MEC-101: MICROECONOMIC ANALYSIS

(Assignment) Course Code: MEC-001

Assignment Code: MEC-002/2020-21

Total Marks: 100

SECTION A

Answer all questions from this section. 2×20 = 40

1. (a) Elucidate price and output determination under Cournot and Stackelberg models of Oligopoly.

(b) Consider a market for energy drinks consisting of only one firm. The firm has a linear cost function:

C(q) = 4q, where q represents quantity produced by the firm. The market inverse demand function is

given by P(Q) = 24 − 2Q, where Q represents total industry output. Based on the given information

answer the following:

(i) What price will the firm charge? What quantity of energy drinks will the firm sell?

(ii) Now suppose a second firm enters the market. The second firm has an identical cost function. What

will be the Cournot equilibrium output for each firm?

(iii) What is the Stackelberg equilibrium output for each firm if firm 2 enters second?

(iv) How much profit will each firm make in the Cournot game? How much in Stackelberg?

(v) Which type of market do consumers prefer: monopoly, Cournot duopoly or Stackelberg duopoly?

Why?

2. (a) Consider an Edgeworth box that describes a two-person, two-commodity exchange scenario. Explain

how trade takes place between the two individuals starting from the initial endowment position. What is

the significance of the slope of the ray passing through a Pareto optimal point and the endowment point?

(b) Consider a pure-exchange economy of two individuals (A and B) and two goods (X and Y). Assume both the

individuals are endowed with 2 units of good X and 1 unit of good Y each.

Let utility functions of individual A and B be UA = min{XA,YA} and UB = min{𝑋𝐵

4,YB}, where Xi and Yi for i = {A,

B} represent individual i’s consumption of good X and Y respectively. Determine the aggregate excess demand

functions for each good.

SECTION B

Answer all questions from this section. 5×12 = 60

3. (a) How would you differentiate a Static game from a Dynamic game?

(b) Consider the following game.

i) Can Backward induction be applied in this game to find a solution?

(ii) What will be the Subgame Perfect Nash equilibria for the given game?

4. What is Kaldor’s compensation principle? How is it used to resolve Pareto non-comparability? How is it

different from Hick's compensation principle?

5. (a) Explain the concept of a Homothetic production function.

Given a production function

q = AL0.5

K0.4

where q represents total production, L and K stands for labour and capital respectively, and A is the technology

coefficient. What are the returns to scale for such a production function?

(b) “Homothetic production function includes Homogeneous production function as a

special case.” Justify this statement.

P

(2, 2)

Player 1

Player 1

Pla

yer

2

(1, 5)

(−1,3)

(3, 2)

(0, 1)

Q

R

S

U

U

T

T

Pla

yer

2

6. (a) Differentiate between a Hicksian and a Walrasian demand function? Do they ever intersect? Explain.

(b) Consider a Cobb-Douglas utility function

U (X, Y) = 𝑋1 5 𝑌4 5

where X and Y are the two goods that a consumer has an option to consume at per unit prices of PX and PY,

respectively. Assume income of the consumer to be Rs M. Determine

(a) Uncompensated demand functions for goods X and Y

(b) Compensated demand functions for goods X and Y

7. Raj expects his future earnings to be worth Rs 100. If there is some unfortunate event, his expected future

earnings will be Rs 25. The probability of an unfortunate event to occur is 2

3, while that of things

remaining fortunate is 1

3. Suppose his utility function is given by U(Y) = 𝑌1 2 , where Y represents the

amount of money. Now suppose an insurance company offers to fully insure Raj against the loss of

earnings caused during an unfortunate event at an actuarially fair premium.

(i) Will Raj accept the insurance? Explain. (ii) What would be the rate of actuarially fair premium charged in this case?

(iii) What would be the maximum amount that Raj would pay for the insurance?

MEC-002: MACROECONOMIC ANALYSIS

(Assignment)

Course Code: MEC-002

Assignment Code: MEC-002/2020-21

Total Marks: 100

Note: Answer all the questions. While questions in Section A carry 20 marks each (to be answered in about 500 words

each) those in Section B carry 12 marks each (to be answered in about 300 words each). In the case of numerical

questions word limits do not apply.

