Principles of Microeconomics II — DU B.A. (Hons.) Economics Previous Year Question Papers

Paper No: 12467 (4 - Pages ) 01. a. "A monopolist faces a downward sloping demand curve, which limits his control over the market." Do you agree with this statement? Give reasons for your answer. b. Explain using diagram, why the equilibrium price under monopoly is higher than that under perfect competition. b. Explain how positive externalities lead to underconsumption in a market economy. associated with asymmetric information. b. Discuss how incentive schemes can be designed to reduce the problem of moral hazard in (9) the labour market. production function is presented in the table below. 04. a. Suppose that labour is the only input used by a perfectly competitive firm. The firm's (9) Units of Output Labour Hours i. Calculate the marginal product for labour. (3) ii Calculate the value of marginal product of labour at price of output is Rs. 100. (3) ili. Derive the firms' labour demand curve. (3) b. Explain the factors that cause shift in the firms' demand for labour? (9) Q5. a. Explain the comparative advantage theory in order to explain the pattern of international trade. How is it an improvement over the absolute advantage theory? (9) b. Give arguments in favour of restrictions to free trade'. (9) Q6. Write comprehensive notes on any two of the following: (9x2-18) a. Duopoly b. Free Rider Problem c. Market for lemons