Scribd Logo
Upload

Welcome to Scribd!

  • 8 views

    micropaper

    Uploaded by

    charmymewal7

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    micropaper

    Uploaded by

    charmymewal7
    8 views16 pages

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    8 views16 pages

    micropaper

    Uploaded by

    charmymewal7

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 16

    [This question paper contains 16 printed pages.

    Your Roll No........

    Sr. No. of Question Paper : 507 G

    Unique Paper Code 2272102301

    Name of the Paper Intermediate Microeconomics-I:


    Behavioural Foundations of
    Market Interactions

    Name of the Course : B.A. (Hons) Economics


    (NEP-UGCF-2022)
    Semester/Annual : III

    Duration : 3 Hours Maximum Marks : 90

    Instructions for Candidates

    1. Write your RollNo. on the top immediately on receipt


    of this question paper.

    2. The question paper is divided into two sections:


    Section A and Section B.

    3. Answer any three questions from Section A £nd


    any two questions from Section B.

    4. Use of simple calculator is permitted.


    5. Answers may be written either in English or Hindi;
    but the same medium should be used throughout the
    paper.
    P.T.0.
    507 2

    2.

    3.

    4.

    SECTION - A

    1. (a) Let utility function of a consumer be given by


    U(x,y) = xy + x, where X and Y are the two
    goods

    (i) Is marginal rate of substitution diminishing?

    (ii) Are marginal utilities of both goods X and


    Ydiminishing?
    507 3

    (b) Let Mr. Ramesh have an income of1000, which


    he can spend on two goods X and Y. Let price of
    good X be 80 for the first two units and then it
    is 60 for the subsequent units. Let price of
    good Y be 50 regardless of how many units
    bought. Write the equation of the budget line and
    draw it.

    (c) Find the equation of the price offer curve and


    demand curve for the following utility function :
    U=min(3x, 2y). Let income of the consumer be
    M, price of goodX is P, and price of good Y be
    P, Also draw both the curves.

    (d) Draw indifference maps for the following utility.


    functions. Also indicate the preference direction

    (i) U(x, y) = x

    (ii) U(x,y) = -X - y (5x4)

    xy + x aT G4T SIGT , GEÍ X r Y T

    P.T.0.
    507 4

    Hj G6 HUT AA ifv: U= min(3x, 2y)i

    P,

    (i) U(x, y) = x

    (ii) U(x, y) =-x - y


    507 5

    2. (a) Usinga diagram illustrate how a flat tax on income


    would make the consumer better off as well as
    bring more revenue for the government compared
    to a two-bracket progressive income tax. (6)

    (b) Let Miss Mary earn an income of 2000 this month


    and 2200 next month. Her utility function is
    U(C,C,) = C,C, where C, denotes the value of
    consumption this month and C, denotes the value
    of consumption next month. Let interest rate be
    5%. Would Miss Mary borrow, lend or doneither?
    What happens if interest rate rises to 12%? In
    which case is the utility higher? (10),.

    (c) Willan increase in overtime wage rate


    necessarily
    lead to an increase in labor supply? Show using a

    diagram. (4)
    507 6

    UCC,) = C,C, , HEÍ C, HHEH TYT

    (7)

    3. (a) Suppose a consumer consume two goods X and


    Y. The utility function is :

    U(x,y) = 2Vx +y. Let price of X be T0.50, price


    of Y be 1 and income is 10.

    (i) Find initial equilibrium of the consumer.

