Elucidate price and output determination under any two non-collusive models of Oligopoly.
See Answer →Explain the Second Fundamental Theorem of Welfare Economics.
See Answer →What is the rationale behind the rationing system for allocation of scarce resources?
See Answer →Explain the concept of Derived demand of the factor of production.
See Answer →Compare and contrast Marshallian theory with the Ricardian theory of rent.
See Answer →What causes a backward bending labor supply curve?
See Answer →What role do taxes or subsidies play in internalising the externality that exists?
See Answer →Negative production externality leads to over-production. Do you agree? Illustrate using an appropriate diagram.
See Answer →Consider the following Table which gives figures relating to the output of a commodity. The inputs used include, Land (which is fixed) and Labour (which is a variable factor).
| No. of Labourers | Total Product |
| 0 | 0 |
| 1 | 12 |
| 2 | 16 |
| 3 | 22 |
| 4 | 26 |
| 5 | 28 |
| 6 | 28 |
| 7 | 24 |
| 8 | 18 |
Based on the above table, attempt the following:
(i) Mark the three stages of law of variable proportion in the above table.
(ii) In which stage will a rational producer choose to operate? Give reason.
(b)What are the reasons behind varying returns viz., increasing, constant and decreasing returns to a factor in production in the short-run? Will such varying returns to a factor hold in the longrun?
See Answer →Consider the figure below where line D represents demand curve facing a monopolist, MR and MC represent the marginal revenue and the marginal cost curve, respectively.
Answer the following:
(i) Which point depicts the monopoly equilibrium in the above figure? What will be the price charged and quantity produced by this monopolist?
(ii) What would have been the equilibrium output and price had it been a perfect competitive industry? Compare your result with that of a monopoly.
(b) Why a monopolist does not produce on the inelastic part of its demand curve?
(c) A monopolist has cost function TC = 10 + 2Q, where TC is the total cost of producing Q units of output. Demand in this market is given by theequation Q = 14 – P, where P stands for the price. Calculate the profit that the monopolist will be making.
See Answer →Now suppose that income goes up to Rs 150. Illustrate how the budget constraint will change. If both goods are normal, mark the region on the new budget line where the new equilibrium will be?
See Answer →Suppose that in equilibrium this individual consumes 2 units of good 1 and 12 units of good 2. Plot this bundle in the same diagram. Draw a convex shaped indifference curve passing through this point.
See Answer →Write the equation of the budget constraint. Also, construct a budget line taking good 1 on the horizontal and good 2 on the vertical axis. What will be the slope of this budget line?
See Answer →Consider a consumer with income Rs 100. There are two commodities 1 and 2 to choose from. If the consumer spends all his income on good 1, he can buy 5 units of it. If he spends all his income on good 2, he can buy 20 units of it. Based on the given information, attempt the following:
See Answer →Giffen goods must be inferior goods, while inferior goods, may or may not be Giffen goods. Do you agree? Comment.
See Answer →What are the assumptions of Indifference curve analysis of consumer equilibrium?
See Answer →Using an appropriate diagram discuss Paul Sweezy’s Kinked Demand curve theory.
See Answer →The Organisation of Petroleum Exporting Countries (OPEC) is an example of which form of market structure? Discuss its characteristic features.
See Answer →Differentiate between
(i) External Economies and External Diseconomies
(ii) Explicit Cost and Implicit Cost
See Answer →Law of Variable Proportion is not a long-run concept. Do you agree? Elaborate.
See Answer →