Section A

1. Derive the conditions for steady state growth in the Solow model. What are its implications? In what respects is the

golden rule different from the steady state?

2. What are the implications of IS and LM curves? What are the factors on which the position and the slope of IS and LM

curves depend?

Section B

3. What does the Phillips curve signify? How do you reconcile the difference in the shape of the curve in the short run and

the long run?

4. From Lucas’ point of view, what are the limitations of the Keynesian model? What improvements does he suggest?

5. Bring out the salient features of the endogenous growth theory.

6. Explain the mechanism through which internal and external balance takes place under flexible exchange rate.

7. Write short notes on the following:

a) Permanent income hypothesis

b) Rational expectations and adaptive expectations

MEC-103: QUANTITATIVE METHODS

(Assignment) Course Code: MEC-103

Asst. Code: MEC-103 / TMA/2020-21

Total Marks: 100

Note: Answer all the questions. While questions in Section A carry 20 marks each, those in Section B carry 12 marks

each.

Section A

1) Consider the utility function 𝑢 = 𝑓(𝑥1 … 𝑥𝑛) where 𝑥𝑖 , 𝑖 = 1,2,… , 𝑛 are the quantities of the n goods consumed. Let

the price of good 𝑥𝑖 be 𝑃𝑖 , 𝑖 = 1,2,… , 𝑛. Let M be the consumer's income. Show that the Lagrangian multiplier of the

utility maximization problem equals the marginal utility of income.

2) (a) What is the normal probability distribution function? State its properties.

(b) The concentration of impurities in a semiconductor used in the production of microprocessors for computer is a

normally distributed random variable with mean 127 parts per million and standard deviation 22. A semiconductor is

acceptable only if its concentration of impurities is below 150 parts per million. What proportions of the

semiconductors are acceptable for use? (The area under the standard normal curve for the value of z = 1.5 is

0.668).

Section B

3) Distinguish between the characteristics of first and second order difference equations. Give examples of economic

problems that are solved with the help of each category of such equations.

4) Solve the following linear programming problem:

Min 𝐶 = 0.6𝑥1 + 𝑥2

subject to 10𝑥1 + 4𝑥2 ≥ 20

5𝑥1 + 5𝑥2 ≥ 20

2𝑥1 + 6𝑥2 ≥ 12

𝑥1 𝑎𝑛𝑑 𝑥2

≥ 0

5) Suppose a large jar contains eight red balls, six yellow balls, and six blue balls. Two balls are to be selected at random

from the jar, and the first ball selected will not be placed back into the jar.

(a) What is the probability that the first ball will be red and the second yellow?

(b) What is the probability that neither will be red?

6) Suppose the technology matrix is

A = 0.2 0.3 0.20.4 0.1 0.20.1 0.3 0.2

Let the final demand vector be D = 1056

Find the level of production of the three goods.

7) (a) What is a test statistic?

(b) Distinguish between one-tailed and two-tailed tests.

(c) What is p- value?

MEC-004: ECONOMICS OF GROWTH AND DEVELOPMENT

Assignment

Course Code: MEC-004

Asst. Code: MEC-004 / AST-1/2020-2021

Total Marks: 100

Note: Answer all the questions. While questions in Section A carry 20 marks each (to be answered in about 500 words

each) those in Section B carry 12 marks each (to be answered in about 300 words each). In the case of numerical

questions word limits do not apply.

SECTION A

1) Examine the effect of population growth in the Solow model of economic growth. Discuss how the Solow model could be

used to explain poverty traps in developing nations.

2) Describe the Mankiw-Romer-Weil extension to the neoclassical model to include human capital. Explain why

diminishing returns to capital do not take place in the AK model.

SECTION B

3) Distinguish between economic growth and development. Briefly mention the main benefits that economic growth confers

upon society.

4) Describe Pasinetti's theory of economic growth and distribution.

5) Describe the various approaches to the measurement of total factor productivity.

6) What are the main propositions of the Real Business Cycle model? Describe the basic structure of a prototype Real

Business Cycle model.

