IEcoS (Economic Services) Economics Paper1: Questions 1  7 of 85
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Question number: 1
» Theory of Consumer's Demand » Indifference Curve Analysis and Utility Function
Appeared in Year: 2011
Describe in Detail
What do you mean by a corner solution? In the case of perfect complementary goods, where do you get the corner solution?
Explanation
The corner solution occurs when the consumers’ preferences are such that the utility is maximized just by consuming only one of the two goods. It is inevitable in the case of concave ICs and occurs in the case of Convex ICs when the Budget Line is either steeper or less steep than the ICs.
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Question number: 2
» Theory of Consumer's Demand » Price Income and Substitution Effects
Appeared in Year: 2011
Describe in Detail
Define the compensated Demand Curve. How does it differ from the uncompensated Demand curve?
Explanation
 Compensated Demand Curve is a demand curve that shows the change in demand of a good when the price changes but the real income or purchasing power is held constant.
 While the compensated demand curve demonstrates only the substitution effect, the uncompensated demand curve describes both the substitution and income effects of the changes in pr
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Question number: 3
» Theory of Value » Pricing under Different Market Structures » CrossSubsidy Free Pricing and Average Cost Pricing
Appeared in Year: 2011
Write in Short
Define and distinguish between the normal profit and the supernormal 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.
Question number: 4
» Quantitative Methods in Economics » Statistical and Econometric Methods » Measures of Central Tendency and Dispersions
Appeared in Year: 2011
Describe in Detail
Find out the variance of the numbers 1,2, 3, …. , 50 and the coefficient of variation. What is the advantage of computing the coefficient of variation over the variance?
Explanation
We know the following results for n natural numbers:
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Question number: 5
» Quantitative Methods in Economics » Statistical and Econometric Methods » Correlation and Regression
Appeared in Year: 2011
Describe in Detail
Briefly discuss the principal component analysis and the rationale for its use.
Explanation

Principal Component Analysis or PCA is a statistical method used to reduce the number of variables in a dataset. It does so by lumping highly correlated variables together. If there is a dataset for two variables then PCA can be used to simplify it. It uses an orthogonal transformation to convert a set of observations of possibly correlated var
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Question number: 6
» Theory of Distribution » Euler's Theorem, Pricing of Factors
Appeared in Year: 2011
Describe in Detail
How can you get the wage offer curve and the supply curve of labour? How can you justify the backward bending supply curve of labour?
Explanation
Wage Offer curve is a curve which shows the number of hours of labour 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 labour on the Y axis. The wage offer curve is shown in the diagram below – Figure
(a) Wage Offer Curve
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Question number: 7
» Theory of Production » Factors of Production and Production Function
Appeared in Year: 2011
Describe in Detail
Given that the average revenue curve is a rectangular hyperbola, what will be the shape of the marginal revenue curve?
Explanation
 When the Average Revenue Curve is a Rectangular Hyperbola, it means the Total Revenue of the Monopolist will remain constant for whatever price he may fix. Mathematically, the area under a rectangular hyperbola remains the same.
 In the given diagram, the product of PQ and P1Q1 is thus the same. When total revenue is fixed, marginal revenue is z
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