IEcoS (Economic Services) Economics Paper-1: Questions 81 - 87 of 240

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Question 81

Appeared in Year: 2014

Describe in Detail Subjective▾

What is the problem of multicollinearity m a regression model? What is its plausibility? Explain Farrar - Glauber method to detect it. How can it be removed?

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Explanation

The term Multicollinearity is due to Ragnar Frisch. Originally it meant the existence of a “perfect,” or exact, linear relationship among some or all-explanatory variables of a regression model. For the k-variable regression involving explanatory variable

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Question 82

Appeared in Year: 2016

Describe in Detail Subjective▾

State the assumptions of classical linear regression model. Why the regressors (X) are assumed to be non-stochastic in repeated samples?

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Explanation

A classical linear regression model is expressed in the following form:

  • , where Y is the dependent variable and X is the independent variable and u is the error or disturbance term.
  • Assumptions: There are two types of assumptions for the model.
    • First or…

… (58 more equations) …

Question 83

Appeared in Year: 2016

Describe in Detail Subjective▾

Derive the long run supply function under perfect competition when there are external economies or diseconomies.

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Explanation

The procedure of deriving the long run supply function is different since, in the long run, entry into and exit of firms from the industry come takes place.

  • A competitive firm in the long run produces at that point, where the long run MC curve intersects the long run AC curve at the lowest point (i.e.. ,

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Question 84

Appeared in Year: 2016

Describe in Detail Subjective▾

Define substitution effect. Separate the income effect from substitution effect for a fall in the price of a Giffen type good using a suitable diagram.

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Explanation

Substitution effect is defined as the change in the quantity purchased of a good as a result of a change in its relative price alone, real income or level of satisfaction remaining constant.

Image Shows of the Commodity Y to X

Figure-1 Price-demand relationship in case of a giffen good

  • Some inferior goods have negative income effect, which is strong o…

… (399 more words, 7 figures) …

Question 85

Describe in Detail Subjective▾

Explain meaning of economic entity, their classification & their relative importance.

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Explanation

  • What do we mean by economic entity? It refers to those institutional units who independently undertake the economic activities like acquiring assets, incurring liabilities, undertake transactions with other economic entities. Etc.
  • The economic activities performed by this economic entities are the prerequisite for the continuous & smooth functioning…

… (869 more words) …

Question 86

Appeared in Year: 2017

Describe in Detail Subjective▾

Explain the concept of spurious regression.

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Explanation

Consider the following two random walk models:

(eq 1)

(eq 2)

  • Where we generated 500 observations of from

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Question 87

Appeared in Year: 2015

Write in Short Short Answer▾

Show that the market price is totally unaffected in case of perfectly inelastic supply curve.

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