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ECONOMICS-2015: Daily Answer Writing Challenge – 3

ECONOMICS-2015: Daily Answer Writing Challenge – 3

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Advanced Micro Economics:

1) Show how investment and savings propensities determine distributive shares in the Kaldor theory of distribution. Suppose the investment is not exogenous as in Kaldor’s original model but that it varies with profits. What does this mean for the stability of the Kaldor model of distribution? (2013 – 10 marks)

 

2) Derive the equilibrium conditions of an individual firm and of the industry in a monopolistic competition scenario? (2013 – 10 marks)

 

3) Under Bertrand competition with homogenous products in an oligopoly demonstrate how is the equilibrium price that will prevail arrived at? (2013 – 25 marks)

 

4) Market demand curve for carbonated water: P = 20 – 9Q/2

5) Two firms producing carbonated water, each with a marginal cost of INR 2.

What is the market equilibrium price and quantity when each firm behaves as a Cournot duopolist? What are the firms’ profits?

What is the market equilibrium price and quantity when each firm behaves as a Bertrand duopolist? What are the firms’ profits? (2013 – 25 marks)

Tomorrow:

Advanced Macro Economics:

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