IEcoS (Economic Services) Economics Paper-1: Questions 41 - 47 of 85

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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 smokers.

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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 industr

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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 the los

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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 lo

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Question number: 46

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

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Essay Question▾

Describe in Detail

Given the demand function and total cost function of a perfectly competitive firm as , p being price, c being cost and X = Output find out the output, price, profit and total revenue corresponding to maximisation of total profit

Explanation

Profit

Order derivative,

26

Order derivative,

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Question number: 47

» Theory of Consumer's Demand » Slutsky Theorem and Demand Curve, Revealed Preference Theory

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Essay Question▾

Describe in Detail

State and explain Kaldor – Hicks Compensation Principle.

Explanation

According to Kaldor if a certain change in economic organisation or policy makes some people better off and others works, off then that change will increase social welfare if those who gain from the change could compensate the losers and still be better off than before.

Prof Hicks supported Kaldor that any criterion that will result in change in soc

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