MASTER OFARTS (ECONoMrcs) ASSIGNMENTS 2OI3.I4 First Year Courses (For July 2013 and Janua ry 2014 Sessions) I#6mww $TllS pH$prs'$ $$s{ffSH$*r.Y School of Social Sciences Indira Gandhi National Open University Maidan Garhi, New Delhi-110 068 Master of Arts (Economics) Assignments (2013-14) Dear Student, As explained in the programme guide for MEC, assignments carry 30 per cent weightage in a course and it is mandatory that you have to secure at least 40 per cent marks in assignments to complete a course successfully. Note that you have to submit the assignments before appearing in Term End Examination of a course. Before attempting the assignments please read the instructions provided in the programme guide sent to you separately. There are five compulsory courses in the first year. In each course there is a Tutor Marked Assignment (TMA). You have to prepare and submit the assignments separately for each course. Make sure that you submit the assignments well in time for those courses in which you plan to appear in the Term End Examination. Submission For July 2013 session, you need to submit the assignments by March 31, 2014, and for January 2014 session by September 30, 2014 for being eligible tir appear in the term-end examination. Assignments should be submitted to the Coordinator of your Study Centre. Obtain a receipt from the Study Centre towards submission. MEC-OO 1 : MICROECONOMIC ANALYSIS Assignment Course Code: MEC-OO1 Assignment Code: MEC-OO1/TMA/ ZOt3_14 Marks: IOO 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 appty. Section A 1. What do you mean by a social welfare function? If you assume that such a function exists, what properties of social optima would be considered by you? Discuss such properties. 2. Suppose that there is a pure exchange economy with 2 consumers and 2 goods. The endowments are wr w2: (4,3). Consumers are otherwise identical and thly have :\2,4), 11 utility function U(x,y):x5ys. a) Construct an Edgeworth Box for this economy. b) Give a definition of Pareto Optimal Allocation in this economy. Find all pareto optimal allocations and graph them in the Edgeworth Box. c) 1 J. How would you define a competitive equilibrium for this economy? Solve for the equilibrium and check if the competitive equilibrium is pareto Optimal. Two players first simultaneously declare Yes or No. If any of the players declares No, then each player gets 80. If both players declare yes, then they play the following game: I't Player Find all the subgame-perfect equilibria of the entire game involving pure strategies only. What is the theory of Second Best? Prove the theorem with the help of a diagram. 5. Let the optimal incentive plan be given as s (x) = wx* k where s(x)= incentive scheme x= output, w:wage and k=constant worker can produce x units of output at a cost of C (fl=tand he can achieve a utility level of u:0 working elsewhere. What is the optimal wage-labour irrcentive scheme s(x)1 for this worker? A Section B 6. Suppose Kareena's utility function ir ":(#)t . Her initial income when healthy is 36,000. However, ill and the income is likelv to reduce there is a 50o/o chance that she will face financial loss on being taken by 20,000. (a) Find the expected value of her income. 7. (b) what expected utility she will have given the possible state of her health? (c) what is the risk premium she will be willing to pay to cover the risk of sickness? Consider the following game given in extensive form: (? (a) Use backwards induction to compute an equilibrium of the game. (b) Write this game in normal form. M EC-O O2z MACROECONOMTC ANALYSTS Assignment Course Code: MEC-0O2 Assignment Code: MEC-OO2/ AST / ZO1-g-14 Maximum Marks: 1OO Note: Answer all the questions. While questions in Section A cariy 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. Under what conditions does an economy realize steady state? In the neoclassical growth model explain how Golden Rule is different from steady state. 2' Explain the basis on which Lucas criticizes econometric modeling. What is the role of microfoundations in Lucas critique? Section B 3. 4' Classify various theories of unemployment based on the possible responses of the firm. What is an IS curve? Explain how equilibrium in the real market can be presented through IS curve. 