WBCS(Main)-2003 Economics Paper-I Question Paper

                                                WEST   BENGAL   CIVIL  SERVICE 

                                                           EXAMINATION - 2003

                                                               Economics Paper-I

Time Allowed-3 Hours                                                                                        Full Marks-100 

                                                      All questions carry equal marks.

                                                                      Group - A 

                                                       Answer any two of the following

1. (a)  What is the marginal rate of subsitution betwen two commodities for an individual ?  How can one measure it ?

    (b)  If' MRS for individual  A exceeds the MRS for individual B, how can individual A gain by exchanging one commodity for more of other with individual B ? 

    (c)  What is elasticity of substitution ?

    (d)  What is meant by diminishing marginal rate of substitution (DMRS) ?  Is diminishing marginal utility (DMU) a necessary and, sufficient condition for DMRS ?       5+5+4+6 = 20

2. (a)  In a production system wherc there are two variable inputs, how can you define an iscquant ?

    (b)  What is meant by "Isoclines".  "Ridge lines" and  "Expansion path" ?   Is there any similarity between them ?  What will be the shape of ridge line and expansion path if the production function is homogeneous of degree one ?

    (c)  What is meant by returns to scale ?  How can you explain constant increasing and decreasing returns to scale ?  With the help of isoquant map represent different production function exhibiting constant increasing and decreasing returns to scale.     5+8+7-= 20

3. (a)  How can one define the concept of  "Oligopoly" ?   Can you explain  "Duopoly" as a special case of "Oligopoly"? 

   (b)  Discuss in this connection the shape of the demand curve facing the Oligopolist in the Sweezy model.

   (c)  If the Oligopolist's cost schedule changes, how can one find the equilibrium level of output, the price at which this output is sold and the new level of profit the Oligopolist earns ?  Discuss in the context of Sweezy model.     5+8+7 = 20

4.  (a) What is meant by price discrimination ?   What are the conditions to be fulfilled for price discrimination to be profitable

    (b)  A monopolist in a certain country has its domestic market protected by law from import competition. The domestic demand curve for it, product is given by P_d = 12.0 - q_d / l0.  The firm can also export to the world market, where the price is P_c = 80 independently of the quantity q_c exported. The monopolist operates a singie plant with the marginal cost given by MC = 50 + q/10. where q = q_d+q.

       (i)  Find the best overall output q and its division between the two markets.

       (ii)  Compare the price and demand elasticities in the domestic market versus the world market.

   (c)  Give two real world examples of third-degree discrimination.      6+10+4 = 20

                                                                      Group - B 

                                                       Answer any two of the following

5.  (a)  State and explain "Say's law" and '"Quantity theory".

    (b)  Show that Say's law barter economy and the homogeneity postulate hold together.

    (c)  Is there any inconsistency in the classical macro economic system with Say's law and Quantity theory ?     6+8+6=20

6.   An essential difference between Keynesian and classical macro economics of their different assumptions regarding the effects of involuntary unemployment on wage rates.

     (a)  What are the assumptions of each about wage rates ?

     (b)  Show that if truly flexible wage rates are inserted in the Keynesian model, there is no equilibrium position other than full employment.

    (c)  However with flexible wages, ther may still be no equilibrium in the Keynesian model. Indicate several possible circumstances in which deflation might fail to produce equilibrium at full employment.   6+6+8=20

7.  (a)  Which financial assest are generally regarded as money ?  Discuss the main functions of money.

     (b)  Write short notes on transaction demand and precautionary demand for money.

     (c)  What is portfolio demand for money ?   Discuss isi this connection Tobin's departure from Keynes.     6+8+6=20

8.  (a) Define inflation. The Phillips curve relates wage changes to unemployment, yet it is used to explain price inflation.  What condition will the long run Phillips curve be vertical ?     6+8+6=20

                                                                      Group - C

                                                        Answer any one of the following

 9. (a)  How Ricardian comparative advantage theory differs from Adam Smith's theory of absolute advantage ? 

    (b)  Can international trade serve as an effective engine for grwoth in less developed countries ?  Give reasons for your answer.    10+10 = 20

10.  Examine the view that is is not possible to make an invariable choice in favour of more labour intensive techniques even in the over populated countries unless we make explicit choice between the present and the future.     20

11. Why and in what sense should growth be balanced ?   Explain the rationale and process of unbalanced growth. Do you think that such a strategy of growth relies less on economic planning ?    10+10=20

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