Welfare Economics (IEcoS (Economic Services) Economics Paper-1): Questions 1 - 6 of 6

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Question number: 1

» Welfare Economics » Social Choice, Game Theory and More

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Appeared in Year: 2011

Essay Question▾

Describe in Detail

In game theory, comment on the terms ‘maxi-min’ and ‘mini-max’.

Explanation

  • Maxi-min strategy is the conservative approach in which a player seeks to maximize the probability of minimum profit so that the degree of risk can be reduced. In this strategy, the player finds the minimum payoff in each strategy and among these chooses the one with the highest value (maximum). For e. g. Payoff matrix of firm I and II are given

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Question number: 2

» 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

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Question number: 3

» 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

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Question number: 4

» Welfare Economics » Divergence between Social and Private Welfare

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Appeared in Year: 2017

Essay Question▾

Describe in Detail

Explain the concept of divergence in the context of social and private welfare.

Explanation

  • Divergences between private and social costs and returns (benefits) are known as externalities, external effects or external economies and diseconomies. Another term is spillovers or “neighborhood effects”.

  • An external effect is assumed to exist whenever the production by a firm or the utility of an individual depends on some activity of an

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Question number: 5

» Welfare Economics » Social Choice, Game Theory and More

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Appeared in Year: 2016

Essay Question▾

Describe in Detail

Distinguish between a cooperative and a non-cooperative game.

Explanation

A game is cooperative if the firm (i. e. players in the game) can arrive at an enforceable or binding contract that permits them to adopt a strategy to maximize joint profits. Suppose making of a carpet costs Rs. 1000 but the buyers value it at Rs. 2000. Fixation of price between Rs. 1000 and 2000 per carpet will yield profits.

  • In this case,

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Question number: 6

» Welfare Economics » Public Goods and Externality

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Appeared in Year: 2014

Essay Question▾

Describe in Detail

Consider a manufactured good whose production process generates pollution. The annual demand for the good is given by . The annual market supply is given by . In both equations, P is the price in rupees per unit. For every unit of output produced, the industry emits one unit of pollution. The marginal damage from each unit of pollution is given by 2Q.

(a) Find the equilibrium price and quantity in a market with no government intervention.

(b) Find the socially optimal quantity of the good. What is the socially optimal market price?

Explanation

Marginal damage per unit of production

Thus, without govt. intervention

a)

At this,

Therefore,

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