(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.

(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. 

(b) Consider a consumer who has to choose between two normal goods A and B. Initially his income is Rs 10, and the per unit price of good A and good B is Rs 2 and Rs 3, respectively. Now, assume income of the consumer increases to Rs 20, the price of good A rises to Rs 3 and that of good B rises to Rs 4.50. What will be the impact of this change on the demand of the two goods?

(a) Draw a concave Production Possibility curve. What does the downward slope andthe concavity of the curve imply? 

(c) How can the cross-price elasticity of demand be used to identify the relationship between any two goods?

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

(b)The income elasticities of demand of two goods, X and Y are + 3.0 and − 0.2, respectively. Assuming income rises by 5 per cent. What will be the respective change in the quantities demanded of good X and good Y?