# Thread: FREE CFA Level 1 sample questions everyday for December 2010 candidates

1. Originally Posted by Avnish
Can u plz explain how d answer is 'A'..??
Which question number r u referring to?

2. the answer is c.

Subsidy is money paid by govt to producer. The supply surve shifts downward and decreases the price and increases the qty. therefore, marginal cost exceeds the marginal benefit.

3. Originally Posted by Nidhi Taleja
I think there will be underproduction. So it's B.

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4. Originally Posted by nehakumaria
the answer is c.

Subsidy is money paid by govt to producer. The supply surve shifts downward and decreases the price and increases the qty. therefore, marginal cost exceeds the marginal benefit.
I agree with Neha...'C' seems logical.

5. Q#5 Answer: (C) A subsidy shifts the supply curve to the right and results in a deadweight loss due to overproduction.
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Today's question (Questions and answers provided by Elan Guides)

Q#6: A tax on a good or service is least likely to:

A. Increase the equilibrium quantity
B. Decrease the equilibrium quantity
C. Increase the equilibrium price

6. I think its 'A'.
When tax is imposed on good or services, the supply curve shift to the left. This increase the equilibrium price whereas decreases equilibrium quantity. So what tax don't do is to increase equilibrium quantity.

7. ## My Answer to Q6 is A

Since with impose of taxes, the prices will increase which will lead to increase in prices and which also leads to decrease in quantity. So the least effected is the increase in equilibrium quantity. Hence my answer is A. Provide your feedbacks. Regards

8. Hello All,

I am Anshul from ProAvenues.com and we represent Elan Guides in India. We are providing some of the questions that will be a part of the daily sample questions for Dec 2010 candidates.

There was some confusion with regard to Q2 earlier. We checked with our Elan Guides team and here is our input:

For the purposes of the CFA Program (and in most modern economics texts) the percentage changes in quantity demanded and price, which are required to calculate price elasticity of demand, are calculated based on AVERAGE and not ORIGINAL values in the denominator. If elasticity is calculated in this manner (based on average values) you get the same elasticity value regardless of whether prices move up to a particular level or down to the same level.

Basically, the answer we provided is correct. For more information, you can either refer to the CFA Program curriculum or register on our website to get the free Economics ebook. http://www.elanguides.com/cfa/india

We are also offering June 2011 early bird Ultimate Prep package with a provision to incorporate any changes made by the CFA institute in their curriculum. To know more details and the special discount for Indian students, you can reach us on: 09619 565 006.

Best,
Anshul

9. Thank you Anshul for the clarification!

10. Originally Posted by rahulgupta45
Since with impose of taxes, the prices will increase which will lead to increase in prices and which also leads to decrease in quantity. So the least effected is the increase in equilibrium quantity. Hence my answer is A. Provide your feedbacks. Regards
I agree with your logic...seems A is right.

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