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1 2 Mme 2016

(1) The document provides instructions for a higher national diploma examination in accountancy. It outlines 6 questions on micro and macroeconomic topics. Candidates are instructed to answer 5 of the 6 questions in the 3 hour exam. (2) The questions cover a range of economic concepts including scarcity, opportunity cost, production possibility frontiers, price controls, consumer behavior, costs of production, market structures, monetary policy, and international trade. Students are asked to define terms, calculate economic values, explain concepts, and analyze hypothetical market situations. (3) Knowledge of economics is deemed important for accountants and managers to understand topics like costs, revenues, market structures, and macroeconomic

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Mathu rajini
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73 views4 pages

1 2 Mme 2016

(1) The document provides instructions for a higher national diploma examination in accountancy. It outlines 6 questions on micro and macroeconomic topics. Candidates are instructed to answer 5 of the 6 questions in the 3 hour exam. (2) The questions cover a range of economic concepts including scarcity, opportunity cost, production possibility frontiers, price controls, consumer behavior, costs of production, market structures, monetary policy, and international trade. Students are asked to define terms, calculate economic values, explain concepts, and analyze hypothetical market situations. (3) Knowledge of economics is deemed important for accountants and managers to understand topics like costs, revenues, market structures, and macroeconomic

Uploaded by

Mathu rajini
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Higher National Diploma in Accountancy

First Year - Second Semester Examination -2016


Micro & Macro Economics

Instructions to Candidates
This question paper has three (03) pages including this page
There are six (06) questions
Answer five questions only Time allowed is three (03) hours

1. (i) Define the terms ‘scarcity’, ‘opportunity cost’ and ‘economic profit’. (05 Marks)
(ii) Explain the term “Economic Resources” with suitable example. (05 Marks)
(iii) Explain five uses (what are the concepts can be explained using PPF) of Production
Possibility Frontier/Curve using examples. (05 Marks)
(iv) Explain the importance of knowledge in “Economics” for Accountants and Managers.
(05 Marks)
(Total 20 Marks)

2. In a hypothetical market, market demand and supply equations are as follows.


Qd = 400 - 2P, Qs = 200 + 4p
(i) Calculate market equilibrium. (04 Marks)
(ii) The government imposed Rs.25.00 as the “control price”. Calculate followings after
“price ceiling”.
(a) Market demand and market supply (03 Marks)
(b) Excess demand or excess supply (02 Marks)
(c) Black market prices or price reduction (02 Marks)
(d) Suggest two solutions to succeed “price ceiling”. (02 Marks)

(iii) (a) Calculate “are price demand elasticity” of the product within the price range of
before and after “price control” (04 Marks)
(b) Do you agree that this product suitable to earn tax income for the government?
justify your decision? (03 Marks)
(Total 20 Marks)
3. (i) Explain the law of di marginal utility with relevant example. (03 Marks)
(ii) Explain consumer & according to indifference curve analysis with relevant graph.
(03 Marks)
(iii)Complete the short-run production cost schedule given below. Total fixed cost is
Rs.600.
Q TFC TVC TC AFC AVC ATC MC
100 300
200 550
300 750
400 1200
500 1750
(11 Marks)
(vi) Explain the behavior of “return to scale” using long-run average cost curve. (03 Marks)
(Total 20 Marks)

4. (i) Demand and cost functions of a seller in a monopolistic competitive market are given
below.
P = 20 - 0.25Q , TC = 1.5Q2 – 120Q + 1000. You are required to calculate the
following.
(a) Output level when total profit is maximum. (04 Marks)
(b) Maximum total profit (02 Marks)
(c) Price when profit is maximum (02 Marks)

(ii)Complete the table using relevant characteristics of market models.

Types Sellers Entry Goods Advertising Elasticity Profitability


barriers of demand in Long run
Perfect Large Perfect
Competition elastic
Monopoly Strongest Abnormal
profits in
long-run
Monopolistic Substitutes
competition
Oligopoly Attractive
(09 Marks)
(iii)Explain “Kinked demand curve” in oligopoly market using relevant graph. (03 Marks)
(Total 20 Marks)
5. (i) State six (6) characteristics of good money. (03 Marks)
(ii) State objectives and instruments of current monetary policy of Sri Lanka.
(05 Marks)
(iii)You are given following summary of economic activities of a fictional economy.
Private consumption 1500

Imports 1050

Exports 660

Salaries and wages 750

Net foreign factor income 830

Gross investment 400

Government consumption 920

Net interests 200

Profits 550

Rent income 1080

Private Tax 600

Subsidies for consumers 250

Calculate the following,


(a) Gross Domestic Production (03Marks)
(b) Gross National Production (03 Marks)
(c) National Income (03 Marks)
(d) Disposable Income of Households (03 Marks)
(Total 20 Marks)
6. (i) Explain absolute advantage and comparative advantage of foreign trade relevant
examples (04 Marks)
(ii) Explain different types of foreign exchange rates. (05 Marks)
(iii) Explain what is meant by the “overall Government Budget Deficit”. State three
sources of financing the Government Budget Deficit. (05 Marks)
(iv) Globalization is a process of interaction among people, companies and governments of
different nations. Recognize three (03) economic benefits of globalization.
(06 marks)
(Total 20 Marks)

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