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Economics-2014: Answer Writing Challenge – 16


20 September 2014

Q1) State and explain the Law of Equi-marginal utility and also state clearly the limitations of this law? (200 words)

Q2) “Pareto optimality is a necessary but not sufficient condition for welfare maximization” Develop this idea highlighting the role of “social welfare contours” and “utility possibility contours” in welfare maximizing state? (200 words)
Q3) If public expenditure is financed by money creation, show diagrammatically the short run and the long run crowding out effect. (200 words)