticity? (2 marks) d) For each of the following pairs of goods state whether the cross-price elasticity is likely to be greater, smaller or equal to zero. (8 marks) i) Petrol, car ii) Tea, coffee iii) Nike trainers, generic brand trainers. tie, business suit. iv) e) In the discussion of elasticity and raising and lowering prices, economists suggest that if you have an elastic demand you should hesitate to raise your price, and that lowering price can possibly increase profits. Why is the word ‘possibly’ used? (5 marks) TOTAL: 25 MARKS
NEXT PAGE No further copying, distribution or publication of this exam paper is permitted. By printing or
UNIVERSITY OF LONDON MSc EXAMINATION 2011
For Internal Students of Royal Holloway
DO NOT TURN OVER UNTIL TOLD TO BEGIN
MN5118 : INTERNATIONAL BUSINESS ECONOMICS MN5118R : INTERNATIONAL BUSINESS ECONOMICS - PAPER FOR RESIT
CANDIDATES
PAPER A
Time Allowed: THREE hours Answer THREE questions
No credit will be given for attempting any further questions.
This exam paper has been made available in electronic form strictly for the educational benefit of current Royal Holloway students on the course of study in question. No further copying, distribution or publication of this exam paper is permitted. By printing or downloading this exam paper, you are consenting to these restrictions. © Royal Holloway University of London 2011
Page 1 of 5 2010 -11
College Calculators are provided Important Copyright Notice
MN5118 / MN5118R
Answer only three questions. Please note that ALL answers must be accompanied by a short paragraph and diagrams where relevant. Question 1. a) How does a market economy solve the what, how and for whom to produce problems? Are there alternative solutions? Explain your answer. (5 marks) b) Explain what is wrong with the following figure and draw a corrected one. (5 marks)
Figure 1
AC(Q) P
P
Profits
MC(Q)
AC D Q
Q*
MR
c) What is cross-price elasticity? (2 marks) d) For each of the following pairs of goods state whether the cross-price elasticity is likely to be greater, smaller or equal to zero. (8 marks) i) Petrol, car ii) Tea, coffee iii) Nike trainers, generic brand trainers. tie, business suit. iv) e) In the discussion of elasticity and raising and lowering prices, economists suggest that if you have an elastic demand you should hesitate to raise your price, and that lowering price can possibly increase profits. Why is the word ‘possibly’ used? (5 marks) TOTAL: 25 MARKS
NEXT PAGE No further copying, distribution or publication of this exam paper is permitted. By printing or