Q1a. Define substitution effect.
Separate income effect from substitution effect
for a fall in the price of a giffen type good using a suitable diagram.
(5M)(2016)
Q1b.Show that if the consumer is free from money illusion, the demand
function is homogeneous of degree zero. (5M)(2016)
Q1c.Give the different views of equity and use utility possibility frontier to
show that efficiency does not necessarily imply equity.(5M)(2016)
Q1d. State the assumptions of classical linear regression model. Why are the
regressors(X) assumed to be non stochastic in repeated samples.(5M)(2016)
Q1e. For the Cobb douglas Production function Q=ALαKβ (where symbols
have usual meaning),calvulate the input elasticities of output and also derive
expression for the expansion path of the firm.(5M)(2016)
Q1f. Define level of significance. How is this level decided for a given problem?
Can we take it as 2 % or 6%? Explain. (5M)(2016)
Q2.
Derive the demand functions from the utility function U=f(q1,q2……qn) subject
to budget constraint
Y=p1q1+p2q2+……pnqn and if the demand function for a commodity
i(i=1,2,…n) is homogeneous of degree zero in prices and income, then show
that the sum of own and cross price elasticities of demand for the commodity
equals its income elasticity with negative sign. (15M)(2016)
Q3.Show that “If the second order condition is satsfied, every point of tangency
on isoquant and an isocost line is the solution of both a constrained maximum
and a constrained minimum. (15M)(2016)
Q4. Distinguish between point estimation and interval estimation of population
parameter. State the small sample properties of a good estimator. (15M)(2016)
Q5.(a) Derive the long run supply function under perfect competition when
there are external economies or external dseconomies.
(b) Consider an industry represented by two competitive firms with the total
cost functions as follows:
C1= a1q12+bq1q
C2=a2q22+bq2q where q1+q2=q and a1>0,a2>0.
Derive the aggregate supply function of the industry when there are
I. External economies.(b<0)
II. External diseconomies(b>0)
Q6. Consider a duopoly with product differentiation in which the demand and
cost functions are
q1=88- 4p1+2p2
C1=10q1
And q2=56+2 p1-4 p2
C2=8q2 for firms I and II respectively.
Derive the price reaction functions for ech firm on the assumption that each
maximises its profits with respect to its own price. Determine the eqilibrium
values of price,quantity and profit for each firm.(15M)(2016)
Q7. “Pareto optimal allocation is contingent upon the assumption that there are
no external effects on consumption and production”. Examine what happens if
there are external effects.(15M)(2016)
Q8. What is stationarity in time series analysis? Show that a random work
model is non stationary. Discuss the Dickey fuller test for stationarity.
(15M)(2016)
Q9.(a) Distinguish betweena cooperative and a non-cooperative
game.(5M)(2016)
(b)In a non-cooperative game, find
I. Saddle point in a pure strategy game.(5M)(2016)
.II.maximum expected pay-off in a mixed strategy game.(5M)(2016)
III. Solution of a sequential game in an ‘extensive form’.(5M)(2016)
Q10.(a) Define heteroscedasticity..(5M)(2016)
(b) Explain:
I. Consequences of heteroscedasticity on OLS estimates.(5M)(2016)
II. Detection of heteroscedasticity in a model .(5M)(2016)
III. Estimation procedure in the presence of heteroscedasticity. .(5M)(2016)
Q11. Given the Classical Linear Regression model with usual assumptions
Yi=β0+β1Xi+Ui i=1,2,..n
A.Examine the goodness of fit of the model using ANOVA .(10M)(2016)
2
B. If the value of R is low , how it can be improved.(10M)(2016)
Q12. Distinguish between basic feasible solution, feasible solution and optimal
solution of a Linear Programming Problem(LPP). Solve the following LPP
graphically.
Maximize Y=q1+2q2
Subject to q1+ 3q2 ≤ 18
2q1+ q2 ≤ 14
q1,q2 ≥ 0
Q13. (a)Examine the situation of market-equilibrium when;
Supply and demand are not equal at a non-negative price-quantity
combination.(10M)(2016)
(b) Supply and demand are equal at more than one non-negative price-quanity
combination. (10M)(2016)
Q14. How is distributional inequality of various kinds measured with the help
of income as a resource?Name some common inequality measures and state
their properties.(20M)(2016)