5. Critically evaluate 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) Menu cost b) Non-accelerating Inflation Rate of Unemployment G\fAIRU) MEC-OO3: QUANTITATIVE METHODS Assignment Course Code: MEC-OO3 Asst. Code: MEC-OO3 / AST-LIZO13-14 Total Marks: lOO 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 u: consider the utility function f (\......xn) where xi,i:r,2,......., n are the quantities of the n goods consumed. Let the price of good x1 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 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 parts per million. A semiconductor is acceptable only if its concentration of impurities is below 150 parts per million. What is the proportion of the semiconductors that are acceptable for use? (The irea under the standard normal curve for the value of Z:1.5 is 0.668). concentration Section B a J. A monopolist firm's demand curve is given by P:100-2q. (a) Find its marginal revenue function. (b) What is the relationship between the slopes of the average and marginal revenue curves? (c) At what price is the marginal revenue zero? 4. (a) Explain the Hawkins- Simon condition for the viability of an input-output table. (b) Given below is the input matrix (A) and the final demand (D) vector. a:f 0.341 t-18001 o,:s o.1o o.rzlD = | zoo Lo.rg o.3B oJ IgooJ l-0.05 0.25 I wlte down the specific input-output matrix for this model. check whether the given data satisfy the Hawkins-Simon-condition. 5. Find the extreme value(s) of z: 2x12 -x1x2 + 4x22 * x3 * xsz +2.Using the Hessian matrix check whether the extreme value(s) is/are maximum or ririni-r*. 6. Suppose x has the following probability distribution. Find out mean and variance of the distribution. 7 ' Explain the method of maximum likelihood lbr estimating the value of a population parameter. MEC-OO ECONOMICS OF GROWTH AND = DEVELOPMENT Assignment Course Code: MEC-O04 Asst. Code: MEC-OO4/ AST/2OL}-L4 Maximum Marks: 1OO 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 ito be answered in about 300 words each). In the case of numerical questions word limits do not apply. Section A 1. Explain the main features of Harrod - Domar Growth model. How explain the occurrence oftrade cycles? 2. does the Harrod Domar model What are the basic elements or ingredients of a dynamic optimization problem? Describe the basic structure of the optimization in the Ramsay growth model. Section B a J. Define any three of the following (i) Real business cycle theory (ii) Inter-temporal substitution of labour (iii) Disguised Unemployment (iv) Common Property Resources (v) Human Capital Formation 4. Explain the Physical Quality of Life Index (PQLI). Discuss the experience of high GNp countries and low GNP countries with regard to peLI. 5. Critically examine Ranis and Fei model of economic growth. 6. Provide a critique of Schumpeter's theory of development. In what ways can Schumpeter,s theory be considered a theory of evolutionary growth'/ 7. Evaluate the circumstances countries. in which the WTO was set up and its significance for developing MEC-OOS: INDIAN ECONOMIC pOLrCy Assignment Course Code: MEC-OOS Assignment Code: MEC-OOS/AST/2013-14 Maximum Marks: 1OO Nofe: Answer all the questions. While questions in Section A carry 20 marks each (to be answered in about 700 words each) those in Section B carry 12 marks each (to be answered in about 500 words each). Section A t. How are the inequalities of income measured in an economy? Examine the policy implications of prevailing levels of inequality in India. 2. Distinguish between Foreign Direct Investment (FDI) and Foreign Portfolio Investment. Critically evaluate the policy adopted by the Government of India towards foreign capital. Section B How far have the policy measures taken by the Government been effective in putting a halt to shrinking land base and declining access to land? State the linkages between infrastructure and economic development. Evaluate the inter-state disparities in economic infrastructure in India. Which are the supervisory functions of SEBI? How far have these functions affected the capttal market in India? "The question of centre state relations has become the focal of discussion for a number of reasons,, Comment. 7. Explain with illustrations the roots, processes and interconnections of black economy in India. 9 MEC-1O5: INDIAN ECONOMTC pOLrCy Assignment Course Code: MEC-105 Assignment Code: MEC-OOS/ AS'T / 2Otg-L4 Maximum Marks: lOO Note: Answer all the questions. While questions in Section A carry 20 marks each (to be answered in about 700 words each) those in Section B carry 12 marks each (to be answered in about 500 words each). Section A l. Identify the key challenges to India's economic development. To what extent the second generation refotms will tackle the current challenges of India's development? 2. Examine the sectoral disparities in India. Critically evaluate the various steps taken by the Government of India towards regional disparities. Section B What is meant by sustainable development? Discuss the set of policies needed to control the environmental damage in India. 4 Examine the prospects and challenges faced by the service sector in India. 5 Discuss the role and scope of a well developed capital market in the growth process of an economy. State the major features of trade 7. policy after l99r economic reforms. What do you mean by food security? Evaluate the various measures adopted by Government of India towards food security. l0