7) Compare and contrast the Uzawa two-sector growth model with the Feldman model.

MEC-005/105: INDIAN ECONOMIC POLICY

Assignment (TMA)

Course Code: MEC-005/105

Assignment Code: MEC-105/AST/2020-21

Maximum Marks: 100

NOTE:

1. All questions are compulsory.

2. Questions in Section A carry 20 marks each and are to be answered in about 700 words each.

3. Questions in Section B carry 12 marks each and are to be answered in about 400 words each.

Section-A

1. Do you think that Indian economy is on the path of transition - transition from under development to

development, from poverty to prosperity and from scarcity to abundance? Explain with reasons. Evaluate the effects

of economic growth on the distribution of national income.

2. “The quality of life in India is far from satisfactory”. Comment.

Section B

3. Analyze the rate and pattern of industrial growth during last two decades. What suggestions would you like to

make for achieving high industrial growth?

4. Identify the constituents of second generation of economic reforms. To what extent the second generation of

reforms will tackle the contemporary challenges of Indian’s development.

5. “States should have their due share in responsibilities as well as rights”. In the light of this statement, bring out

the important issues in Center-State relations in India.

6. Give an account of India’s balance of payment situation during last two decades. Discuss the policy implications

of emerging situation of Balance of Payment.

7. What do you mean by the food security? Evaluate the various measures adopted by the Government of India

towards food security.

TMSHIV

Typewritten text

For IGNOU Assignments Call-9386520072 or Visit Our Website- https://www.ignouast.in/

MEC-006: PUBLIC ECONOMICS

Assignment (TMA)

Course Code: MEC-006

Assignment Code: MEC-006/AST/2020-21

Maximum Marks: 100

Note: Answer all the questions. While questions in Section A carry 20 marks each (to be answered in about

500 words each) those in Section B carry 12 marks each (to be answered in about 300 words each). In the case

of numerical questions word limits do not apply.

Section A

1) What is the basic idea behind the “Pure Theory of Public Expenditure’: Discuss briefly. Also, what is the

theoretical rationale behind Lindahl Pricing?

2) State the ideal conditions for meeting the ‘socially optimum criteria’ for utility pricing. Also,

critically discuss the utility pricing rules for ‘best solutions’.

Section B

3) Using different tax rates demonstrate how the deadweight loss could be minimised?

4) On what ground did the classical economists oppose public debt? What counterview is proposed

by the modern economists in their view on public debt?

5) What is a Social Welfare Function? Explain this concept with the help of the Samuelson-

Bengson’s Social Welfare Indifference Curves.

6) Discuss the Bowen and Black’s models for the identification of ‘Median Voter Preference’.

7) State the main problems in international policy coordination. Suggest methods on how they can

be solved?

MEC-106: PUBLIC ECONOMICS

Assignment (TMA)

Course Code: MEC-106

Assignment Code: MEC-006/AST/2020-21

Maximum Marks: 100

Note: Answer all the questions. While questions in Section A carry 20 marks each (to be answered in about

500 words each) those in Section B carry 12 marks each (to be answered in about 300 words each). In the case

of numerical questions word limits do not apply.

Section A

1) Discuss the welfare concepts, inbred in the different forms of social welfare functions, which

form the foundation of policies in public economics.

2) Elucidate the two theoretical models attributed to Lindahl and Samuelson in the context of public

goods.

Section B

3) Outline how internalisation of negative externalities could be a solution to externalities through

the instruments of taxation and property rights.

4) State Arrow’s impossibility theorem with conditions. Also, illustrate the element of

impossibility in Arrow’s theorem.

5) Highlight the argument behind the ‘revenue maximisation’ approach to public expenditure.

6) Establish how under conditions of ‘imperfect competition’ government enhances overall social

welfare.

7) Delineate the ‘alternative strategies’ available to ensure the required money supply in an

economy.

MEC-007: INTERNATIONAL TRADE AND FINANCE

Assignment

Course Code: MEC-007

Asst. Code: MEC-007 / AST-1/2020-2021

Total Marks: 100

Note: Answer all the questions. While questions in Section A carry 20 marks each (to be answered in about

500 words each) those in Section B carry 12 marks each (to be answered in about 300 words each). In the case

of numerical questions word limits do not apply.

