You may have heard that the Indian Economic Services (IES) exam is difficult to pass, but we believe that this is not entirely correct.
Economics has real-world applications; everything we see and hear has an economic implication. To pass your Indian Economic Services (IES) exam, you simply need to have a more developed understanding of the subject, as well as the proper strategy, mindset, and techniques. If you have a bachelor’s or master’s degree in economics, you’re already on the right track because you know more about economics than the average person. So, let’s see how you can easily pass this exam as well.
Now, let’s move ahead with the importance of studying General Economics 1.
Why do we need to study General Economics I?
The exam is worth 1000 points, and general economics is worth 200 points, accounting for 20% of the written exam. And we all know that even attempting an extra 10% of the UPSC exam increases the rank; here is general economics, which accounts for 20% of the exam and is also very important.
To make your preparations easier, we here at Ecoholics are providing the students with model questions and answers for the General Economics Module Topics.
Model Question Answers
In order to have a reference on how to write answers, every student looks for model answers while studying for the exam. So, here we at Ecoholics have made the work easy for you. Providing the best reference answers.
Model: Theory of Consumer Demand
Q1. Explain the difference between Bandwagon effect and snob effect.
Network externalities are a special kind of externalities in which one individual’s utility for a good depends on the number of other people who consume the commodity.
|Bandwagon effect||Snob effect|
|Definition||Bandwagon effect refers to the desire or demand for a good by a person who wants to be in style because possession of a good is in fashion and therefore many others have it.||Snob effect refers to the desire to possess a unique commodity having a prestige value.|
|Type of Externality||Positive network externality- quantity demanded of a good that an individual buys increases in response to the increase in the quantity purchased by other individuals||Negative network externality- The quantity demanded of a commodity having a snob value is greater, the smaller the number of people owning it|
|Example||Desire to be in style, to possess a good because almost everyone else has it, or to indulge a fad||Rare works of art, specially designed sports cars, specially designed clothing made to order, very expensive luxury cars|
Model: Theory of Production
Q1. Show the conditions for a Cobb Douglas production function under
- increasing returns to scale
- constant returns to scale
- diminishing returns to scale
are the laws of return compatible?
In economics and econometrics, the Cobb–Douglas production function is a
particular functional form of the production function, widely used to represent
the technological relationship between the amounts of two or more inputs
(particularly physical capital and labour) and the amount of output that can be
produced by those inputs.
In its most standard form for production of a single good with two factors, the
Y = AL^ β K^ α
- Y = total production (the real value of all goods produced in a year
or 365.25 days)
- L = labour input (person-hours worked in a year or 365.25 days)
- K = capital input (a measure of all machinery, equipment, and
buildings; the value of capital input divided by the price of
- A = total factor productivity
- α and β are the output elasticities of capital and labour,
respectively. These values are constants determined by available
i) Cobb douglas production function exhibits increasing returns to
scale if the value of α + β is greater than one. Here, the
proportionate increase in production is greater than the increase
ii) Cobb douglas production function exhibits constant returns to
scale if the value of α + β is equal to one. For constant returns to
scale to occur, the relative change in production should be equal
to the proportionate change in the factors.
iii) Cobb douglas production function exhibits decreasing returns to
scale if the value of α + β is less than one. An incidence of
decreasing returns to scale would mean that the increase in
output is less than the proportionate increase in the input.
Returns to scale are not compatible with each other. Only one of the
returns to scale can exist at a point of time.
Model: Theory of Distribution
Q1. (a) Consider a profit-maximizing monopolist who is also a monopsonist and uses a single variable input. Determine the equilibrium price of the input. (b) In the context of part (a), explain the concept of monopsonistic exploitation of labour using a suitable diagram.
A firm is said to have monopsonist power when it represents itself as single buyer in the factor market. A monopsonist firm hires more labour by offering higher wage and consequently faces upward rising supply curve.
- This labour supply curve is actually the average expenditure that the monopsonist must incur at different level of employment. This is shown in the diagram.
