University of Delhi 2010-1st Year M.Com Commerce ECONOMIC ANALYSIS UNIVERSITY - Question Paper

This question paper contains 7 printed pages ]

Your Roll No

6453

M.Com. /1

Course 413 - ECONOMIC ANALYSIS

Time: 3 Hours wm: 3 vvt

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Note: The maximum marks printed on the question paper are applicable for the candidates registered with the School of Open Learning These marks will, however, be scaled down proportionately in respect of the students of regular colleges, at the time of posting of awards for compilation of result

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Attempt All questions All questions carry equal marks

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1 (a) In India, we have a large number of firms which are single product, single entity Does this mean that the behavioural theory is irrelevant ¹ Can you think of any other theory, which may be applicable to such firms ⁹

(b) It is not the maximization of profits which now is the goal of the modem corporation or firm rather it is the structure of the organization which decides its goals Justify statement

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(a)    Discuss sales maximization as an alternative objective of the firm

(b)    Compare and contrast Bamouls static model with dynamic model, with reference to the set of underlying assumptions and predictions

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2 (a) Compare the bifurcation of price effect into substitution and income effects, using Hicksian and Slutsky approaches Under what conditions will the law of demand not apply ?

(b) State the assumptions of revealed preference theory Explain how the fundamental theorem of consumption is derived from these assumptions -

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(a)    Explain bnefly vanous measures of uncertainties. What are the limitations of such measurements ⁷

(b)    Discuss the concepts of risk preference, nsk aversion and risk neutral Can you think of real world examples of these concepts ⁹

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(a)    For output less than long run optimal level, it is more economical to underuse a slightly larger plant operating at less than its minimum cost output Conversely, at outputs beyond the optimum level, it is more economical to over use smaller plant Explain this showing the relationship between relevant cost curves

(b)    Q = 20 LK is the output rate of a company The price of labour (L) is Rs 4 per unit and the price of capital (K) is Rs 10 per unit What combinations of inputs should the firm use to produce 200 units of output per period of time ?

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(a)    How the cost function is derived from estimated production function ⁹ What problems are encountered in empirical estimation of cost function ⁹

(b)    Is increasing returns to scale a refutation of the law of diminishing returns ⁷ Also explain whether constant returns to scale compatible with the law of diminishing returns Discuss economic implication

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4 (a) There is always a first entrant advantage Discuss the statement in the light of Cournot and Stakelbergs models of duopoly

(b) Two firms under Cartel face demand and cost functions as given below

P, = 100 - 2Q| - Q₂, TC, = 2 5

P₂ = 95 - Q, - 3Q₂, TC₂ = 25 Q₂

Determine the quantities and pnees such that their joint" profits are maximum Also find the individual profits

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(a)    Discuss the implications of the imposition of lump sum tax, profits tax and specific tax under monopoly Whether a monopolist can raise the pnce by the full amount of a per unit tax

(b)    Explain the various methods of pricing of product in terms of objectives and costs

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5 Explain bnefly any two of the following

(a)    Uses of the concepts of marginalism and equi-marginalism in business life

(b)    Impact of technological change on productivity

(c)    Symmetric and asymmetric information

(d)    Monopsonistic and monopolistic exploitation of labour

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6453    7    600

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