EC 2804/EC 2803/EC 2801 – MICRO ECONOMIC THEORY – II

Date & Time: 17/04/2007 / 1:00 – 4:00 Dept. No. Max. : 100 Marks

Part A

Answer any FIVE questions in 75 words each (5 x 4 = 20 marks)

“In the Modern World the firm is a highly complex organization. It is characterized by separation of ownership and management” – Is it agreeable to the Neo-Classical Economists?
Outline the postulates of Sylos’s Model of Limit Pricing
Distinguish between Cartel and Price Leadership.
Explain the conditions of Pareto Optimality for promotion of Social Welfare
Explain the concept of Social Welfare Function
Explain the concept of Social Choice propounded by Amartya Sen
Define the concepts of Pay off Matrix, Strategies, Players. How are these concepts applied in Oligopoly?

Part B

Answer any FOUR questions in 250 words each (4 x 10 = 40 marks)

Bring out the differences between Andrew’s interpretation of Mark up Pricing and Hall and Hitch views of it.
Critically appraise the Maximization Utility Function Theory of Scitovsky.
Critically analyze Sylos’ Model of Limit Pricing.
What do you mean by Saddle Point? Explain it applying the concept of Pay off Matrix. How is it a deviation from the Nash Equilibrium?
“Social Choice Theory of Arrow is an improvement over Social Welfare Function Theory of Bergson” Substantiate it with reasons.
Compare Price Leadership with Limit Pricing
What are the features of Input – Output analysis? How is it fruitful to formulate economic policies in India?

Part C

Answer any TWO questions in 900 words (2 x 20 = 40 marks)

“Neither the managerial discretion nor the managerial enterprise Model replaces the traditional Economic Theory of the firm” – Comment
Enumerate the conditions required for the success of Collusive Oligopoly. Do you consider that collusion is beneficial for Oligopoly firms?
What are the demerits of Input – Output analysis? Do you think that it is an extension of production function? How?
Critically examine Sen’s Social Choice Theory. Do you think that his interpretation is relevant to Indian Democracy? How?