Institute of Chartered Financial Analysts of India (ICFAI) University 2007 Certification Finance Economics (CFA520): - Question Paper

ques. Paper
Economics (CFA520): October 2007
• ans all ques..
• Marks are indicated against every ques..
1. The demand for most products varies directly with the change in consumer income. Such products are
known as
(1 mark)
(a) Normal goods
(b) Prestigious goods
(c) Complementary goods
(d) Inferior goods
(e) Substitute goods.
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2. The situation of market equilibrium occurs when
(1 mark)
(a) Demand for the goods is greater than supply of the goods
(b) volume demanded for the goods equals volume supplied of the goods
(c) The price, sellers ask for the goods is less than the price consumers pay of those goods
(d) There exist a shortage of the supply of the goods
(e) Demand for the goods is less than supply of the goods.
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3. Essexx Design Inc. produces very costly and attractive sports watches. Now Sofex Inc. introduced a
stylish sports watch in the market. The watches of Essexx Design Inc. and Sofex Inc. are considered to
be perfect substitutes. The cross elasticity of demand ranging from these watches is
(1 mark)
(a) Infinity
(b) Positive, less than infinity
(c) Zero
(d) Less than zero
(e) One.
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4. Which of the subsequent does not reason a shift in the demand curve?
(1 mark)
(a) change in the price of the good
(b) change in the income of the buyers
(c) change in the personal preferences
(d) change in the price of the related goods
(e) change in the consumer trends.
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5. The demand and supply functions of a commodity are estimated as
Qd = 100 – P
Qs = –20 + 3P
The equilibrium price and volume of the good are
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(a) Rs.60 and 40 units respectively
(b) Rs.40 and 60 units respectively
(c) Rs.50 and 50 units respectively
(d) Rs.30 and 70 units respectively
(e) Rs.70 and 30 units respectively.
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6. Current demand for apples in a city is 1,000 boxes per week. In the city, price elasticity of demand for
apples is –1.25 and income elasticity of demand is 2.00. For the next period, if per capita income is
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expected to increase by 7% and price of apples is expected to increase by 10%, demand for apples is
expected to be
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(a) 875 boxes per week
(b) 1,000 boxes per week
(c) 1,250 boxes per week
(d) 1,140 boxes per week
(e) 1,015 boxes per week.
7. The falling part of a total utility curve shows
(1 mark)

Earning:   Approval pending.