(a) Distinguish between substitution effect and Income effect. Make a comparison with illustration between Slusky’s approach and Hicksian approach to decompose the price effect into substitution effect and income effect. 

Illustrate with the help of a diagram, higher the price elasticity of supply, larger will be the per unit tax burden borne by the consumers.

Discuss the central problems of an Economy.

Illustrate the relation between the Value of Marginal product and Marginal Revenue product of a factor under perfect competition.

Law of Diminishing returns applies only in the short-run. Do you agree?

Discuss the types of non-cooperative behaviour under Oligopoly

(b) What will be the resultant effects on the labour market if the minimum wage is set below the market equilibrium wage rate?

(a) With the help of a diagram show the effect of the minimum wage rule on the labour market given that the wage is set above the market equilibrium wage rate.

(b) A Monopoly faces market demand given by Q = 30 – P, where Q stands for quantity and P for price. Total cost function is given by C(Q) = 2Q2 . Find the profit maximising price and quantity and the resulting profit to the monopoly. Compare your results with the equilibrium quantity and price of that of a perfect competitive industry. 

(a) Draw a kinked demand curve and explain how a change in marginal costs may not affect the price in the market

(b) Consider the following Table which gives total cost schedule of a firm. Given that the
average fixed cost of producing 2 units of output is Rs. 10. Find the total variable
cost, total fixed cost, average variable cost, average fixed cost, short-run average
cost, and short-run marginal cost schedules of the firm for the corresponding values
of output.

Quantity    Total cost
    1                  50
    2                  65
    3                  75
    4                  95
    5                  130
    6                  185

(a) Given that a firm experiences a linear homogenous production function, comment upon the shape of the Expansion path, both in the long run and in the short run.

Consider Figure 1, where DD and D’D’ represent the two different demand curves for a commodity in two different markets. Compare the two demand curves in terms of the price elasticity of demand.

 With respect to the demand and supply analysis, discuss the Walrasian equilibrium and the Walrasian stability condition.

(a) Using appropriate diagrams discuss the income and substitution effects of a price change in case of an inferior good.

(b) Discuss the various factors that distort the ability of Competitive markets to achieve efficiency.

(a) Using appropriate diagrams compare the level of production when there is a positive production externality with the production level when there is a negative production externality. How can the resulting inefficient production levels be corrected? 

Write short notes on the following.

(a) Instrumental Variables (IV) Method.
(b) Pooled Cross Section Data.
(c) Linear Static Panel Data Model.

Differentiate between:

(a) Quantitative Research and Qualitative Research.
(b) In-sample forecast and out-of-sample forecast.
(c) Autoregressive Model and Autoregressive Distributed Lag Model.

Show that ‘exact identification’ is a sufficient condition for the unique determination of a system of equations.