Advanced Micro Economics:

YEAR 2020

  1. What is conjectural variation? Show how some models of oligopoly are derived on the basis of it.
  2. Suppose that we have only two firms in a market with constant marginal costs of C1 and C2 respectively such that C1>C2. What is Bertrand equilibrium in this market? How is it different from competitive equilibrium?
  3. Many countries subsidize some of their export industries use a partial equilibrium model under perfect competition to illustrate the following effects of an export subsidy for a large country:
    1. Welfare Effects of an export subsidy.
    2. Which group is winning and which is losing from the subsidy.
  4. Briefly state the Kaldor’s Theory of Distribution in determining the share of profit and share of wages in national income. Explain the mechanism behind Kaldor’s model.
  5. State arrows five reasonable conditions which a social welfare function must satisfy.
  6. Indian economy with only two commodities, two consumers and two producers with single factor of production, derive the necessary conditions of Pareto optimality in a perfect economy.
  7. Two firms produce homogenous outputs with cost functions C1= 𝑞2 , C2= 2𝑞2 and the inverse market demand function P= 100- (q1+q2). Show that at the Cournot Nash equilibrium firm 2 make higher profit than at the joint profit maximizing equal. Explain why this is so.

YEAR 2019

  1. Under competition, the cost function is given as C(y) = y2 + 1, where y is output. Derive the inverse supply curve and show how the supply curve looks like.
  1. What determines the degree of price discrimination under monopoly market?
  2. ‘Tragedy of commons’ leads to over-exploitation of resources. Analyse.
  3. The role of income and substitution effect is crucial in producing backward bending labour supply curve when a tax is imposed on wages, Do you agree?
  1. Reflect on the inefficiency and socially undesirable aspects of monopolistic competition market situation vis-à-vis the perfect competition, both in the short and in the long run.
  2. What is the follower’s problem in a duopoly model and how does it differ from the leader’s problem?
  3. What criteria will have to be satisfied to obtain a Pareto efficient allocation?
  4. How is the Marshallian equilibrium different from Walrasian equilibrium?
  5. What are the causes of market failure in agriculture? How may government intervention mitigate this?

YEAR 2018

  1. Does a monopolistically competitive market lead to excess capacity under price competition?
  2. Explain some of the measures for assessing the monopoly power of a firm.
  3. Explain why in a duopoly model of collusion, each firm has an incentive to cheat the other.
  4. Show how a dominant firm with a competitive fringe can act as a price leader in an oligopoly market.
  5. Give an outline of Kaldor’s theory of distribution. Also explain the implications of an increase in the wage level and a reduction in the saving rate on the distribution of income.
  6. How do externalities lead to market failure? How can this situation be remedied?

YEAR 2017

  1. Derive the expansion path for a firm operating with the Cobb-Doughlas production function.
  2. “Under monopolistic competition of a firm enjoys Monopoly power without enjoying Monopoly profit.” – Explain.
  3. “Pareto Optimality conditions are necessary but not sufficient conditions for social welfare maximization.” Comment.
  4. How Chamberlin uses planned sales curve to explain equilibrium of a firm and group when the entry of firms is permitted?
  5. State and discuss Arrow impossibility theorem. How does Sen modify it for social welfare maximization?

YEAR 2016

  1. State Marshallian and Walrasian stability condition of market equilibrium. Do you think that existence of Marshallian stability necessarily ensures Walrasian stability and vice versa? Explain.
  2. State Bain’s limit price theory.
  3. Explain kinked demand curve theory with the help of diagram.
  4. Examine Kaldor and Kalecki theory of distribution.
  5. Write on Prisoners’ dilemma and Nash equilibrium.
  6. What is a Lemon Market? What is the role of signalling and screening in it? Explain.
  7. What is asymmetric information? How could it lead to adverse selection and market failure? Discuss.
  8. Explain Brander-Krugman model of intra-industry trade in an oligopolistic market.

YEAR 2015

  1. Explain the backward sloping supply curve of labour as a choice between income and leisure.
  2. Under perfect competition, in the short run, find out graphically, without using average cost curve, the conditions in equilibrium for the existence of
    1. normal profits
    2. supernormal profit and
  • loss.

In what way Kaldor’s model of income distribution is basically a Keynesian theory?

  1. Explain how Nash equilibrium provides a solution to the problem of strategicinterdependence among firms in an oligopolistic market.
  2. How is Kaldor-Hicks compensation principle an improvement over Pareto optimality criterion? What are Scitovsky’s views in this regard?