Subject:

Economics
Question-1

Total Number of
Questions: 5
Category: Simple

Duration: 190
Minutes
Duration: 10 Minutes

Real GDP in 1998 was 9066.9 Billion, and real GDP in 1999 was 9470.3 Billion.
According to the rule of 70, how long will it take real GDP double if it grows at a constant rate?

Question-2

Category: Medium

Duration: 30 Minutes

given C(q)= 4q^2+16, at what range of prices would the firm produce positive profit and output
and at what range of prices would it produce negative profit and zero output?

Question-3

Category: Medium

Duration: 30 Minutes

Assume that a country's production function is Y = AK0.3L0.7. The ratio of capital to

output is 3, the growth rate of output is 3 percent, and the depreciation rate is 4 percent.
Capital is paid its marginal product.

a. What is the marginal product of capital in this situation?

b. If the economy is in a steady state, what must be the saving rate

c. If the economy decides to achieve the Golden Rule level of capital and actually
reaches it, what will be the marginal product of capital?

d. What must the saving rate be to achieve the Golden Rule level of capital?

Question-4

Category: Complex

Duration: 60 Minutes

A. Suppose Q = 2L0.4K0.6 , w = $5.00, and r = $15.00. Find long run total cost, average cost
and marginal cost for Q = 174. Draw a graph to illustrate your answers. (You may round the
values for K and L to the nearest whole number.)

B. Suppose K is fixed at K*, where K* is the optimal K in #2 above, with the same input
prices and production function as in #2. Find short run total cost for Q = 200.

Question-5

Category: Complex

Duration: 60 Minutes

Suppose the low-skilled labor demand and labor supply curves are given by the following
equations.
Demand: L = 115 19w
Supply: L = W
(a)Draw the labor demand and supply curves.
(b)What is the equilibrium wage and level of employment for low-skilled workers?
(c) If the state or federal government decided to institute a minimum wage of $6 per hour,
what would happen to employment? Would low-skilled workers, on average, be better off?
How might high-skilled workers be affected?
(d) How would your answers to parts (b) and (c) change if low-skilled labor demand is given
by