IGNOU BECC-101 June 2023 Previous Year Question Paper

Q1.(a) Can we use production possibility curves to demonstrate production under increasing and constant cost conditions. Explain with the help of diagrams. 6

(b) “As long as resource s are fully employed and every firm in the economy is producing its output using the best available technology, then the utilisation of resources will be efficient.” Do you agree with this statement ? Explain your answer.

(c) When both the price of a subs titute and price of a compleme nt of commodity-X rise, then what would be the impact on demand for commodity-X ? Explain your answer.

Q2.(a) Given the demand and supply functions fo r labour hours as below : SL 10 W DL 600 10W where W is wage rate per hour of labour and L S and L D are respectively the supply and demand of labour in millions of labour hours. 6

(i) Determine the free market wage rate and employment. (Graph is required)

(ii) Now suppose t hat the government fixes the minimum wage rate ` 40 per labour hour. How would the employment of labour hours be effected ?

(b) What are the reasons beh ind variations in the wage rates across the different professions ? 6

(c) The burden of a tax is shared by producers and consumers. Under what conditions will consumers pay most of the tax ? Under what conditions will producer pay most of

Q3.(a) “A typical production function has three stages.” Explain with the help of diagrams.

(b) Is the firm mi nimizing costs if the marginal product of labour is six, the marginal product of capital is five, the price of labour is ` 2, and the price of capital is ` 1 ? If not , what must the firm do to minimize costs ? 6

(c) Explain the following concepts with the help of diagrams : 6

(i) Expansion path

(ii) Ridge lines

Q4.(a) Explain the short -run equilibrium of a competitive firm. When would a competitive firm close down its business in the short-run ? 8

(b) Would the monopolist ever operate on the inelastic portion of the demand curve ? Explain your answer with reason. 6

(c) Explain the concept of mark-up pricing.

Q5.(a) There is a straight line demand curve in the figure : 6 Prove that the point elasticity at point “C ” on the demand curve is the ratio of line segment M1 to line segment M2.

(b) On what factors does the price elasticity of supply depend ? Explain.

Q6.(a) Define the Law of Diminishing Marginal utility (Diagram is required). The total utility at different levels of consumption is a given below : 6 Units Consumed Total Utility If the price is fixed at ` 10 per unit, determine the equilibrium level of demand.

(b) Device the demand curve for a Giffen good with the help of indifference curves and the budget line.

Q7.Explain the price effect, income effect and the substitution effect of a fall in price for a n inferior commodity using suitable diagram. 12 [ 6 ]

Q8.(a) Is the firm’s expansion path always a straight line ? Explain it. 6

(b) Explain the concept of economies and diseconomies of scale. How do economies and diseconomies of scale determine the shape of the long -run average cost (LAC) curve ?

Q9.(a) Show that a competitive firm alw ays operates at its optimal capacity in the long run. 8

(b) How does a monopolist firm face efficiency loss ?

Q10.Write short notes on the following : 4×3=12

(i) Recardian theory of Rent

(ii) Sources of market failures

(iii) Prisoner’s Dilemma in oligopoly market

(iv) Backward bending labour supply curve [ 7 ]

Q11.“The kinked demand curve describes price rigidity.” Explain how the model works. What are its limitations ?