ECONOMIC THEORY 6A Easter 1954

Set by Mr. Edwin J. Davies

(Answer 5 questions)

What considerations govern the extent, in space and time of the market for a commodity? Give full examples of narrow and wide markets with reasons for the type of market.
Discuss the meaning of the term “monopolistic production”. What checks are there to the charging of an excessive price by a monopolist for his product? When is it justified?
Bring out the importance of the “time element” in the theory of Value. Show how marginal utility affects the short period and marginal costs affect t the price in the long run.
Examine carefully the concept of elasticity of demand. Explain how it is measured and how it may vary over the range of prices for which the demand curve is drawn.
Discuss the advantages of the joint stock liability principles as applied to business organisation. Are there any disadvantages?
What relation exists between the quantity of money and the general level of prices? How do inflation and deflation affect the various classes of the community?
How do you account for wage variations in different occupations? To what extent, if any, can trade unions influence wages?
OR
Explain how wages are related to the cost of living. How are the theory of value and marginal productivity concerned with this relationship?
What is the connection between the Bank of England, the commercial banks and the money market? In relation to this state in what ways have the old methods of regulating money been superseded by government action?
What causes have made foreign trade so important a factor in our economic structure? In relation to this explain what is meant by the “dollar shortage”?
How is the rate of exchange determined between two countries with interconvertible currencies?
OR
“Under gold standard conditions the rates of exchange between national currency units will vary within the narrow limits of the gold or specie points”. Show how this comes about and mention factors which determine the gold or specie point.