IEcoS (Economic Services) Economics Paper-1: Questions 38 - 45 of 85

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Question number: 38

» Theory of Value » Pricing with Incomplete Information and Moral Hazard Problems

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Appeared in Year: 2013

Essay Question▾

Describe in Detail

State the causes of market failure. (Section A)

Explanation

  • Market failure occurs when there is an inefficiency in the allocation of goods and services. There are many reasons for market failure. One of the major reasons is asymmetric information.
  • Pareto optimality assumes that producers and consumers have perfect information but in the real world there is ignorance and uncertainty on the part of both b

… (39 more words) …

Question number: 39

» Theory of Distribution » Macro-Distribution Theories of Ricardo, Marx, Kaldor, Kalecki

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Appeared in Year: 2013

Essay Question▾

Describe in Detail

Critically examine Hicks-Kaldor · criterion of compensation. Give Scitovsky’s improvement over this criterion. (Section B)

Explanation

  • According to Kaldor’s welfare criterion, if a certain charge in economic organisation or policy makes some people better off and some people worse off, then that change will increase social welfare if those who gain could compensate the losses and still be better off than before. Hicks supported this movement and looked at it as an unequivocal i

… (148 more words) …

Question number: 40

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

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Appeared in Year: 2013

Essay Question▾

Describe in Detail

Write dual of the following linear programme and solve the obtained dual graphically:

Minimize:

Subjects to:

(Section B)

Explanation

Table of the Linear equation

Table of the Linear equation

0

1

1/2

0

-1/4

Table of the Linear equation

Table of the Linear equation

0

1/2

1

0

1/2

Graph of the linear programme

Graph of the Linear Programme

Graph of the linear programme

… (39 more words) …

Question number: 41

» Theory of Value » Pricing with Incomplete Information and Moral Hazard Problems

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Essay Question▾

Describe in Detail

What is adverse selection in insurance markets? How the problem can be solved?

Explanation

  • Adverse selection arises when people with the highest risk are also those who are most likely to buy the insurance. It can lead to a market where people with highest are the ones only insured or even to a situation when there is no market at all.

  • For eg: an insurance company is offering life insurance in a market made up of smokers and non sm

… (97 more words) …

Question number: 42

» Theory of Distribution » Neo Classical Distribution Theories

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Appeared in Year: 2015

Essay Question▾

Describe in Detail

Elucidate the statement that no economic rent is earned when the supply of a factor is perfectly elastic.

Explanation

Economic rent is the excess payment to a factor over and above the minimum amount necessary to keep a factor in its present occupation.

  • In modern economic theory, economic rent is not merely confined to land; it also refers to the surplus payments made to the units of other factors over and above what is necessary to keep them in the present in

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Question number: 43

» Theory of Consumer's Demand » Marginal Utility and Demand

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MCQ▾

Question

For Linear demand curve, Which of the following is true

Choices

Choice (4) Response

a.

Elasticity declines as one slides down the demand curve

b.

Elasticity of demand is constant at all points

c.

Elasticity of demand is unity at all points

d.

Elasticity increases as one slides down the demand curve

Question number: 44

» Welfare Economics » Compensation Principle

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Appeared in Year: 2015

Essay Question▾

Describe in Detail

State and explain the Kaldor-Hicks compensation principle.

Explanation

  • Nicholas Kaldor was the first economist to give a welfare criterion based on compensation payments.

    • According to Kaldor’s welfare criterion, if a certain change in economic organization or policy makes some people better off and others worse off, then that change will increase social welfare if those who gain from the change would compensate

… (524 more words) …

Question number: 45

» Welfare Economics » Social Choice, Game Theory and More

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Appeared in Year: 2015

Essay Question▾

Describe in Detail

State and explain the Kaldor-Hicks compensation principle.

Explanation

  • Nicholas Kaldor was the first economist to give a welfare criterion based on compensation payments. According to Kaldor’s welfare criterion, if a certain change in economic organization or policy makes some people better off and others worse off, then that change will increase social welfare if those who gain from the change would compensate the

… (531 more words) …