    (ii) Find the new equilibrium if price/of X falls


    to 0.20.
    507 7
    decompose the
    (ii) Using Hicksian technique
    and income
    price effect into substitution
    effects.

    variation in the
    (iv) Calculate the compensating
    above case.
    (8)

    (b) Let two utility functions be given as

    U(x, y) = xy
    U(x,y) = exy + 5

    (6)
    Do they represent same preferences?
    Kaldor's varíant of
    (c) Using a diagram, show the
    decomposition of price effect if price of x falls
    and x is a normal good. (6)

    U(x,y) = 2x +y. HGy te X hI H 0.50 ,

    P.T.0.
    507 8

    (ü) f XI H 0.20 a fR GGT , 4

    U(x, y) = xy
    U(x,y) = eXy + 5

    4. Let utility function be U(x) = x, where x denotes


    income level. The consumer faces the following
    scenario: he can earn ?100 with a probability of 0.4
    and 600 with a probability of 0.2

    (i) Using only the utility function show that the


    9
    507
    he is a risk lover.
    preferences show
    utility equivalent
    expected utility and
    (ii) Calculate confirm he is a risk
    Do they
    of the income.
    lover?

    Certainty equivalent of his income.


    (ii) Calculate

    Give the equation showing the risk premium of


    (iv)
    the consumer.

    and Certainty
    (v) Represent Risk Premium
    Equivalent for a risk loving consumer in a
    diagram.
    Absolute
    (vi) Calculate Arrow-Pratt Coefficient of
    Risk Aversion and interpret it. (3.5x5+2.5)

    8 0.4 t HMGT HT 100 4 HhI , 3tt 0.2

    P.T.0.
    507 10

    SECTION - B

    5. (a) For a multiple output producing firm, the inverse


    production function, with one input x and two
    outputs y, and y, is given as :

    X = y + y,2 + yy2

    () Given two vectors of output(2.4) and (4,2),


    prove that the inverse production function
    is strictly convex.
    507 11

    (ii) Check the monotonicity of the inverse


    production function.

    (ii) Suppose the firm now decides to produce


    only one output such that the inverse 2
    production function takes the form/ = y² X=y
    a_suming x > 1. Find the firm's input
    demand function when unit price of the
    output is p=5. (3,2,6)

    (b) Using an example explain if it is possible for a


    production function to exhibit diminishing rate of
    substitution and decreasing returns to scale at the
    same time. (4)

    X = y, t y,+ y,y2

    (i) MrSC à tft (2.4) tt (4,2) fey

    P.T.0.
    507 12

    (iüü)

    6. (a) The production function of afirm producing mobile


    phone covers is given as:
    q = (klß + 73)3

    - Here k is the amount of capital employed and is


    the amount of labor hours employed and q is total
    output. The wage rate is w 1 per hour and
    rental cost of capital is v = {4 per unit.

    (i) Does this production function exhibit IRS,


    CRS or DRS?
    507 13
    factor demands and
    (11) Derive the conditional
    function
    use them to find the long-run cost
    for this firm.

    (ii) Detive and draw the firm's long run supply


    Curve.

    (iv) Suppose the firm is creating noise pollution.


    If the government is deciding whether to
    impose alumpsum tax of T on the firm
    or to impose a fine, t per unit of output,
    which will have more impact on the output
    of the firm? (1,4,3,2)

    (b) What is the difference between input demand and


    conditional input demand? Explain using graphs.
    (5)

    q =(k3 + 33

    P.T.O.
    507 14

    (iv)

    7. (a) Consider a profit-maximizing firm with the


    production function given as :
    507 15

    capital (k) are


    The factor prices of labor (/) and
    Assume
    w,=160 and nd w, = 200 respectively.
    unit in the
    that amount of capital is fixed at 1
    short run.

    (i) Derive the short-run cost function.

    (ii) Find the short-run supply curve of the firm,

    (iii) What will be the loss of the firm if it


    decides to discontinue production?

    (iv) If both the inputs become variable, then


    'using a graph, show the long run supply of
    this firm. Also shade the profit of the firm
    at a particular per unit output price P*.
    (2,5,1,4)

    (b) "The long-run cost curve is the envelope of all the


    short-run curves". Explain this statement with the
    help of a graph. (3)

    q= kl41/3

    P.T.0.
    507

    (iv) (ii) AH
    ()
    fad t
    yt
    qhHT
    (k)
    16
    BIT
    ? hG
    H
    shN:

    W,=?160

    You might also like