IGNOU BECC-101 December 2020 Previous Year Question Paper

Q1.(a) Illustrate and distinguish between the expansion path in case of a non-linear production function and a linear homogeneous production function. 8 Lot-I 2.1. 0.

(b) Draw a Production Possibility curve. What is the slope of this curve ? Mark in the same figure, production possibilities when :

(i) resources are underutilised,

(ii) when resources are efficiently utilised.

(c) What can bring a shift in the production possibility curve ?

Q2.Consider an equation : Q=utvP seve

(A) where Q stands for quantity of a commodity, P for price of that commodity, u and v represent any constant numbers. Answer the following questions :

(a) Is the given equation, a demand or a supply equation ? Give reason for your answer. Also draw the curve representing such an equation. 6

(b) Now consider another equation : Q=w-xP wee

(3) Here again Q stands for quantity of a commodity, P for price of that commodity, w and x represent any constant numbers. Considering equations

(A) and _

(8), determine the equilibrium price (P*) and quantity (Q*) of the commodity. 8

(c) Let u = 4, v = 2, w = 24 and x = 3. What will be the values of equilibrium price (P*) and quantity (Q*) ?

Q3.(a) Using appropriate diagram, describe the Law of Variable Proportions. 10

(b) What are the reasons behind varying returns viz., increasing, constant and decreasing returns to a factor in production ?

Q4.(a) Differentiate between the underlying assumption of the three market structures, viz., Perfect competition, Monopoly and Monopolistic competition. 10

(b) What is meant by ‘excess capacity’ under the monopolistic competition market structure ? Explain with example.

Q6.(a) What is meant by price elasticity of demand ? Illustrate a unitary elastic demand curve. How does the shape of this demand curve change when demand becomes more elastic ? 6

(b) Discuss the determinants of price elasticity of demand.

Q7.(a) What are the underlying assumptions about the consumer preferences ? Also differentiate between the cardinal and the ordinal utility analysis. 6

(b) With the help of a diagram, discuss the concept of consumer equilibrium in one- commodity case using the utility analysis.6

Q8.Consider a consumer who consumes two goods X and Y, priced at Py and Py, respectively. Suppose price of good X rises to Px. Decompose price effect of this price increase into substitution and income effect using compensating variation in income approach.

Q9.Consider the figure below, where capital (K) and labour (L) are the factors of production in producing output. Ii, Iz, Is represent isoquants for output levels 750, 850 and 950 units, respectively : Sx,

Q11.=750 oO Labour (L)

(a) Identify the returns to scale represented by the above set of isoquants. What are the factors that bring in such returns to scale ? 6

(b) Discuss the various reasons resulting in internal diseconomies of scale in the production process for a firm.

Q12.A perfectly competitive firm is both productively and allocatively efficient in the long-run. Explain.

Q13.Write short notes on the following :

(a) Merit good 3

(b) Marginal Rate of Substitution 3

(c) Economic rent 3

(d) Adverse Selection

Q14.What is meant by the externality problem?

Q15.Explain, how taxes and _ subsidies rectify distortions resulting from externality.

Q16.Differentiate between the first-degree and third-degree price discrimination. 6 2»

Q17.1. 0. Q=utvP vee

(A) Q=w-xP wees

(B)