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# Gauhati University 2007 B.A Economics Microeconomic theory - Question Paper

Monday, 21 January 2013 11:15Web

2007
ECONOMICS
FIRST PAPER

(Microeconomic Theory)
Full Marks: 80
Time: three h6urs

\The figures in the margin indicate full marks for the ques.
1. ans the subsequent (each within 50 words): 2×4=8
a) How would you distinguish ranging from a risk lover and a risk averter?
b) Under double criteria of compensation principle, when will a change from
situation A to B be considered as an improvement?
c) According to Ricardo, what happens to the rate of profit in the economy in the
long-run?
d) What is the basic difference ranging from the Cournot and Stackelberg models of
duopoly?
2. ans any 4 of the subsequent (each within 150 words) : 6×4=24
(a) provide an outline of the linear expenditure system.
(b) discuss how the cost function can be derived from the production function.
(c) Illustrate the 'phenomenon of price leadership with the help of anyone of
the models.
(d) Derive the individual demand curve for a single variable factor under
perfect competition.
(e) Outline the Walrasian tatonnement process and explain its limitations.
(f) State and illustrate Arrow's impossibility theorem.
3. ans any 3 of the subsequent (each within 700 words): 16×3=48
a) Split the effect of fall of price of good on its demand into income and
substitution effects. explain the nature of the effects for a normal, an inferior and
a Giffen good. 7+9=16
b) explain the various problems involved in the process of determination of price
output equilibrium of a firm under monopolistic competition. 16
c) Show how a factor can be exploited in a monopsony market. Suggest policy
intervention to decrease exploitation. 10+6=16
d) provide an outline of an Walrasian economy and discuss how the economy can be
modelled. discuss .why an Walrasian system can at best determine only the
relative prices. . 4+6+6= 16
e) Why is discounting necessary in intertemporal economic analysis? Show how
the discounted current value criterion is used for evaluating investment projects.
4+12=16 