- Hence, in order to determine the equilibrium wage and employment we need to derive the marginal expenditure curve of firm. The marginal expenditure of firm is defined as change in total expenditure of labour by the firm due to additional hiring of labour. Graphically theis posited upward left to the average expenditure curve as the firm pays higher price not only to the additional labour but also pays that new wage to all previous number of workers employed.
- Since the firm is monopolist in product market, the profit maximization
condition implies that the firm will face MRPL curve as demand curve for labour shown in the diagram.
- Hence, the firm will be in equilibrium when its marginal expenditure on labour is equal to its marginal revenue productivity of labour. This is shown by the point F in the diagram.
- Now we can determine the equilibrium level of employment by drawing a vertical straight line to the labour axis and obtain the Lf units of labour. The firm will pay wage according to its average expenditure curve.
- Therefore, for Lf units of labor, the corresponding equilibrium wage rate is obtained as Wf by drawing a straight line from the intersection average expenditure curve or supply curve of labour and FLf line.
- We can observe that the equilibrium wage rate paid by the monopsonist firm is less than the value of its marginal product of labor as well as its marginal revenue product of labour. The gap between the wage set according to F and wage determined by Wf is known as monopolistic exploitation.
- Now the additional wage gap (i.e. difference between wages paid by monopolist firm and the monopsonist firm) arises due to the monopsony power of the firm leading to exploitation of labour in addition to monopolistic exploitation.
- This exploitation of labour is called monopsonistic exploitation. The monopolistic and monopsonistic exploitations are shown below in the diagram.
- In the diagram above, the wage rates Wc, Wm , and Wms are set by competitive firm, monopolist firm and monopsonist firm respectively.
- The difference between Wc and Wm is known as monopolist exploitation, while, the gap between Wc and Wms is called monopsonistic exploitation.
There are a few more hints regarding the PYQs, so what are you waiting for, click on the link nad download the full module-wise question and answers.
How to move forward
Cracking any exam with a good rank requires proper strategy and time management. For the preparation of Indian Economic Services, at least a year or 18 months of preparation is required. But what if the time gap is smaller, you have only 2 months left with the entire GE 1?
Here’s the optimal method of preparation you can follow to cover the syllabus in less time.
- Analyse last year’s papers and jot down the repetitive topics every year.
- If you are good in Mathematics, General Economics 1 is just a cakewalk for you, if this is vice versa, then take the topic in which you have a strong hold first.
- Never sleep before planning your next day. Also, refer to our timetable module for the preparations.
- Maintain Consistency in Your Preparation
- Follow Daily Current Affairs to Stay Up to Date, here you can download the quarterly current affairs PDF
- Revision is a must… whatever you study, revise it the other day.
Here’s an amazing offer for you if you’re dedicated to Indian Economic Services and want to crack it on your first attempt. Grab the tremendous opportunity provided by Ecoholics for the preparations.
Answer Writing Strategy
We all know that in the Indian Economic Services mains exam, writing skills play a major part in gaining extra marks.
So, here’s the trick by which you can gain extra marks for good handwriting and valuable content.
What is value addition?
Value addition is nothing more than combining graphs and mathematical steps with theories in your solution wherever necessary.
In every exam, there are topics that repeat every year and are important. Check for those topics, to have a view of where to start the preparation.
Also, go through the following links for more details.
PREPARATION STRATEGIES OF TOPPERS
Every aspirant looks for the preparation strategy of toppers to have an idea of where to give emphasis on the topics.
Here at Ecoholics, we have presented many toppers and are ongoing with their training in the academy.
Here’s one of the experiences of our students
- Start with organizing your day
- Taking classes is up to the aspirant, however, classes give an idea and exposure and maintain the aura and zeal of competition.
- Also, self-study with proper revision is a must.
- Be updated with Current Affairs
For more strategies visit Topper testimonial
So, what are you waiting for, pull up your socks and start your preparations with Ecoholics; India’s Largest Platform for Economics.
Call Us Now
+91 7880 10 7880
Send A Mail