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

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.

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

(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? 

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

(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. 

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