Suggestive Solutions Guide to Past Exam Papers

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Suggestive Solutions Guide to Past Exam Papers
Dr. M. H. Nabin

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Important Message

I have put some suggestive solutions or at least some hints for the past exam papers starting from year 2004. In so doing, I emphasize T 1, T 2 and T 3 of 2010, T 1 and T 2 year 2009, S1 and S2 of year 2008, S1 and S2 of year 2007, S1 and S2 of year 2006 — these past exam papers are more relevant to our current courses as we have used the same textbook, course outline and study guide. Please ignore the multiplier questions as those questions are not relevant for our final exam. I also encourage my students to go through all those elive sessions (recorded by myself). These elive sessions will refresh your memory as well as help you to understand the critical concepts in Economics. Please note that there is no harm of trying to attempt the past exam papers as much as you can – as there is wise saying that “practice makes one perfect”. However, beyond the year 2006 one might find those past exam questions are hard to answer or follow , which is not surprising as we have used different textbooks and course outline and even in some years— the exam format is bit different. Therefore, attempting such questions you might end up with a problem which is summarized by another wise saying 1

i.e. “ The philosophers kick up the dusts and then complain that they cannot see”. So be rational and make your decision wisely in this regard. Finally, I hope my effort will not go in vain and I wish you all the best. cheers Dr. Nabin

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MPE781 Economics for Managers, Exam, T3: 2010

DEAKIN UNIVERSITY FACULTY OF BUSINESS AND LAW MPE781 ECONOMICS FOR MANAGERS Trimester 3, 2010 (Duration of exam: 3 hours plus 15 minutes reading time)

Instructions to candidates: 1. This is a closed book exam. examination. Candidates may bring a calculator to the

2. This paper covers 70% of marks for the total subject: • • Marks for assignments submitted during the semester: Marks for this paper: 30% 70%

3. This paper consists of two sections, Section A and Section B • • Section A is worth 60% of the total marks in this paper Section B is worth 40% of the total marks in this paper.

4. Section A consists of six (6) short answer questions. Students are to answer only FIVE (5) of these questions. All questions in Section A carry equal marks. 5. Section B consists of three (3) essay type questions. Students are to answer TWO (2) of these questions. All questions in Section B carry equal marks.

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MPE781 Economics for Managers, Exam, T3: 2010

SECTION A This section consists of 6 questions. Students are to answer 5 of the 6 questions. Where possible, the use of graphs to support your answers is greatly encouraged. All questions carry equal marks. 1. Imagine there is a monopoly firm that is able to practice perfect price discrimination (first-degree price discrimination). This means the monopoly firm is able to charge each customer its maximum valuation for each of the firm’s products. From a welfare (consumer and producer) perspective, would society as a whole be better off if the firm was a single-price monopoly instead?

Graph must show monopoly but the MR curve equals the demand curve. Firm extracts entire surplus area as producer surplus. Consumer has zero surplus. There is no deadweight loss for the first-degree price discriminator since it produces where MC=D.

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What is the definition of economic efficiency? Is a perfectly competitive market considered efficient? What are the market forces that ensure a perfectly competitive market remains at equilibrium? Efficiency defined as the sum of surplus. Okay to show that efficiency is where MC=MB on a graph or similarly to say something along the lines that that the lowest cost producer and the highest valuing customer stay in the market. PC efficient because MC=MB(D) and because surplus is maximized (the appropriate graph is the market and not the graph of the firm. For the third part, simply have...
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