WEST BENGAL CIVIL SERVICE
EXAMINATION - 2007
Economics Paper-I
Time Allowed-3 Hours Full Marks-100
( Answer any five questions, taking at least two from each Group )
Group - A
1. (a) State standard properties of a consumer's preference. For what kind of goods indifference curves are L-shaped ?
(b) Derive the Marshallian and Hicksian demand curves from a Price Consumption Curve and justify their shapes for a normal good. (5+5)+(5+5)
2. (a) Consider a single variable input and explain the three stages of production in a diagram.
(b) Distinguish between technical progress and increasing returns to scale.
(c) Relate constant returns to scale to the shape of long run average cost (LAC) curve.
(d) Examine why short run average cost is never less than LAC. 5+5+5+5
3. (a) Analyze the major assumptions that arc necessary for a market to be perfectly competitive.
(b) How would you derive the short run supply curve of a perfectly competitive firm ?
(c) Trace the process of adjustment of an existing firm and the industry as a whole towards long fun competitive equilibrium. 5+5+10
4. (a) What are the major sources of monopoly power ?
(b) Explain dead-weight loss in the case of a pure monopoly.
(c) Compare and contrast the effects of a lump sum tax vis a vis a per unit sales tax on the optimum, price quantity decision of a monopolist. 5+5+10
5. Explain in details why according to classical theory.
(a) there is no problem of lack of aggregate demand; and
(b) there is no effect on real variables of changes in money supply ? 10+10
Group—B
6. (a) Present the benefit principle of taxation. Can a benefit tax be progressive ?
(b) Explain what is meant by "Kicardian Equivalence". Is it true that "the debt does not matter, because we only owe it to ourselves" ? 10+(5+5)
7. (a) Show how transactions demand for money may be a function of the rate of interest.
(b) How does this interest sensitivity of transaction demand influence the effectiveness of monetary policy ? 15+5
8. (a) What is purchasing power parity ?
(b) Will threre necessarily be a tendency for factor price to equalize among trading countries ? Explain your answer. 5+15
9. (a) Write a note on the Rastow's Stage Theory of Economic Growth.
(b) Show that balanced growth may be undesirable besides being unattainable. 10+10
10. Write short notes on any two of the following : 10x2
(a) Acceleration Principle;
(b) Effective Rate of Protection:
(c) Public Good;
(d) Critical Minimum Effort Thesis.
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