Economics Balochistan PCS Paper 2003

Note: Attempt any Five questions. All questions carry equal marks.

Q-1. Discuss the importance of Capital Formation in economic development. Why capital formation is low in Pakistan? How can you boost capital formation in Pakistan?

Q-2. (a) What are the main causes of deficit in the Balance of Payment of Pakistan? How can you solve these problems?
(b) Calculate Median, Mode and Quartile from the following data:
12,   12.5,   10.5,   10.4,   14.9,   12.5,   2.3,   4.9,   12.3

Q-3. (a) Explain and illustrate the theory of comparative cost as a basis of international trade.
(b) What is meant by export and import function? How do they affect equilibrium level of national income?

Q-4. Explain and illustrate by appropriate diagrams how shall equilibrium level of national income be affected by:
(i) An increase in Government Expenditure.
(ii) An increase in Taxes.
(iii) An increase in Government Transfer Payment.

Q-5. (a) What is Full Employment? Why classical notion about full employment is not true?
(b) Given the IS and LM equations:
         C = 80 + 0.6 Y      I = 150 – 120 i      M_d = 0.2Y – 200i
         T_x = 0.1 Y           G = 100                  M_s = 240
Determine the equilibrium income (Y) and rate of interest (i)

Q-6. (a) Explain the concepts of National Income. What are its determinants?
(b) Find the equilibrium level of national income:
         S = -20 + 0.25 Y_d      I = 20      G = 10      T = 20

Q-7. (a) Define the term Long Run Average Cost. How is the long run average cost curve of a firm obtained from short run average cost curves? Why is it flatter than the short run curves?
(b) Given AC = 4860/Q + 15Q + 750000
Find the level of output where AC is at its minimum and show that at the minimum AC, marginal cost and average cost are equal.

Q-8. (a) In both monopoly and perfect competition, the equilibrium output is at the level of which MR = MC, but only in the latter is the equilibrium level such that P = MC. Explain.
(b) A monopolist has the following demand equation Q = 144 / P² , AVC = Q^1/2 and TFC = 5. what are its profit maximizing quantity, price and profit?

Q-9. (a) What is Elasticity of Supply? How is it measured? Which factors determine the elasticity of supply?
(b) The demand equation for a product is given by P = 60 – 0.2Q².
At what price is demand unitary elastic?

Q-10. (a) Explain cardinal utility theory. How does a consumer achieve equilibrium according to this theory? How can consumer’s demand curve be derived through this theory?
(b) How many units of commodities X and Y consumer can purchase?
While P_x = Rs.0.50   P_y = Rs.1   and consumer’s Income (M) = Rs.8

Good Luck

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