MEC-101 EM 2025-26 SOLVED ASSIGNMENT

Description

MEC 101: MICRO ECONOMIC ANALYSIS

Tutor Marked Assignments

Course Code: MEC-101

Assignment Code: Asst /TMA /2025-26

Total Marks: 100

Note: Answer all the questions

SECTION A Answer the following questions in about 700 words each. The word limits do not apply in case of numerical questions. Each question carries 20 marks

1.a. Consider a pure-exchange economy of two individuals (A and B) and two goods (X and Y) Individual A is endowed with 5 units of good X and 3 units of good Y, while individual B with 3 and 4 units of goods X and Y respectively. Assuming utility functions of individuals A and B to be UA=XA YA² and UB=XB² YB where Xi and Yi for i= {A, B} represent individual i’s consumption of good X and Y respectively, what will be the set of Pareto optimal allocation in this economy?

b.Determine the conditions that need to be fulfilled by an allocation to be termed as Pareto efficient allocation.

2.Consider a Cobb-Douglas utility function U (X, Y) = X^1/2 Y^1/2 Where X and y are the two goods that a consumer consumes at per unit prices of Px and Py respectively. Assuming the income of the consumer to be ₹M, determine:

Marshallian demand function for goods X and Y.

Indirect utility function for such a consumer.

The maximum utility attained by the consumer where Px =₹ 5, Py = ₹ 5 and M= ₹ 5000.

Derive Roy’s identity.

PART II Answer the following questions in about 400 words each. Each question carries 12marks.

3.

4.a.) Distinguish between Strategic (or Normal Form) and Extensive Form Games.

b.) Solve the following game using iterated elimination of strictly dominated strategies.

5.a) Explain the expected utility theory

. b) Two players have the opportunity to participate in a gamble with two possible outcomes as:

6.a.) What is excess capacity and how is it related to the model of monopolistic competition?

b) Demand function and supply function are given as P=25-X² and P=2X+1 respectively, find out producer surplus and consumer surplus.

7.Write short notes on following:

a) Compensated Demand Curve

b) Homogeneous and Homothetic production functions

c) Arrow prat measure of risk averseness

d) Pooling and separating equilibrium