General Equilibrium and Welfare - Microeconomics - Economics Previous Year Questions

Consider the following demand–supply model, where
Demand function: \(P = Q^2 - 12Q + 35\)
Supply function: \(4P - 3Q = 0\)
The stable market equilibrium price-quantity combination will be

Walras’ Law implies that if there are \( N \) markets in the economy, then one only needs to find equilibrium prices in

In a competitive market for dry-cleaning, the inverse market demand function is given by
\(P = 100 - Q\)
where \(P\) denotes price and \(Q\) denotes quantity. The (private) marginal cost (MC) of production for all the dry-cleaning firms together is given by
\(MC = 20 + 2Q\)
The market pollution generated by the dry-cleaning processes of all firms creates external damages given by the marginal external cost (MEC):
\(MEC = 2Q\)
The socially efficient output of dry-cleaning is ______ (in integer).

Consider a two good economy where \(a\) denotes consumption of apricots and \(b\) denotes consumption of bananas. Anu's utility function is \(U^{Anu}(a, b) = a + 2b\), and Binu's utility function is \(U^{Binu}(a, b) = \min\{a, 2b\}\). Anu initially has no apricots and 12 bananas. Binu initially has 12 apricots and no bananas. In the competitive equilibrium, which one of the following will be Anu's optimal consumption bundle?

A dual economy consisting of a manufacturing sector (\(M\)) and an agricultural sector (\(A\)) is depicted in the figure below. \(O_M O_A\) is the total labour available in the economy of which \(O_M LS_M\) is the labour supply in the manufacturing sector before any migration was allowed among the labourers. The vertical axis in the left (right) side measures the wage in the manufacturing, \(W_M\) (agricultural, \(W_A\)) sector. \(LD_M\) (\(LD_A\)) is the demand of labour in the manufacturing (agricultural) sector with respect to \(O_M\)(\(O_A\)) as the origin. If wages are flexible, and labour is allowed to migrate between these two sectors, then it will be TRUE that

Consider a two-person exchange economy where two goods, \(x\) and \(y\) are available in limited quantities of 50 and 100, respectively. The preferences of the two persons, Anil and Binod are given by the utility functions \[ U_{Anil}(x_{Anil}, y_{Anil}) = x_{Anil}^{0.4} y_{Anil}^{0.6} \] and \[ U_{Binod}(x_{Binod}, y_{Binod}) = x_{Binod}^{0.6} y_{Binod}^{0.4} \] If they decide to share good \(y\) equally among themselves, the amount of good \(x\) Anil receives is __________ (in integer)