IES General Economics Previous Year Paper (1994)
Attempt any two part of the following question in about 200 words each.
1. (a) Explain the concept and measure of elasticity-of price r expectations. Illustrate the use of this
elasticity in economic analysis and business practice. (30)
(b) Identify the determinants of demand-for labour in a production process. How is the demandfor
labour different from the demand-for output where labour is used as an input? (30)
(c) Present an overview of possible market strategies which can be adopted by an oligopoly firm.
(d) What is “Liquidity Trap”? Explain the “trap” from the standpoint of both demands for money
and supply of money considered separately also examine the policy implications of existence
of the “trap”. (30)
SECTION-II (Short answer type)
Attempt any two of the following questions. Be precise and technical in your presentation.
2. Satisfying the conditions of Pareto-optimality is necessary but not sufficient for maximizing social
welfare comment. (25)
3. In theory, the price costs relationship is simple and straightforward, but in practice, it is quite
complex--firms while maximizing profit may follow the method of either cost-plus- pricing or priceminus
costing bring out the implications of above observation. (25)
4. “Supply creates its own demand.” Compare and contrast the traditional versus the modern
interpretation of the statement quoted above 25
5. In what sense is PROFIT a….. (25)
(i) ‘Differential surplus’?
(ii) ‘Surplus value’?
(iii) ‘Dynamic surplus’?
Add a paragraph stating clearly the basic limitations of the above viewpoints taken together.
SECTION-III (Essay type)
Attempt any two of the following questions.
6. In the context of Keynesian economics, analyse the income-effect, interest-effect and real balance
effect- all three effects separately on (45)
(i) Consumption Function
(ii) Investment Function
(iii) Liquidity Function
7. Do you agree or not with the following observation? Give reasons. (45)
“Equi-marginalism is the basic microeconomic principle underlying the equilibrium position
of any economic agent; it makes no difference whether the agent is a multi-commodity. Consumer or
a multi-product firm or a multi-factor producer or a multi-market monopoly-seller or a multi-market
monopsonybuyer or the like.
8. “The distinction between micro-and macro-economics is getting narrower and narrower day by day.
Recent developments in economic theory suggest that there are micro foundations of macroeconomics
just as there are macro foundations of micro-economics.” Elucidate with adequate and
appropriate references to economic analyses. (45)
9. Write short but intelligent notes on: (45)
(i) Revealed Preference
(ii) Public Utility pricing
(iii) Adding-up problem
(iv) Social Accounting Identities
(v) Compensation Criteria