What causes diminishing returns to a variable factor in the production process?

Differentiate between Static Economics and Dynamic Economics.

Given that the two factors of production are used in fixed proportion in the production process, what will be the shape of the corresponding isoquants? Illustrate. Also, is it possible to increase the output by increasing only one factor keeping constant the other factor of production? Give reason for your answer.

A rent ceiling prohibits charging rent that exceeds the ceiling amount. Suppose government decides to put a rent ceiling.

(a) With the help of a diagram show the effect of a rent ceiling on the supply and demand of a rented house if the ceiling is set below the market equilibrium rent. 

(b) What will be the resultant effects on supply and demand of a rented house if the ceiling is set above the market equilibrium rent?

(a) Cardinal Utility analysis is not free from criticism. Do you agree? Elaborate.

(b) Consider a consumer who consumes two goods X and Y, priced at PX and PY, respectively. Suppose price of good X falls to PX’. Decompose price effect of this fall in price into substitution and income effect using Hicksian approach.

What is meant by a firm’s expansion path? Illustrate and distinguish between the Expansion path in case of a non-linear production function and a linear homogeneous production function.

Illustrate with the help of a diagram, lower the price elasticity of demand, lower will be the per unit tax burden borne by the producers. (a) In the Demand-Supply analysis, what is meant by a Marshallian cross? Illustrate

(b) The demand and supply functions of a good are given by QD = 110 − 5P; QS = 6P where P, QD and QS denote price, quantity demanded and quantity supplied, respectively. Find the inverse demand and supply functions and the market equilibrium price and quantity.

Illustrate with the help of a diagram, lower the price elasticity of demand, lower will be the per unit tax burden borne by the producers. (a) In the Demand-Supply analysis, what is meant by a Marshallian cross? Illustrate

(b) The demand and supply functions of a good are given by QD = 110 − 5P; QS = 6P where P, QD and QS denote price, quantity demanded and quantity supplied, respectively. Find the inverse demand and supply functions and the market equilibrium price and quantity.

Describe with the help of a diagram interaction between the Short-run Average Total Cost curves and the Long-run Average Total Cost curve given that the firm has five plant sizes to consider viz. I, II, III, IV and V (in ascending order of their size), wherein plant size III turn out to be optimal plant size in the long run.

Illustrate the relation between Marginal Cost (MC), Average Total Cost (ATC), Average Variable Cost (AVC) and Average Fixed Cost (AFC) curves. Given a total cost function,

TC(Q) = 50Q2 + 10Q + 75

where Q represents quantity of output produced. Find the expression for Variable Cost (VC), Fixed Cost (FC), AVC, AFC and ATC.

Explain the concept of short-run and the long-run as associated with a firm.

A firm in a perfect competitive market structure faces a marginal cost function given by

MC(Q) = 4Q + 5

where Q represents quantity of output produced. This firm earns marginal revenue of Rs 25 oneach unit sale of its output. Suppose this firm decides to produce 3 units of output, is this a profit maximisingdecision by the firm? If not, how much should this firm produce to earn maximum profits? In the long-run will this firm earn negative economic profits, positive economic profits, or zero economic profits?

If trade takes place between both the given countries, which country will export commodity A?

Which country has a comparative advantage in producing commodity B? Give reason.

Which country has an absolute advantage in producing commodity A? Give reason.

Consider two countries I and II producing two commodities A and B. There is only one factor of production, that is, Labour hours. The table below gives labour hours required by each country to produce a unit of commodities A and B.

Labour hours needed to produce a unit of

Heckscher-Ohlin theory of international trade begins where the Ricardian theory of international trade ends. Elucidate.

Why does the slope of the demand curve vary on the both sides of the kink? Give reason.

The demand curve facing an oligopolist has a kink at the level of the prevailing price. Discuss.

Compare and contrast the Cournot model with the Stackelberg model of Duopoly.