Faculty of Actuaries Institute of Actuaries
EXAMINATIONS
April 1999
Subject B — Economics and Finance
Paper One
Time allowed: Three hours
INSTRUCTIONS TO THE CANDIDATE
1. Write your surname in full, the initials of your other names and your
Candidate’s Number on the front of the answer booklet.
2. Begin your answers to Parts One, Two and Three on a separate sheet.
3. Mark allocations are shown in brackets.
4. Attempt all 37 questions.
Graph paper is not required for this paper.
AT THE END OF THE EXAMINATION
Hand in BOTH your answer booklet and this question paper.
In addition to this paper you should have available
Actuarial Tables and an electronic calculator.
ã Faculty of Actuaries
B1—A99 ã Institute of Actuaries
B1(A)—2
PART ONE
For questions 1–26 indicate in your answer booklet which one of the answers A, B, C or
D is correct.
1 Which of the following would shift the demand curve for Good X (a normal
good) to the right?
A A decrease in the price of a substitute good.
B A decrease in the price of a complementary good.
C A decrease in consumers income.
D A decrease in the price of Good X. [1½]
2 Which of the following goods will have an income elasticity of demand which is
greater than 1?
A A luxury good.
B A necessity good.
C An inferior good.
D A Giffen good. [1½]
3 Which of the following statements correctly explains how price and quantity
adjust to eliminate a surplus?
A Price will fall, quantity demanded will rise and quantity supplied will
rise.
B Price will fall, quantity demanded will rise and quantity supplied will
fall.
C Price will rise, quantity demanded will fall and quantity supplied will
rise.
D Price will rise, quantity demanded will rise and quantity supplied will
fall. [1½]
4 If the cross elasticity of demand between Goods X and Y is negative then:
A Goods X and Y are substitutes.
B Goods X and Y are complements.
C Goods X and Y are both inferior goods.
D Goods X and Y are both Giffen goods. [1½]
B1(A)—3 PLEASE TURN OVER
5 Consumer A spends all his income on Good X or Good Y and Good X is three
time the price of Good Y. At present his marginal utility from Good X is 10
units and his marginal utility from Good Y is 5 units. He could increase total
utility by consuming:
A more of Good X and more of Good Y
B more of Good X and less of Good Y
C less of Good X and less of Good Y
D less of Good X and more of Good Y [1½]
6 Which of the following statements is relevant to the distinction between the
short run and the long run in the production process?
A Labour input is fixed in the short run but variable in the long run.
B Labour input is variable in the short run but fixed in the long run.
C Capital input is fixed in the short run but variable in the long run.
D Capital input is variable in the short run but fixed in the long run. [1½]
7 Given the following data, at what levels of employment are the average
product and marginal products of labour at a maximum?
Labour Output
(Units per day) (Units per day)
0 0
1 5
2 14
3 22
4 28
5 33
A Average product at 2 units of labour and marginal product at 1 unit of
labour.
B Average product at 3 units of labour and marginal product at 2 units of
labour.
C Average product at 4 units of labour and[1] [2] [3] [4] [5] [6] 下一页 |
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