SECTION A

1) Critically discuss the Ricardian theory of Comparative Advantage. How is it different from Adam Smith’s

theory of Absolute Advantage?

2) Explain the various concepts of terms of trade. Critically examine the behavior of terms of trade as explained by

Prebisch

SECTION B

3) Explain multilateral framework of international trade. Explain its main features.

4) What are the various forms of economic integration? How is trade diversion different from trade creation?

Elucidate.

5) Describe the evolution of international monetary system. Examine the trends in the international

monetary and financial systems.

6) Discuss the various instruments of trade protection. Differentiate between quotas and tariffs.

7) Critically examine the relative merits and demerits of the fixed and flexible exchange rates.

MEC-008: ECONOMICS OF SOCIAL SECTOR

AND ENVIRONMENT

Assignment (TMA)

Course Code: MEC-008

Assignment Code: MEC-008/AST/2020-21

Maximum Marks: 100

Note: Answer all the questions. While questions in Section A carry 20 marks each (to be answered in about

500 words each) those in Section B carry 12 marks each (to be answered in about 300 words each). In the case

of numerical questions word limits do not apply.

Section A

1) How does taking the ‘income levels’ as an indicator of development defeats the objective of tackling the

multi-faceted dimensions of development? Explain.

2) Discuss the Gordon’s contention that the ‘optimal size of fishery is one which maximizes sustainable

resource rent’ with appropriate theoretical justification.

Section B

3) Explain the transition to ‘institutional economics’ from ‘neoclassical economics’.

4) What are the essential differences in the two approaches of ‘shadow prices’ and ‘hedonic pricing’

methods as ‘valuation tools of environmental functions’.

5) Write a note on the different types of ‘common property resource’.

6) Bring out the inter-regional variations in ‘expenditure on education’ in India as it obtained in the

early years of 2000s.

7) Make a case in favour of levying the ‘user fees’ for public health facilities. What are the

arguments that can be offered ‘for and against’ such a proposal?

MEC-108: ECONOMICS OF SOCIAL SECTOR

AND ENVIRONMENT

Assignment (TMA)

Course Code: MEC-108

Assignment Code: MEC-108/AST/2020-21

Maximum Marks: 100

Note: Answer all the questions. While questions in Section A carry 20 marks each (to be answered in about

500 words each) those in Section B carry 12 marks each (to be answered in about 300 words each). In the case

of numerical questions word limits do not apply.

Section A

1) Discuss the various situations of ‘market failure’ leading to environmental degradation.

2) Discuss the significance of ‘efficiency wage’ in contributing to health and productivity of workers.

Section B

3) Explain how ‘poverty’ is not the sole determinant of malnutrition.

4) Specify the fundamental challenges of using the non-renewable resources optimally.

5) Derive the results for the optimal use of renewable resources under the discrete and continuous

time frames.

6) Describe the concept of ‘quasi markets’ in the provisioning of public services.

7) Derive the conditions of optimality for buying health insurance in cases of absence/presence of

free riders.

MEC-109: RESEARCH METHODS IN ECONOMICS

Assignment (TMA)

Course Code: MEC-109

Assignment Code: MEC-109/AST/2020-21

Maximum Marks: 100

NOTE:

1. All questions are compulsory.

2. Questions in Section A carry 20 marks each and are to be answered in about 700 words each.

3. Questions in Section B carry 12 marks each and are to be answered in about 400 words each

Section-A

1. What are the key features of interpretative philosophy of science? Using a suitable

example from economics, select a theme and write a proposal in about 500 words using

interpretative research methodology.

2. Distinguish between tools of data collection and methods of data collection. Discuss

the various methods of Random Sampling. How will you decide the suitable method of

data collection among various random sampling methods?

Section-B 3. State the different functional forms of regression model. How do you interpret the

estimated slope coefficient β of a log linear regression model?

4. State the properties of Lorenz Curve. When will comparison between two Lorenz

curves fail to compare inequality in two distributions?

