IEcoS (Economic Services) Economics Paper1: Questions 82  85 of 85
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Question number: 82
» Quantitative Methods in Economics » Statistical and Econometric Methods » Correlation and Regression
Appeared in Year: 2016
Describe in Detail
State the assumptions of classical linear regression model. Why the regressors (X) are assumed to be nonstochastic in repeated samples?
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 ordered assumptions or statistical assumptions, wh

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Question number: 83
» Theory of Value » Pricing under Different Market Structures » CrossSubsidy Free Pricing and Average Cost Pricing
Appeared in Year: 2016
Describe in Detail
Derive the long run supply function under perfect competition when there are external economies or diseconomies.
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. , m
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Question number: 84
» Theory of Consumer's Demand » Price Income and Substitution Effects
Appeared in Year: 2016
Describe in Detail
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.
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.
Figure1 Pricedemand relationship in case of a giffen good

Some inferior goods
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Question number: 85
» Theory of Production » Duality and Cost Function, Measures of Productive Efficiency of Firms
Describe in Detail
Explain meaning of economic entity, their classification & their relative importance.
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 fun
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