LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
M.A. DEGREE EXAMINATION – ECONOMICS
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SECOND SEMESTER – APRIL 2008
EC 2804 – MICRO ECONOMIC THEORY – II
Date : 17/04/2008 Dept. No. Max. : 100 Marks
Time : 1:00 – 4:00
PART – A
Answer any FIVE questions in about 75 words each. (5 x 4 = 20 marks)
- What is meant by zero sum game?
- Are price and output under Oligopoly indeterminate? Why?
- List out the factors which Bain considers as barriers to the entry of new firms.
- Distinguish between Pareto efficiency and Pareto optimality.
- List out the important features of technology matrix.
- What do you understand by free rider problem
- Write a short note on Rawl’s Maximin welfare criterion.
PART – B
Answer any FOUR questions in about 250 words each. (4 x 10 = 40 marks)
- “Managers seek to maximize balanced growth rate” – Discuss.
- Explain a dominant strategy? How can firms decide about the optimal choice of a strategy in the absence of dominant strategy?
- Illustrate the price and output determination under price leadership.
| 11. | User of outputs | |||||
| Agriculture | Manufacturing | Final demand | Total output | |||
| Producers of inputs | Agriculture | 75 | 125 | 100 | 300 | |
| Manufacturing | 100 | 150 | 250 | 500 | ||
| Labour | 125 | 225 | – | 350 | ||
| Total Output | 300 | 500 | 350 | 1150 | ||
- Given the transaction matrix find out the technology matrix.
- If the final demands for agriculture and industry change to 150 and 300 respectively, estimate the total outputs of agriculture and industry required to meet the new inter-industry demand and the new final demands assuming that technology matrix remain same.
- Does perfect competition always ensure Pareto optimality and maximum social welfare? – Discuss.
- Bring out the influence of externalities in economic efficiency.
- Briefly explain the Arrow’s theory of social choice.
PART – C
Answer any TWO questions in about 900 words each. (2 x 20 = 40 marks)
- Briefly explain the W.J. Baumol’s maximization model of Oligopoly with advertisement expenditure, overhead cost, choice of output and input combinations and sales maximization.
- Elucidate the Neumann-Morgenstern game theory with an illustration and bring out its criticism.
- Elaborate the conditions of Pareto optimality and its criticism.
- Critically examine the Kaldor-Hicks-Scitovsky’s compensation principle.
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