Theory of Production-Factors of Production and Production Function [IEcoS (Economic Services) Economics Paper-1]: Questions 1 - 7 of 8

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Question 1

Appeared in Year: 2011

Describe in Detail Subjective▾

Given that the average revenue curve is a rectangular hyperbola, what will be the shape of the marginal revenue curve?

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Explanation

  • When the Average Revenue Curve is a Rectangular Hyperbola, it means the Total Revenue of the Monopolist will remain constant for whatever price he may fix. Mathematically, the area under a rectangular hyperbola remains the same.
  • In the given diagram, the product of PQ and P1Q1 is thus the same. When total revenue is fixed, marginal revenue is zero. …

… (26 more words, 1 figure) …

Question 2

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Graphically explain the expansion path of a firm taking labor and capital as inputs.

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Explanation

  • Expansion path describes how the factor combination which firm the uses alter as the firm expands its level of output. An iso-cost line shows the various combinations of two factors (capital and labour) that the firm can buy with a given outlay. Iso product curves or Isoquants are curves that describe different combination of inputs which yield the…

… (93 more words, 3 figures) …

Question 3

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What is industrial policy? Why it is needed and analyzes the pros and cons of it.

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Explanation

Image Shows Theory of Industrial Policy
  • India was endowed with great economy since ancient times but the colonial exploitation has ruined the economy with global industrial output of just and after the independence the struggle start to get the economy indian sed and favorable for the people of india because the economy was goin…

… (564 more words, 18 figures) …

Question 4

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Given the production function of a commodity , where Output, Labour input. Verify that when the average is maximum, it is equal to marginal product.

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Explanation

Maximising Average Product,

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Question 5

Appeared in Year: 2020

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State and prove product exhaustion theorem. How does it differ from Clark-Wicksteed - Walras theorem?

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Explanation

The product exhaustion theorem states that since factors of production are rewarded equal to their marginal product, they will exhaust the total product.

  • The adding- up problem is used to solve this theorem. This was given by Wicksteed.
  • This method states that in a competitive factor market, the price paid to the factor employed in the production is …

… (229 more words) …

Question 6

Appeared in Year: 2021

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Why is it possible for a monopolist to earn supernormal profit in the long-run?

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Explanation

Monopoly is the market structure where there is only a single seller who is the only owner of the firm.

Certain features of monopoly help it to attain profits-

  • Under monopoly, the firm is a price maker rather than price taker.
  • There are no close substitutes.
  • Barriers to entry.

Supernormal profit is a situation where the seller can earn profits above the…

… (157 more words, 2 figures) …

Question 7

Appeared in Year: 2022

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The demand and the total cost function of a firm respectively are given by:

Where notations have usual meanings.

(i) Show that a monopolist produces output in the elastic range of demand.

(ii) Calculate the efficiency loss of monopoly.

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Explanation

We have,

We know, in a monopoly,

… (120 more equations, 18 figures) …