Growth and Development-Economic Development and International Trade and Investment [IAS (Admin.) Mains Economics]: Questions 1 - 8 of 8

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Question 1

Appeared in Year: 2017

Describe in Detail Subjective▾

Distinguish between Cournot and Bertrand models of duopoly. (200w, 15 Marks)

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Explanation

Classical models of duopoly (only two producers) are given by French economists Augustin Cournot and Joseph Bertrand. Both the models, assuming that firms ignore their interdependence, provides solution to the price-output determination problem in oligopoly. However, there are important differences in the assumptions of these models.

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Question 2

Appeared in Year: 2011

Describe in Detail Subjective▾

Write a note on shadow prices of investment.

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Explanation

  • Shadow pricing is used to refer to either one of two things: the actual market value of a money market fund share, or, more commonly, the assignment of a dollar value to an abstract commodity that is not ordinarily quantifiable as having a market price, but needs to be assigned a valuation to conduct a cost-benefit analysis.

    In the latter instance, …

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Question 3

Appeared in Year: 2012

Describe in Detail Subjective▾

Explain the methods of determining shadow price.

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Explanation

  • Shadow prices have been used as an adjective in three senses:
    • In mathematical programming, the term is used for interpretation of dual problem and in this sense, the shadow price Lagrange՚s multiplier for constraint optimization.
    • The term is used to cover the benefits and costs that are unpriced.
    • The shadow prices are used in those countries where pri…

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Question 4

Appeared in Year: 2018

Describe in Detail Subjective▾

Critically analyses the role of foreign capital in promoting investment in India.

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Explanation

Foreign Direct Investment

Foreign capital plays a great role in promoting investment and economic development of a country. India doesn՚t have much resources/income to deal with all the activities especially welfare and developmental. This will lead to deficit financing and increases the overall financial burden of the government. This also affects …

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Question 5

Describe in Detail Subjective▾

Distinguish between single and double factor terms of trade. Explain how far terms of trade of a developing economy would change with technological advancement and economic growth.

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Explanation

Terms of Trade

Terms of trade (TOT) are the ratios of a country՚s export and import prices. The ratio is computed by dividing the price of exports by the price of imports and multiplying the result by 100. When adjustments are made to the Net Barter or commodity terms of trade (N) with relation to export and import productivity, Single and Double Fa…

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Question 6

Appeared in Year: 2012

Describe in Detail Subjective▾

What is the difference between private and social cost-benefit? Which one of the two is more relevant to government investment decision and why? (20 marks)

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Explanation

Private Cost Benefit

Private cost benefit considers the money invested and the income that results from the investment. This income does not account for any costs or other negative externalities, such as pollution. It is possible to limit the advantage resulting from the positive externality in the form of fees by including exclusionary clauses in t…

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Question 7

Describe in Detail Subjective▾

Do you agree with the view that international trade is engine of growth? Elucidate your answer? (20 Marks)

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Explanation

A country can acquire more advanced capital goods through trade, which “represent” better technology that can be applied to manufacturing to increase total factor productivity. By advising the importing companies on the optimal uses for the new capital goods, for example, the overseas exporters can improve the process as well.

  • Trade is a growth engi…

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Question 8

Appeared in Year: 2011

Describe in Detail Subjective▾

The marginal efficiency of capital together with the current rate of interest determines the profitability of an investment project. How does it help in the selection of an investment project? (20 marks)

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Explanation

The return on investment for each invested unit of capital is referred to as the capital՚s marginal efficiency. It refers to the amount of return that one more unit of capital will produce. The opportunity cost of the capital invested, on the other hand, may be shown by the present rate of interest. The trade-off between the two determines how much…

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