IGNOU BECC-101 December 2024 Previous Year Question Paper

Q1.(i) Define production possibility curve. How can we use production possibility curve to demonstrate increasing, constant and decreasing returns to scale ? (Diagrams are required.) 10

(ii) Given the demand and supply equations as Q» = 150000 — 3P and QS = 7P, calculate :

(a) Equilibrium price, and

(b) Equilibrium quantity

Q2.@ Given the demand function : Qx = 8000 — 1000 Px determine the elasticity of demand at a single point, where the price of = 6 and the corresponding quantity of 2000 units. 10

(ii) Discuss the least cost combination of inputs with the help of isoquant curve and isocost line (Diagrams are required.)

Q3.(i) Define the price consumption curve and use them to derive the demand curves for : 5+5=10

(a) A Giffen good, and

(b) A normal good

(ii) Explain the technique of splitting the price effect into its components of substitution and income effects for a Giffen good.

Q4.(@) Show that the supply curve for a competitive firm is the rising part of the marginal cost curve. 10 Gi) Do you think that the kinked demand curve describes price rigidity ? Give reasons. What are its limitations ?

Q5.(0) The demand curve for labour by an industry is given by the curve : LP = 1200 — 10 W, where LP is the labour demanded per day and W is the wage rate. The supply curve is given by LS = 20 W. What is the equilibrium wage rate and quantity of labour hired ? What is the economic rent earned by workers ? 7

(ii) The price of a product falls by 10%. In consequence, the total expenditure of the consumer rises by 20%. Find the price elasticity of demand.

Q6.(i) Show that Marshall’s analysis can’t account for Giffen good. 6 Gi) What is the relationship between the utility approach and the indifference curve approach to consumer demand theory?

Q7.Define corner solution. Explain the following two points under corner solution concept: 12

(a) When only one commodity is purchased.

(b) Consumer equilibrium in case of concave indifference curves. (Diagrams are required.)

Q8.(@) What are the three stages of production ? Which one of these do the producers prefer and why ? 6

(ii) With the help of diagram, define the ridge lines and the economic and the non- economic regions of production.

Q9.@) Show that a competitive firm always operates at its optimal capacity in the long- (ji) Explain the concept of prisoner's dilemma.

Q10.Write short notes on the following :

Q11.Third degree price discrimination 6

(ii) Excess capacity

Q12.Define the fundamental role of the marginal cost in achieving efficiency in a_ perfectly competitive market.

Q13.What do you understand by the market failure ? Explain the sources of market failure. 6 [71 BECC-101 L? = 1200 - 10W