Description
BECC-108 : INTERMEDIATE MICROECONOMICS – II
Tutor Marked Assignments
Course Code: BECC-108
Assignment Code: Asst /TMA /2024-25
Total Marks: 100
Assignment One
Answer the following questions. Each question carries 20 marks 2 × 20 = 40
1. (a) Explain how the presence of externalities in the market does not lead to optimal production
of goods? Suggest at least three ways of internalizing the externalities.
(b) Consider a duopoly of firm 1 and 2 producing a homogenous product, the demand of which
is described by the following demand function: Q = (100 – P) where Q is total production of
both firms (i.e., Q = Q1 +Q2, Q1 and Q2 are the output produced by firm 1 and firm 2,
respectively). Let the marginal cost of production faced by both firms be Rs. 50, i.e. MC1=
MC2 = 50. Calculate the residual demand function for both the firms. Find their reaction
curves and the Cournot-Nash equilibrium quantity produced by each firm?
2. (a) What is Pareto Efficiency? Explain the statement that Pareto efficiency requires Efficiency in
exchange, production and output mix.
(b) Distinguish between the Sequential- move game and Simultaneous-move games.
(c) Explain Subgame perfect Nash Equilibrium. Find the same in the following game
Assignment Two
Answer the following questions. Each question carries 10 marks. 3 × 10 = 30
3. What are Public Goods? How is the optimal provision of public goods done in the society?
4. What is Deadweight loss for a monopolist? If a monopolist faces the demand curve given by
P(Q) = 20-2Q and the cost function as 2Q+ Q2
, calculate the deadweight loss that he might face.
5. What is a Contract curve? Explain how any perfectly competitive equilibrium allocation is Pareto
efficient.
Assignment Three
Answer the following questions. Each question carries 6 marks. 5 × 6 = 30
6. What are Iso-welfare curves? How do they help in determining the maximum point of social
welfare?
7. Differentiate between Bergson-Samuelson Social Welfare Function and Classical Utilitarian or
Benthamite Welfare Function
8. Natural Monopoly cannot have Marginal cost Pricing. Explain why?
9. Explain the concept of excess capacity under Monopolistic Competition.
10. Differentiate between any three:
(a) Long run equilibrium of Monopoly and Perfect competition
(b) Bertrand and Stackelberg model
(c) First Degree and third-degree price discrimination
(d) Asymmetric Information and Moral Hazar
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