Q1) Mr. Haroon has limited income which he spends on goods X and Y, market price of X is Rs. 30 per unit and Y is Rs. 40 per unit. When he draws his budget line, its X intercept at 100 units. Find Haroon's income and slope of his budget line.

Q2) Two goods have a cross-price elasticity of demand of 1:2

i) Would you describe the nature of goods?

ii)If the price of one good increase by 5 percent, what will happen to the demand for the other good. Also estimates its value holding other factors constant?

Q3) At its best possible output level, a firm has total revenue of Rs. 7000 per day and total cost of Rs. 14000 per day. What should this firm do in the short run if:

(Hint: See normal and abnormal loss)

i)The firm has total fixed cost of Rs. 6000 per day?

ii)The firm has total variable cost of Rs. 6000 per day?

Q4) The following information is extracted from the National Income Accounts of an economy.

Exports of goods and services = 130

Depreciation = 525

Government expenditure = 450

Gross domestic investment = 750

Imports of goods and services = 135

Personal consumption expenditure = 27,500

Find the value of net domestic product.