Tuesday, May 19, 2009

Microeconomics 2004 Paper: Answers/Hints/solutions to Past Year Papers/Exam of Delhi School of Economics (DSE)

Here I am giving indicative solutions for DSE Papers. I am giving hints and some thought points to ponder over. All mistakes are mine, kindly mail me wherever you find mistakes at ecopoint.dse@gmail.com First I am posting for Micro and in subsequent posts would do for Macro and Maths

Microeconomics 2004

Ans 3.(c) x1=y1 for x1 Є {0,1000} (The set of allocations would be on the diagonal line (Think, what if the Edgeworth box is not a square)

Ans 4. (c) x1=y1 for x1 Є {0,1000} (It is a case of multiple equilibria. Solve for demand functions of i, j (Think, does min-min always give multiple equilibria)

Ans 5 (d) Both are pareto efficient. For both α and β, check by transferring the resources, can you make one person better off and other person worse off. In this case both α and β are pareto efficient.(Remember it is not a square now)

Ans 6 (b) (Again a case of multiple equilibria)

Ans 7. (a) Competitive Equilibrium prices (1,0) .(Think, a good in excess supply is x2. Is this the case always?)

Ans 8. (c ) {q1,q2} = {3-4c/6,c/3}; {s1,s2} = {3-4c/3-2c,2c/3-2c}

Ans 9 (b) No, collusion could be Pareto efficient

Ans 10. (a) ½

Ans 11. (d) Produce nothing in Plant 1

Ans 12. (c ) p=1-q π=(1-q)q-1/2q Find dπ/dq, q=1/4

Ans 13. (a) Use Slutsky SE, {x0,y0} = {5,5/3}, {x1,y1} = {5/2,5/3}, (x1-x0,y1-y0} = {-5/2,0}

Ans14 (d) (200)1/2 -10.Use Hicksian SE, keeping the original utility constant

Ans 15 (b) At U=25/3. Calculate m =(200)1/2. {x1,y1} = {(200)1/2 /4, (200)1/2/6} Δ = {5/2-(200)1/2 /4, 5/3-(200)1/2/6} =(10-(200)1/2 )/4, (10-(200)1/2)/6

Ans 16. (a) Deficit decreases by 15-(200)1/2

Ans 17 (d) removing the water subsidy and providing lumpsum subsidy

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