Q1. The utility function of a rational consumer for two goods X and Y is U = XY. If M be the money income, Px and Py the respective prices of the goods then describe that the demand for X (or Y) inversely proportional to it’s’ price, other things remaining constant.
Q2. Sketch the indifference map of a consumer for the given commodities:
a) Pollution and Industrial Development.
b) Left shoe and Right shoe.
Q3. Describe the concept of Marginal Rate of Technical Substitution (MRTS) in the context of theory of production. Explain how can you describe the convexity of the iso-quants in terms of the properties of MRTS?
Q4. Illustrate that the output maximization under cost-constraint outcomes in the similar input combination as does cost - minimization with output constraint.
Q5. Write detail notes on:
a) Price-Consumption curve.
b) Price support and associated welfare change.
c) Law of variable proportions.
d) Point elasticity and Arc elasticity.