IAS (Admin.) Mains Economics: Questions 1 - 6 of 628
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Question 1
Appeared in Year: 2011
Write in Short Short Answer▾
Define and distinguish between the normal profit and the super-normal profit under perfect competition. In the short run, find out graphically the amount of profit corresponding to the equilibrium without using the average cost curve.
EditQuestion 2
Appeared in Year: 2011
Describe in Detail Subjective▾
How can you get the wage offer curve and the supply curve of labor? How can you justify the backward bending supply curve of labor?
EditExplanation
Wage Offer curve is a curve which shows the number of hours of labor a worker puts in at various levels of wage rate. The wage offer curve has Money income on the Y axis and number of hours of labor on the Y axis. The wage offer curve is shown in the diagram below – Figure
(a) Wage Offer Curve
As shown in the diagram, …
… (360 more words, 104 figures) …
Question 3
Appeared in Year: 2011
Describe in Detail Subjective▾
In game theory, comment on the terms ‘maxi-min’ and ‘mini-max’ .
EditExplanation
- Maxi-min strategy is the conservative approach in which a player seeks to maximize the probability of minimum profit so that the degree of risk can be reduced. In this strategy, the player finds the minimum payoff in each strategy and among these chooses the one with the highest value (maximum) . For e. g. Payoff matrix of firm I and II are given a…
… (108 more words, 1 figure) …
Question 4
Appeared in Year: 2011
Describe in Detail Subjective▾
If and are the demand and supply functions respectively, calculate the equilibrium price and the quantity. Hence calculate both consumers and producer՚s surplus under equilibrium.
EditExplanation
- The equilibrium is established at the point where demand is equal to supply. Thus, equating the demand and supply equations given, we get:
… (108 more equations, 27 figures) …
Question 5
Appeared in Year: 2011
Describe in Detail Subjective▾
Suppose that a monopolist faces a demand curve with price elasticity less than one. Should the monopolist adopt the policy of price increase in order to increase revenue? Comment Briefly.
EditExplanation
Marginal Revenue is given as: where e is the price elasticity.
… (58 more words, 6 figures) …
Question 6
Appeared in Year: 2011
Describe in Detail Subjective▾
What is meant by excess capacity? Why is it bad? Are there any benefits of excess capacity associated with monopolistic competition?
EditExplanation
When a firm can increase its output and reduce its cost per unit of output but continues to produce a smaller quantity at a higher price, it has an excess capacity. This means that a firm under monopolistic competition or imperfect competition in long run equilibrium produces an output that is less than the ideal output or socially optimum level. T…
… (253 more words, 2 figures) …