MEC 101 Solved Assignment 2022-23

MICRO ECONOMIC ANALYSIS

MEC 101 Solved Assignment 2022-23 : All assignments are in PDF format which would be send on email/WhatsApp (9958676204) just after payment.

Course Code: MEC 001/101

Assignment Code: Asst /TMA /2022-23

Total Marks: 100

SECTION A

Answer the following questions in about 700 words each. The word limits do not apply in case of numerical questions. Each question carries 20 marks.

2 × 20 = 40

1. a) Consider a pure-exchange economy of two individuals (A and B) and two goods (X and Y) Individual A is endowed with 5 units of good X and 3 units of good Y, while individual B with 3 and 4 units of goods X and Y respectively. Assuming utility functions of individuals A and B to be UA=XA YA 2 and UB=XB 2 YB where Xi and Yi for i= {A, B} represent individual i’s consumption of good X and Y respectively, what will be the set of Pareto optimal allocation in this economy?

b) Determine the conditions that need to be fulfilled by an allocation to be termed as Pareto efficient allocation.

2. Consider a Cobb-Douglas utility function

U (X, Y) = Xα Y (1- α) ,

Where X and y are the two goods that a consumer consumes at per unit prices of Px and Py respectively. Assuming the income of the consumer to be ₹M, determine:

a. Marshallian demand function for goods X and Y.

b. Indirect utility function for such a consumer.

c. The maximum utility attained by the consumer where α =1/2, Px =₹ 2, Py = ₹ 8 and M= ₹ 4000.

d. Derive Roy’s identity.

SECTION B

Answer the following questions in about 400 words each. Each question carries 12 marks.

5 X 12=60

3. a.) What is excess capacity and how is it related to the model of monopolistic competition?

b) Demand function and supply function are given as P=25-X2 and P=2X+1 respectively, find out producer surplus and consumer surplus.

4. a.) Define games of complete and incomplete information

b.) From the following pay-off matrix, where the payoffs (the negative values) are the years of possible imprisonment for individuals A and B, determine:

(i) The optimal strategy for each individual.

(ii) Do individuals A and B face a prisoner’s dilemma?

 Individual B Individual A Confess Don’t Confess Confess (-5, -5) (-1, -10) Don’t Confess (-10, -1) (-2, -2)

5. a.) Differentiate between the Cournot and the Bertrand model of Oligopoly.

b.) Consider an industry with two firms 1 and 2, each producing output Q1 and Q2 respectively and facing the industry demand given by P=140-Q, where P is the market price and Q represents the total industry output, that is Q= Q1 + Q2. Assume that each faces a marginal cost of ₹ 20 per unit with no fixed costs. Solve for the Cournot equilibrium in such an industry.

6. a.) Given the Von Neumann-Morgenstern utility function of an individual, U (W) =W ½ , where W stands for amount of money. Comment upon attitude towards risk of such an individual with the help of a diagram.

b) Now suppose this individual possesses a building worth ₹1600. If the building catches fire, its value falls to ₹ 400. Let the probability of building catching fire be ¼. On the basis of the given information, find out whether the individual would be willing to pay a risk premium of ₹ 76 to the insurance company in order to eliminate the risk associated with the factory building.

7. Write short notes on following:

a) Moral Hazard

b) Homogeneous and Homothetic production functions

c) Arrow prat measure of risk averseness

d) Bergson-Samuelson Social welfare function

MEC 101 Solved Assignment 2022-23 : All assignments are in PDF format which would be send on email/WhatsApp (9958676204) just after payment.

POST GRADUATE DIPLOMA IN AUDIO PROGRAMME PRODUCTION Master's Degree Programmes (M.A. ECONOMICS) ASSIGNMENTS

Dear Learner,

You have to submit one assignment in each course, i.e. MEC 101. All these are Tutor Marked Assignments (TMAs). Before attempting the assignments, please read the instructions provided in the Programme Guide carefully.

Kindly note, you have to submit these assignments to the Coordinator of your Study Centre within the stipulated time for being eligible to appear in the term-end examination. You must mention your Enrolment Number, Name, Address, Assignment Code and Study Centre Code on the first page of the assignment. You must obtain a receipt from the Study Centre for the assignments submitted and retain it. Keep photocopies of the assignments with you.

After evaluation, the assignments have to be returned to you by the Study Centre. Please insist on this and keep a record with you. The marks obtained by you will be sent by the Study Centre to the Student Evaluation Division at IGNOU, New Delhi.

Guidelines for Doing Assignments

There are five questions in each assignment, all carry equal marks. Attempt all the questions in not more than 500 words (each). You will find it useful to keep the following points in mind:

Planning: Read the assignments carefully. Go through the units on which they are based, make some points regarding each question and then rearrange them in a logical order

Organization and Presentation: Be analytical in your selection of the information for your answer. Give adequate attention to the introduction and the conclusion. Make sure that your answer is logical and coherent; has a proper flow of information.

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