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.

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

(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? 

Discuss the central problems of an Economy.

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

(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) 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