IEcoS (Economic Services) Economics Paper1: Questions 68  73 of 85
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Question number: 68
» Theory of Production » Laws of Return, Returns to Scale and Return to Factors of Production
Appeared in Year: 2017
Describe in Detail
Distinguish between laws of variable proportions and laws of returns to scale.
Explanation

Major Differences between Returns to Scale and Returns to a factor Proportions are listed below:

Returns to a factor:

Only one factor varies while all the rest are fixed.

The factorproportion varies as more and more of the units of the variable factor are employed to increase output.

Returns to a factor or to variable proportion

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Question number: 69
» Quantitative Methods in Economics » Mathematical Methods in Economics » Linear Algebra and Linear Programming and InputOutput Model
Appeared in Year: 2015
Describe in Detail
Consider the Leontief static inputoutput model along with its assumptions. How can you confirm that the model is either open or closed? State the fundamental objective of Leontief static open inputoutput model.
Explanation

Inputoutput is a novel technique invented by Professor Wassily W. Leontief in 1951.
It is used to analyze interindustry relationship in order to understand the interdependencies and complexities of the economy and thus the conditions for maintaining equilibrium between supply and demand.

Static Input Output model

The inputoutput mod

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Question number: 70
» Theory of Production » Laws of Return, Returns to Scale and Return to Factors of Production
Appeared in Year: 2014
Describe in Detail
Consider the production function
(a) What is the name of this type of production function?
(b) What is the elasticity of substitution for this production function?
(c) Does this production function exhibit increasing, decreasing, or constant returns to scale?
(d) Suppose that the production function took the form . Does this production function exhibit increasing, decreasing or constant returns to scale?
Explanation
CES production function has a form where the function is expressed as . In the above Production function,
.
a) This type of production function i
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Question number: 71
» Welfare Economics » Social Choice, Game Theory and More
Appeared in Year: 2016
Describe in Detail
Distinguish between a cooperative and a noncooperative game.
Explanation
A game is cooperative if the firm (i. e. players in the game) can arrive at an enforceable or binding contract that permits them to adopt a strategy to maximize joint profits. Suppose making of a carpet costs Rs. 1000 but the buyers value it at Rs. 2000. Fixation of price between Rs. 1000 and 2000 per carpet will yield profits.

In this case,
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Question number: 72
» Quantitative Methods in Economics » Mathematical Methods in Economics » Differentiation and Integration
Appeared in Year: 2016
Describe in Detail
Explain detection of heteroscedasticity in a model.
Explanation
Although heteroscedasticity does not destroy the unbiased and consistency properties of the OLS estimators, they are no longer efficient. This lack of efficiency makes the usual hypothesis testing procedure faulty.

Therefore, remedial measures are necessary to be undertaken. But before that we should make some corrections for heteroscedastici
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Question number: 73
» Theory of Consumer's Demand » Slutsky Theorem and Demand Curve, Revealed Preference Theory
Appeared in Year: 2016
Describe in Detail
Show that if consumer is free from money illusion, demand function homogeneous of degree zero.
Explanation
If prices and money income change proportionately, then demand for all goods (and therefore the equilibrium bundle) remain the same. Initial price set and the money income is at which the commodity vector is bought where
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