DSE 2011 and 2012 Doubts

[riddhima]

2012" http://economicsentrance.weebly.com/uploads/1/1/0/5/1105777/2012-option-a.pdf

Ques 2 In this I understand the logic for option 3, but clarify me the options 1 and 2
ques 23: I am getting the answer as p= 6 by following the price leadership model in which the follower will charge a price equals to its MC, in that case the question gets solved in the first step, but I am not getting the clear logic here

2011: http://economicsentrance.weebly.com/uploads/1/1/0/5/1105777/2011-option-a.pdf
 Ques 41 and 42, I have the answers needs confirmation on my approach
ques 43: The substitution effect here comes out to be 0, that is how i am justifying the logic that b is a complement of a, clarify if i am concepts are wrong
Ques 44, how to approach this question
Ques 46 and 47
Ques 51 I am getting the answer for this need the working

Thanks!

[duck]

Hi.. :)

2012:

2) For Pareto optimal points, what matters is the total availability of the two goods.
So, if A tranfers some of his endownment to B then also, the total amount avaiable in the economy will be the same. Thats why option(i) is ruled out.
However, if A's endownment has increased then, total amount of good available has gone up. So, pareto optional allocation (before the change) may not remain pareto efficient.
Hence, option(ii) is correct.


23) Its because if any firm charges different price other than 6 then, its always beneficial for the firm to deviate. Its like saying any price apart 6 will not be a best response.Hence, cannot be an equilibrium.
Therefore, equilibirum price=6.

[duck]

2011:

41,42) Please post your approach.

43) Suppose, x and y are two commodities. If ∂x/∂py < 0 then, x and y are complements.

44) Its given firm employs in some fixed proportion . If x=1 then, y=α.
The only production function which satisfies y=αx is option(b).

45,46) Already been discussed on the forum. Please search yourself.
http://discussion-forum.2150183.n2.nabble.com/DSE-2011-question-46-td7582179.html#a7582186

51) 51) Its given P(t) = [(1+α)*W(t)]/L(t)........ (I)
where L(t)= Y(t)/N(t)
Now, take log both the sides of (I) and differentiate wrt t.
You'll get the equation in terms of growth rates:
Π = w-λ

[Sinistral]

hey Duck,
Would you please have a look at these 2 problems as well.

http://discussion-forum.2150183.n2.nabble.com/Estimators-tp7582706.html

http://discussion-forum.2150183.n2.nabble.com/Neyman-Pearson-tp7582708.html

[riddhima]

Hey Duck

First of all thanks for the clarifications for the questions.

I approached questions 41 and 42 of 2011, assuming that since for optimality the approach of equating the slope of budget equation and the utility won't work here, there possibly can be three case, case 1--the kink i.e. x=y, case 2---x=0 or case 3---y=0

Assuming this I solved the budget equation in the three cases and got the bundles after which I solved the utility function and picked the bundle which gave maximum utility.

The approach worked for both the cases, though need to know if its the right approach and if not how to go abut such questions.

Thanks again! :)

[duck]

Hi Riddhima.. :)
In such questions, its best to plot the IC.
You approach seems correct. But the only thing is at px/py = 1/2 or px/py=2, there is no unique demand.

[riddhima]

Hey Duck

Could you please help me plot these curves, I have had a similar problem before for min functions, didn't quite get how to draw the graphs! 

And also for your reply regarding complements does the same condition also hold true if one of the good is a giffen good like this case for if the price of good A increases its demand increases and with the logic of complementary goods the demand for good B should also increase which isn't happening in this case.

On Sun, Jun 23, 2013 at 8:29 PM, duck [via Discussion forum] <[hidden email]> wrote:

Hi Riddhima.. :)
In such questions, its best to plot the IC.
You approach seems correct. But the only thing is at px/py = 1/2 or px/py=2, there is no unique demand.

:)

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Riddhima Mishra

[duck]

Hi Riddhima.. :)

Please refer the following link:
http://economicsentrance.weebly.com/uploads/1/1/0/5/1105777/notes_1.pdf

[riddhima]

Hey Duck!

Thanks a ton really, its a gem of a link that you just sent me!

I tried and tested what you has said in your earlier post, what I concluded was in the first case when p1 = p2 = 20, the solution at kink x1= x2 gives a higher utility compared to the other options 

while the second case where p1/p2 we do have an identical utility, but then cant we rationale it with the fact that a consumer always prefers to consume the average of the two goods rather having just one even if the two such bundles give him equal utility?

On Tue, Jun 25, 2013 at 3:31 PM, duck [via Discussion forum] <[hidden email]> wrote:

Hi Riddhima.. :)

Please refer the following link:
http://economicsentrance.weebly.com/uploads/1/1/0/5/1105777/notes_1.pdf

:)

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Riddhima Mishra

[duck]

Correct Riddhima.. :)

Infact, at px/py=1/2 or 2 ,there are many bundles which gives him equal utility.