Policy rules are better than discretionary policies. Justify the above statement in light of new classical macroeconomics.
See Answer →Differentiate between adaptive expectations and rational expectations. Explain why the shape of the Phillips curve changes when we introduce expectations in our analysis.
See Answer →Explain the concept of steady state growth in the Solow model with appropriate diagram. Show that the golden rule of Phelps is not a steady state.
See Answer →Bergson-Samuelson Social welfare function
See Answer →Arrow prat measure of risk averseness
See Answer →Homogeneous and Homothetic production functions
See Answer →Moral Hazard
See Answer →a.) Given the Von Neumann-Morgenstern utility function of an individual, U (W) =W ½ , where W stands for amount of money. Comment upon attitude towards risk of such an individual with the help of a diagram.
b) Now suppose this individual possesses a building worth ₹1600. If the building catches fire, its value falls to ₹ 400. Let the probability of building catching fire be ¼. On the basis of the given information, find out whether the individual would be willing to pay a risk premium of ₹ 76 to the insurance company in order to eliminate the risk associated with the factory building.
See Answer →5. a.) Differentiate between the Cournot and the Bertrand model of Oligopoly.
b.) Consider an industry with two firms 1 and 2, each producing output Q1 and Q2 respectively and facing the industry demand given by P=140-Q, where P is the market price and Q represents the total industry output, that is Q= Q1 + Q2. Assume that each faces a marginal cost of ₹ 20 per unit with no fixed costs. Solve for the Cournot equilibrium in such an industry
See Answer →a.) Define games of complete and incomplete information
b.) From the following pay-off matrix, where the payoffs (the negative values) are the years of possible imprisonment for individuals A and B, determine:
(i) The optimal strategy for each individual.
(ii) Do individuals A and B face a prisoner’s dilemma?
| Individual B | |||
| Individual A | Confess | Don’t Confess | |
| Confess | (-5, -5) | (-1, -10) | |
| Don’t Confess | (-10, -1) | (-2, -2) |
See Answer →
a) What is excess capacity and how is it related to the model of monopolistic competition?
b) Demand function and supply function are given as P=25-X2 and P=2X+1 respectively, find out producer surplus and consumer surplus
See Answer →Consider a Cobb-Douglas utility function
U (X, Y) = Xα Y (1- α) ,
Where X and y are the two goods that a consumer consumes at per unit prices of Px and Py respectively. Assuming the income of the consumer to be ₹M, determine:
a. Marshallian demand function for goods X and Y.
b. Indirect utility function for such a consumer.
c. The maximum utility attained by the consumer where α =1/2, Px =₹ 2, Py = ₹ 8 and M= ₹ 4000.
d. Derive Roy’s identity
See Answer →Determine the conditions that need to be fulfilled by an allocation to be termed as Pareto efficient allocation.
See Answer →Consider a pure-exchange economy of two individuals (A and B) and two goods (X and Y) Individual A is endowed with 5 units of good X and 3 units of good Y, while individual B with 3 and 4 units of goods X and Y respectively. Assuming utility functions of individuals A and B to be UA=XA YA 2 and UB=XB 2 YB where Xi and Yi for i= {A, B} represent individual i’s consumption of good X and Y respectively, what will be the set of Pareto optimal allocation in this economy?
See Answer →Mesmerism and hypnotism
See Answer →Mental health as resilience
See Answer →Defense mechanisms
See Answer →Evolution of adaptive mechanisms
See Answer →Brain disease
See Answer →Dualistic view towards biological basis of body and mind
See Answer →