IEcoS (Economic Services) Economics Paper-1: Questions 61 - 67 of 85

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Question number: 61

» Theory of Production » Forms of Production Functions

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Appeared in Year: 2017

Essay Question▾

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Write down the form of CES production function and interpret its parameters. Find out the elasticity of substitution of the CES production function

Explanation

Arrow, Chenery, Minhas and Solow in their new famous paper of 1961 developed the Constant Elasticity of Substitution (CES) function. This function consists of three variables Q, C and L, and three parameters A, and it can be expressed in the form:

where Q is

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Question number: 62

» Theory of Value » Pricing under Different Market Structures » Marginal Cost Pricing

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Appeared in Year: 2015

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Derive the long-run supply curve in the constant cost industry under perfect competition. Under what conditions can the long-run supply curve of a competitive industry slope downward?

Explanation

  • The Long-Run Supply Curve of the Industry under Perfect Competition:

    • In the long run the firms can change their capital equipment and the other fixed factors and also the number of firms can vary in response to changes in the demand for a commodity.

    • In the long run, when new firms can enter and old ones can leave the industry the firm is

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Question number: 63

» Theory of Value » Pricing under Different Market Structures » Peak Load Pricing

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Appeared in Year: 2017

Essay Question▾

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Define peak-load pricing. How does it differ from third degree price discrimination? Analyze graphically

Explanation

  • Peak load Pricing: It is a form of inter-temporal price discrimination based on efficiency. For goods and services, demand peaks at particular times — for roads and public transport during commuter rush hours, for electricity during late afternoon and so on.

  • MC is also high during these peak periods because of capacity constraints. Prices sh

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Question number: 64

» Theory of Value » Pricing under Different Market Structures » Public Sector Pricing

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Appeared in Year: 2017

Essay Question▾

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What do you mean by price discrimination? Under what circumstances is price discrimination profitable? Trace out the equilibrium situation under price discrimination.

Explanation

  • Price discrimination is charging different prices from different customers or for different units of the same product. In the words of Joan Robinson: “The act of selling the same article, produced under single control at different prices to different buyers is known as price discrimination. ”

  • Price discrimination is possible when the monopol

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Question number: 65

» Theory of Value » Pricing under Different Market Structures » Marginal Cost Pricing

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Appeared in Year: 2015

Essay Question▾

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What do you mean by collusive oligopoly? Distinguish between cartel and price-leadership with respect to the determination of price and quantity. Write a note on barometric price-leadership model. (Part-2)

Explanation

Image Shows Peice output determination under lowcost Leadership

Image Shows Peice Output Determination under Lowcost Leadership

Image Shows Peice output determination under lowcost Leadership

  • Figure 2: Price output determination under low-cost price leadership

  • When the products of the price leader and his price-followers are differentiated, then the price charged by them will be different but the prices

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Question number: 66

» Theory of Production » Duality and Cost Function, Measures of Productive Efficiency of Firms

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Appeared in Year: 2015

Essay Question▾

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How can you graphically derive the long run marginal cost curve from the short run marginal cost curves?

Explanation

  • Short-run marginal cost refers to the change in cost that results from a change in output when the usage of the variable factor changes.

    Long-run marginal cost shows the change in total cost due to the production of one more unit of commodity. According to Robert Awh, “Long-run marginal cost curve is that which shows the extra cost incurred i

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Question number: 67

» Quantitative Methods in Economics » Mathematical Methods in Economics » Linear Algebra and Linear Programming and Input-Output Model

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Appeared in Year: 2015

Essay Question▾

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State the Hawkins-Simon condition and explain its economic meaning and significance.

Explanation

  • Input-output is a novel technique invented by Professor Wassily W. Leontief in 1951.

    It is used to analyse inter-industry relationship in order to understand the inter-dependencies and complexities of the economy and thus the conditions for maintaining equilibrium between supply and demand.

  • Hawkins-Simon conditions:

    Our basic equation is

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