December 2015 - Paper 3

1:  

The theory of sales (revenue) maximization subject to some predetermined amount of profit was advanced by ____

A.

K.W. Rothschild

B.

Herbert Simon

C.

O.E. Williamson

D.

William J. Baumol

 
 

Option: D

Explanation :

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2:  
Suppose the demand function for a commodity is given as :
Q=5OO-5P
Where 'Q' denotes quantity of demand and 'P' denotes price of the commodity. The point price elasticity of demand at price Rs 20 will be ____________
A.

-0.50

B.

-0.25

C.

-0.20

D.

-5

 
 

Option: B

Explanation :

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3:  
Suppose the demand and total cost functions for a monopoly firm are as follows :
Q=100-0.2P
P=500-5Q
TC=5O+20 Q+Q2
What will be the profit maximization output?
A.

20

B.

10

C.

50

D.

40

 
 

Option: D

Explanation :

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4:  
Statement (I) : The elasticity of factor substitution is formally defined as the percentage change in the capital-labour  ratio divided by the percentage change in the marginal rate of technical substitution.
 
Statement (II) : Q= 5K0.5 L0.3 is a production function where Q = output, K = units of capital and L = units of labour. This production function shows the application of increasing returns to scale.
A.

Both statements are correct.

B.

Both statements are incorrect.

C.

Statement (I) is correct while statement (II) is incorrect.

D.

Statement (I) is incorrect while statement (U) is correct.

 
 

Option: C

Explanation :

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5:  

Which one of the following is not an investment appraisal technique to incorporate risk and uncertainty?

A.

The Pay-off Matrix method

B.

Certainty - Equivalent approach

C.

Marginal Efficiency of Capital approach

D.

The Decision - Tree method

 
 

Option: C

Explanation :

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