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# Most Important Questions of Microeconomics for MA./M.Sc. Economics

Most important questions for Microeconomic Theory (Paper-1) for MA./M.Sc. Economics Part-I from the paper point of view are given below.

Theory of Consumer Behaviour and Demand Analysis

• Define and explain the concept of Marginal Rate of Substitution (MRS) diagrammatically and mathematically.
• Prove with arguments that Ordinal Approach is considered better over the Utility Approach.
• Explain consumer equilibrium geometrically and mathematically in the light of ordinal approach.
• Slutsky Theorem
• Prove that Price effect = Income effect + Substation effect in case of Giffen commodity. Hicksian and Slutsky approaches
• Compare Hicksian and Slutsky approaches of consumer behaviour with the help of diagrams.
• Prove that Price effect = Income effect + Substation effect in case of Inferior commodity.

Market Demand & Elasticity

• Explain Indirect Utility Function
• Derive Hicksian and Slutsky demand curve for consumer with the help of indifferent curves in double story diagram.
• Explain Revealed Preference theory
• Derive Slutsky demand curve of consumer in case of Giffen commodity.
• Cross Elasticity of demand
• Income Elasticity of demand

Production Functions

• Law of Variable Proportion
• Define and explain the concept of Marginal rate of Technical substitution (MRTSL,K) mathematically.
• How a firm can minimize its cost of production by using two inputs for producing a particular level of output explain with the help of diagrams and mathematics.
• How a firm succeeds in maximization of output when cost of production is given with the help of diagrams and mathematics.
• Explain the Cobb Douglas production function with reference to:
1. Marginal Product of Labour
2. Marginal Product of Capital
3. Factor Intensity
4. Marginal Rate of Technical Substation
5. Elasticity of factor substitution
• Law of Increasing return to scale with Iso quant and schedule
• Law of Decreasing return to scale
• Explain the three Laws of Return to Scale with the help of schedule and diagram.
• Expansion Path
• Explain briefly different types of isoquants.

Cost of Production

• Explain main features of Modern Cost theory with the help of diagrams.
• Compare and contrast Traditional Theory of Cost with Modern Theory of Cost. Explain with the help of diagrams.
• How we can derive Long run marginal+ Average cost curve with the help of short run cost curve.

Perfect competition

• How equilibrium of the firm taken place under perfect competition in short and long period.
• Make a comparison of monopoly and perfect competition.
• Make a comparison of perfect competition and pure competition.
• Derive Supply Curve of a Competitive firm and industry in short period.

Monopoly

• Multi-plant Monopolist Firm
• Bilateral Monopoly
• Explain the Second-Degree Price Discrimination policy of monopolist firm with the help of diagram.
• Prove mathematically that MR = P [1-1/e]
• Dumping
• Long run equilibrium of firm under monopoly

Oligopoly

• Using Kinked demand curve Hypothesis explain price stability in a oligopolist firm.
• Explain Cournot model of Non-Collusive oligopoly with the help of reaction curves.

Game Theory

• Game Theory
• Explain the concept of Dominant Strategy in respect of Game theory by using Pay-off matrix
• Nash Equilibrium

Pricing of Factors of Production

• Derived Market demand curve for labour under perfect competition, when Firm is using several variable inputs in the process of production.
• Derived Market demand curve for labour under perfect competition, when Firm is using single variable input in the process of production graphically and mathematically.
• Derivation of Backward bending and Negatively slope supply curve of labour using indifference curve approach.

General Equilibrium

• Explain the General Equilibrium of Consumption using Edgeworth Bowley diagrams and also derive Utility Possibility Curve.
• Explain the concept of Partial and General Equilibrium. Also discuss 2x2x2 model of general equilibrium with the help of diagrams.

Welfare Economics

• Explain three Marginal conditions of Pareto optimality with refence to perfect competition with the help of diagram.
• Bergson Criteria of social welfare