MEC-101 Master of Arts (Economics) Past Exam Paper December 2023 PDF

No. of Printed Pages : 12 MEC–101 MASTER OF ARTS (ECONOMICS) (MEC) Term-End Examination December, 2023 MEC-101 : MICROECONOMIC ANALYSIS Time : 3 Hours Maximum Marks : 100 Note : Answer questions from each Section...

No. of Printed Pages : 12 MEC–101 MASTER OF ARTS (ECONOMICS) (MEC) Term-End Examination December, 2023 MEC-101 : MICROECONOMIC ANALYSIS Time : 3 Hours Maximum Marks : 100 Note : Answer questions from each Section as per instructions given. Section—I Note : Answer any two questions from this Section. 20×2=40 1. (a) If an individual consumer’s utility function is : 15 U = X1. X2 and her money income is ` 20, while the prices are P1 = ` 2 and P2 = ` 8. (i) Determine the utility maximizing choice. P. T. O.  MEC–101 (ii) Formulate the dual problem and solve for the minimum expenditure needed to attain the utility level as in (i) above. (b) Suppose the demand curve is given by Q = 10 – P. What is the total consumer’s surplus from consuming 6 units of the good ? 5 2. (a) Discuss the concepts of Pooling equilibrium and Separating equilibrium in the context of insurance. Explain the situations under which pooling equilibrium fails. 15 (b) Explain the theory of second best. 5 3. (a) The production function of a small shop that frames pictures is : Q  5 LK where Q is the number of pictures framed per day, L is labour hours and K is the machine hours. Suppose 9 labour hours and 9 machine hours are used every day, what is the maximum number of pictures that can be framed in a day ? Calculate the  MEC–101 marginal product of labour when 9 labour hours are used each day together with 9 machine hours ? Suppose the firm doubles both the amount of labour and machine hours used per day. Calculate the increase in output. Comment on the returns to scale in the operation. 12 (b) Define the term ‘Shepard’s lemma’. Assume that the production function of a producer is given by Q = 5L0.7 K0.3, where Q, L and K denote output, labour and capital respectively. If labour cost ` 1 per unit and capital ` 2, find the least cost combination of inputs (L & K). 8 4. Distinguish between the following concepts with suitable illustrations : 5×4=20 (i) Consumer’s surplus and Producer’s surplus (ii) Homogeneous and Homothetic production function (iii) First degree and Third degree price discrimination (iv) Adverse selection and Moral hazard P. T. O.  MEC–101 Section—II Note : Answer any five questions from this Section. 12×5=60 5. (a) Define expansion path. Prove that the Decreasing Returns to Scale (DRS) shows diminishing returns to a variable factor. 6 (b) Illustrate the long-run equilibrium conditions of a firm and industry in the competitive market. 6 6. (a) What are the conditions of Pareto optimality ? Explain. 5 (b) Suppose an investor is concerned about a business choice in which there are three prospects. The probability and returns are given below : 7 Probability Returns 0.4 100 0.3 30 0.3 – 30 What is the expected value of the uncertain investment ? What is the variance ?  MEC–101 7. Suppose that the average and marginal production cost are constant and equal to zero respectively. If the industry demand function can be written as : P = 100 – 0.5 Q what will the price and output be for : 3×4=12 (i) Monopoly (ii) Cournot Duopoly (iii) Chamberlain Duopoly (iv) Competitive Market 8. (a) Discuss the Lindahl’s formula for efficient allocation of public goods. 6 (b) Explain the problems associated with insurance market. 6 9. (a) What is efficiency wage ? Discuss the importance of No-Shirking Condition (NSC) in efficiency wage model. 6 (b) Distinguish between Prisoners’ Dilemma Game and Hawk-Dove Game. 6 10. (a) What is the Bayesian equilibrium ? Illustrate. 6 P. T. O.  MEC–101 (b) Solve the following normal form game using the method of iterated elimination of strictly dominated strategies : 6 Player 2 Left Middle Right Player 1 Up 1, 0 1, 2 0, 1 Down 0, 3 0, 1 2, 0 11. Write short notes on any three of the following : 4×3=12 (i) Slutsky equation (ii) Stackelberg model (iii) Walrasian equilibrium (iv) Rawls’ theory of justice  MEC–101 MEC–101 2023 -101 I × =40 U = X1. X2 ` P1 = ` P2 = ` (i) P. T. O.  MEC–101 (ii) (i) Q = 10 – P (Pooling) (Separating) Q  5 LK Q ] L ]  MEC–101 ] Q = 5 L0.7 K0.3 ] Q, L K ] ` ` ] L K × =20 (i) (ii) (iii) (iv) P. T. O.  [ 10 ] MEC–101 &II ×5=60 ] ] 0.4 100 0.3 30 0.3 – 30  [ 11 ] MEC–101 P = 100 – 0.5 Q 3×4=12 (i) (ii) (iii) (iv) P. T. O.  [ 12 ] MEC–101 (Bayesian) 1, 0 1, 2 0, 1 0, 3 0, 1 2, 0 4×3=12 (i) (ii) (iii) (iv) MEC–101