Ollscoil na hÉireann, Gaillimh

GX_____

National University of Ireland, Galway

Semester 1 Examinations 2008/2009

Exam Code(s)

2BA5

Exam(s)

2nd B.A. (Economic & Social Studies)

Module Code(s)

EC222

Module(s)

Techniques of Analysis

Paper No.

1

Repeat Paper

External Examiner(s)

Professor Robert Wright

Internal Examiner(s)

Professor Eamon O’Shea

Mr. Stephen McNena

Instructions:

There are two sections in this exam. Please answer any 6

questions from section A and 6 questions from section B.

Duration

3 hours

No. of Pages

6 pages, including this cover sheet

Department(s)

Economics

Course Co-ordinator(s)

Breda Lally, St. Angela’s College, Sligo

Requirements:

MCQ

No

Handout

Handout of formulae to be distributed at St. Angela’s

College, Sligo

Statistical Tables

Yes, to be distributed at St. Angela’s College, Sligo

Graph Paper

Yes, if students request it

Log Graph Paper

No

Other Material

No

SECTION A MATHS

Answer any 6 of the 8 questions. 15 minutes per question.

1. (a) Consider the demand function represented by the equation: Qd = 50 – 5P

(i) Express Total Revenue (TR) as a function of Qd.

(ii) What is the slope of the demand curve? What is the value of its intercept?

(iii) Sketch the demand curve.

(iv) At P = 6, calculate the quantity and the total revenue.

(b) Consider the following production function: Y = A f (K, L) = 10AK0.5L0.5

where Y is national output, A is technological knowledge, K is the capital stock,

and L is labour.

Transform this Cobb-Douglas production function into a linear model using

logarithms.

2. (a) A firm that makes paint sells their product for €7. Their cost function is

represented by the equation: TC = 200 + 5Q.

(i) Calculate the breakeven quantity.

(ii) Determine the Total Revenue, Fixed Cost, Variable Cost and Total Costs.

(iii) Sketch the Total Cost and Total Revenue curves.

(b) Consider the following demand and supply equations:

Demand: P = 100 – 3Q

Supply: P = 10 + 2Q

(i) Solve for the equilibrium price and quantity.

(ii) What are the slopes of the two curves?

3. Consider an open economy described by the following equations:

C = 300 + 0.9Yd Govt spending = 600

I (autonomous) = 400 Tax rate = 20% of incomes

Exports = 800 Imports = 27.5% of disposable income

Note that C, Y and M are endogenous, and I, G, t and X are exogenous constants.

(a) Solve for the equilibrium national income, Y.

(b) Then calculate disposable income, consumption and imports.

(c) Determine the Marginal Propensity to Consume and the Marginal Propensity to

Save.

(d) Calculate the expenditure multiplier.

(e) If an injection of extra autonomous expenditure causes national income to rise by

400, calculate the size of the extra expenditure.