# IEcoS (Economic Services) Economics Paper-1: Questions 72 - 76 of 85

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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 heteroscedasticity, we

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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 and . Let there be another set

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## Question number: 74

» Quantitative Methods in Economics » Statistical and Econometric Methods » Sampling and Survey Methods

Appeared in Year: 2016

### Describe in Detail

Distinguish between point estimation and interval estimation of a population parameter. State the small sample properties of a good estimator.

### Explanation

If we find a single value with the help of sample observations which is taken as the estimated value of unknown parameter then this value is known as point estimate and the technique of estimating the unknown parameter with a single value is known as “point estimation”.

If we find two values between which the parameter may be considered to lie with

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## Question number: 75

» Theory of Consumer's Demand » Cardinal Utility Analysis

Appeared in Year: 2014

### Describe in Detail

The demand for good X is estimated to be Q = , where M is the (average) consumer income and is the price of a related good Y. The values of P, M and expected to Rs. 200, Rs. 60,000 and Rs. 100 respectively.

(a) Calculate the price elasticity of demand, income elasticity of demand and cross price elasticity.

(b) Is the demand for X elastic, inelastic, or unit-elastic? How would a small increase in affect total revenue?

(c) Is the good X normal or inferior? Are the goods X and Y substitutes or complements?

### Explanation

Q

a)

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## Question number: 76

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

Appeared in Year: 2014

### Describe in Detail

Assume that a monopolist sells a product with the cost function , where C is total cost, F is a fixed cost, and Q is the level of output. The inverse demand function is , where P is the price in the market.

(i) How much profit does the firm earn when it charges the price that Maximizes profit?

(ii) At what price will the firm earn zero economic profits?

### Explanation

(F = fixed cost)

(i)

Price

The profit will be

ii) For zero economic profits

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