5. What is correspondence analysis? Explain with example the various steps involved in

correspondence analysis.

6. What is participatory research? Identify the various steps involved in data analysis of

participatory research.

7. Name the different sources that provide data on employment. Explain the different

measures of employment and unemployment used by NSSO in different quinquennial

surveys.

MECE-001: ECONOMETRIC METHODS (Assignment)

Course Code: MECE-001

Asst. Code: MECE-001/AST/2020-21

Maximum Marks: 100

Note: Answer all the questions. While questions in Section A carry 20 marks each, those in Section B carry

12 marks each.

Section A

1. What do you understand by autocorrelation? What are the consequences of autocorrelation? How

do you detect autocorrelation in a data set? Explain the steps you would follow to remove the

problem of autocorrelation.

2. Consider the regression equation where is a stochastic error term.

(a) Explain the need of including the in the model

(b) What assumptions regarding the error term are needed to prove the Gauss-Markov theorem?

(c) Prove the Gauss –Markov theorem for the estimator of

Section B

3. What is meant by heteroscedasticity? Explain one of the remedial measures for the problem of

heteroscedasticity.

4. What is meant by dynamic model? Explain how the following model can be estimated?

where + . In the above model is distributed independent, normal with mean

zero and variance and

5. What is meant by indirect least squares (ILS) method? Explain how the following model can be

estimated using this method?

Demand function:

Supply function:

where Q = quantity, P = Price, and = income.

6. Explain the steps followed in estimation of parameters through the method of Generalised least squares

(GLS).

7. Explain the concept of multicollinearity. What are its consequences on estimates? What remedial measures

would you suggest for problem of multicollinearity?

MECE-003: Actuarial Economics: Theory and Practice

Assignment (TMA)

Course Code: MECE-003

Assignment Code: MECE-003/AST/2020-21

Maximum Marks: 100

Note: Answer all the questions. While questions in Section A carry 20 marks each (to be answered in about

500 words each) those in Section B carry 12 marks each (to be answered in about 300 words each). In the case

of numerical questions word limits do not apply.

Section A

1) (a) Why is it necessary to model interest stochastically? How is a model of ‘stochastic interest’

developed? (b) Differentiate between the features of ‘classical and Bayesian analysis of

credibility theory’.

2) You are required to demonstrate the interplay between ‘finance and insurance principles’. How

would you approach this problem with the help of ‘unit-linked insurance contracts’?

Section B

3) State Markov’s theorem with illustrations. What is the condition required to be met by a random

variable R in order to possess the Markov property?

4) How is a ‘survival function’ defined? In what way is a ‘hazard function’ different from the

‘survival function’?

5) How is Lundberg Risk Model formulated? Suggest modifications therein so as to offer an

alternative to it.

6) State the Optional Stopping Theorem. What technique could be used to analyse the ‘collective

risk’?

7) Write short notes on: (a) Compound-Poisson Process; (b) Black-Scholes Theorem; (c) Panjer

Recursion; and (d) Risk neutral evaluation.

MECE-004: FINANCIAL INSTITUTIONS AND MARKETS

Assignment

Course Code: MECE-004

Asst. Code: MECE-004 / AST-1/2020-2021

Total Marks: 100

Note: Answer all the questions. While questions in Section A carry 20 marks each, those in Section B carry 12

marks each.

SECTION A

1) Describe the nature of the financial system in a modern economy giving the important types of constituent

institutions, markets and instruments. Explain the concept of flow-of-funds in the financial markets

2) Discuss the Markowitz theory of efficient portfolio selection. How does the Capital Asset Pricing Theory

(CAPM) theory build on it?

.

SECTION B

3) Explain the Arbitrage Pricing Theory.

4) Explain the need for, and role of depository systems in secondary markets. Explain the concept of custodial

services.

5) Give a theoretical model of central banking, bringing out the relationship between the monetary base and

monetary aggregates. What are instruments of monetary policy used by central banks?

6) Compare the impact of monetary policy under fixed exchange rates with those under flexible exchange rates.

7) Discuss the concept of leverage for a firm. Discuss the important financial and leverage ratios used. Explain the

Merton-Miller theorem.