Gauhati University Macroeconomic Theory 2007 Question Paper

University :  Gauhati University

Degree : MA Economics

Question Paper Subject: Macroeconomic Theory

Question Paper Year : 2007

Question Paper Details : Previous Years Question Papers Types Version

2007

ECONOMICS

FIRST PAPER

(Microeconomic Theory)

Full Marks: 80

Time: 3 hours

The figures in the margin indicate full marks for the questions

1. Answer the following (each within 50 words): 2×4=8
a) How would you distinguish between a risk lover and a risk averter?
b) Under double criteria of compensation principle, when will a change from
situation A to B be considered as an improvement?
c) According to Ricardo, what happens to the rate of profit in the economy in the
long-run?
d) What is the basic difference between the Cournot and Stackelberg models of
duopoly?
2. Answer any four of the following (each within 150 words) : 6×4=24
(a) Give an outline of the linear expenditure system.
(b) Explain how the cost function can be derived from the production function.
(c) Illustrate the 'phenomenon of price leadership with the help of anyone of
the models.
(d) Derive the individual demand curve for a single variable factor under
perfect competition.
(e) Outline the Walrasian tatonnement process and discuss its limitations.
(f) State and illustrate Arrow's impossibility theorem.
3. Answer any three of the following (each within 700 words): 16×3=48
a) Split the effect of fall of price of good on its demand into income and
substitution effects. Discuss the nature of the effects for a normal, an inferior and
a Giffen good. 7+9=16
b) Discuss the different issues involved in the process of determination of price
output equilibrium of a firm under monopolistic competition. 16
c) Show how a factor can be exploited in a monopsony market. Suggest policy
intervention to reduce exploitation. 10+6=16
d) Give an outline of an Walrasian economy and explain how the economy can be
modelled. Explain .why an Walrasian system can at best determine only the
relative prices. . 4+6+6= 16
e) Why is discounting necessary in intertemporal economic analysis? Show how
the discounted present value criterion is used for evaluating investment projects.
4+12=16

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