ISI Sample Paper 2013 (PEB Economics)- Question 2,4,6 and 10.
I tried solving them but I couldn't wrap my head around them. I'll post the questions here:
10. Consider an otherwise identical Solow model of economic growth where
the entire income is consumed.
(a) Analyse how wage and rental rate on capital would change over
(b) Can the economy attain steady state equilibrium?
2.2. Consider a city that has a number of fast food stalls selling Masala
Dosa (MD). All vendors have a marginal cost of Rs. 15/- per MD, and
can sell at most 100 MD a day.
(a) If the price of an MD is Rs. 20/-, how much does each vendor
want to sell?
(b) If demand for MD be d(p) = 4400 − 120p, where p denotes price
per MD, and each vendor sells exactly 100 units of MD, then how
many vendors selling MD are there in the market?
(c) Suppose that the city authorities decide to restrict the number of
vendors to 20. What would be the market price of MD in that
(d) If the city authorities decide to issue permits to the vendors keeping the number unchanged at 20, what is the maximum that a
vendor will be willing to pay for obtaining such a permit?
4. A monopolist has contracted with the government to sell as much of
its output as it likes to the government at Rs. 100/- per unit. Its sales
to the government are positive, and it also sells its output to buyers
at Rs. 150/- per unit. What is the price elasticity of demand for the
monopolists services in the private market?
6. Suppose that due to technological progress labour requirement per unit
of output is halved in a Simple Keynesian model where output is proportional to the level of employment. What happens to the equilibrium
level of output and the equilibrium level of employment in this case?
Consider a modiﬁed Keynesian model where consumption expenditure
is proportional to labour income and wage-rate is given. Does technological progress produce a diﬀerent eﬀect on the equilibrium level ofoutput in this case?