MEC

MASTER OF ARTS
(ECONOMICS)

ASSIGNMENTS 2019-20
First Year Courses
(For July 2019 and January 2020 Sessions)

School of Social Sciences

Indira Gandhi National Open University
Maidan Garhi, New Delhi-110 068
 Master of Arts (Economics)
(TMA)

(2019-20)

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. In this booklet we have included the
assignments for all the courses pertaining to the second year. In each course there is a
Tutor Marked Assignment (TMA). You have to do the assignment for those courses for
which you have registered. Do remember that 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 2019 session, you need to submit the assignments by March 31, 2020, and for
January 2020 session by September 30, 2020 for being eligible to 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.

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 MEC-101/001: MICROECONOMIC ANALYSIS
Assignment (TMA)
Course Code: MEC-101
Assignment Code: MEC-101/AST/2019-20
Maximum Marks: 100

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

1. (a) What are the assumptions on which the First fundamental theorem of welfare economics
rests?

(b) Consider a pure-exchange economy of two individuals (A and B) and two goods (X and Y).
Individual A is endowed with 1 unit of good X and none of good Y, while individual B with 1
unit of good Y and none of good X. Assuming utility function of individual A and B to be

UA = (XA)α(YA)1− α and UB = (XB)β(YB)1− β

where Xi and Yi for i = {A, B} represent individual i’s consumption of good X and Y,
respectively. Determine the Walrasian equilibrium price ratio.

2. (a) Elucidate price and output determination under any two non-collusive models of
Oligopoly.

(b) Consider a market structure comprising two identical firms (A and B), each with the cost
function given by

Ci = 30Qi , where Qi for i = {A, B} is output produced by each firm.

Market demand is given by

P = 210 − 1.5Q, where Q = QA + QB

(i) Find Cournot equilibrium.

(ii) What will be the outcome if the firms decide to collude? Compare it with the results
under the Cournot equilibrium.

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 SECTION B

3. What is meant by a Subgame Perfect Nash equilibrium? What will be the Subgame Perfect
Nash equilibria for the following game?

Player 1
B G

2, 2 Player 1
S T

Player 2 Player 2
S S T
T
1, 3 0, 0 0, 0 3, 1

4. (a) A CES production function approaches a Cobb-Douglas production function as a special

case. Comment.
(b) Given the production function Q = F(P, R), where Q denotes output produced using
factors P and R. Assume v and s to be price of factor P and R, respectively. Using the given
information, represent the expression for the Shephard’s Lemma.

5. (a) What is meant by the Dual problem in context of the utility and expenditure optimisation
exercise?
(b) Derive the Hicksian Demand functions for good X and Y given the following utility
function:
U(X, Y) = √𝑋 + 2√𝑌

6. What is a von Neumann-Morgenstern expected utility function? An individual’s von

Neumann-Morgenstern (vNM) utility function is given by
U(M) = √𝑀
where M denotes money. Assume this individual has Rs 4 with him. A lottery ticket that will be
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worth Rs 12 with probability 2 and zero otherwise is available in the market. What is the
maximum price he would pay to obtain it?

7. Write short notes on the following:

(i) Significance of Value judgments in Welfare Economics.
(ii) A. C. Pigou’s contribution to Welfare Economics.

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 MEC-002: MACROECONOMIC ANALYSIS
Assignment (TMA)

Course Code: MEC-002

Assignment Code: MEC-002/AST/2019-20
Maximum Marks: 100

Note: Answer all the questions. While questions in Section A carry 20 marks each, those in
Section B carry 12 marks each.

Section A

1. Bring out the salient features of the Solow Model. In what respects the golden rule is
different from the steady state growth rate? (Your answer should include the
assumptions, important equations, appropriate diagrams and its interpretation).

2. Consider the overlapping generations model where each member lives for two time
periods ‘t’ and (t+1). Assume that individuals work in time period ‘t’ and earn wage
income, while they do not work in time period (t+1) and survive on interest income.
Explain the impact of an increase in interest rate on consumption during time period ‘t’.

Section B

3. Interpret the IS and the LM curves. What policy implications do they have?

3. Bring out the reasons for rigidity in price and wage rate. What implications do they have?

4. Explain in brief, the decentralized household problem in the Ramsey model.

5. Critically evaluate the endogenous growth theory.

6. What is meant by business cycle? How does the political business cycle model explain it?

7. Write short notes on the following.

a) Ineffectiveness of fiscal policy under flexible exchange rate

b) Lucas Critique

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 MEC-003/MEC- 103: QUANTITATIVE METHODS
Assignment (TMA)

Course Code: MEC-003/ MEC-103

Asst. Code: MEC-003/103/TMA/2019-20
Total Marks: 100

Answer all the questions. Each question in Section A carried 20 marks while that in Section
B carries 12 marks.

Section A

1. What is differential equation? How do you apply differential equations in Economics?

Discuss the role of initial condition in solving a differential equation. If your objective is to
examine the stability of equilibrium, show with the help of an example, how a second-order
differential equation can address your concern.

2. (a) What is the normal probability distribution function? State its properties.

(b) The concentration 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 (ppm) 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 area under the
standard normal curve for the value of Z=1.05 is 0.3531)

Section B

3. Explain the relevant considerations of making a choice between one-tailed and two-tailed
tests. How would you determine the level of significance in the above tests?

4. How would you determine linear dependence of a matrix? Define the rank of a matrix in
terms of its linear independence.

5. A monopolist’s demand curve is given by P = 100 – 2q.

(a) Find the marginal revenue function.
(b) At what price is marginal revenue zero?
(c) What is the relationship between the slopes of the average revenue and marginal
revenue curves?

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6. Solve the following linear programming problem in x1 and x2.
Min C = 0.6x1 + x2
Sub to 10 x1 + 4 x2 ≥ 20
5 x1 + 5 x2 ≥ 20
2 x1 + 6 x2 ≥ 12
x1 , and x2 ≥ 0.
7. Write short notes on the following:
(i) Eigen vectors and Eigen values
(ii) Taylor’s expansion
(iii) Mixed strategy equilibrium
(iv) Kuhn-Tucker condition

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 MEC-004: ECONOMICS OF GROWTH AND DEVELOPMENT
Assignment (TMA)

Course Code: MEC-004

Asst. Code: MEC-004 / AST-1/2019-2020
Total Marks: 100

Answer all the questions. Each question in Section A carried 20 marks while that in Section
B carries 12 marks.

Section A

1) Discuss the main sources of economic growth. Discuss the main adverse repercussions on the
economy that the process of economic growth can have.

2) What do you understand by technical progress? What is the relationship between technical
progress and growth of total factor productivity? Discuss the various conceptions of neutral
technical progress as put forward by Hicks, Harrod and Solow.

Section B

3) Describe the Mankiw-Romer-Weil extension to the neoclassical model to include human

capital. Explain why diminishing returns to capital do not take place in the AK model.

4) What are the main propositions of the Real Business Cycle model? Describe the basic
structure of a prototype Real Business Cycle model.

5) Compare and contrast Adam Smith’s theory of development with that of Ricardo’s.

6) Discuss the Harris-Todaro model of migration. What has been the impact of this model?
What is its relevance for developing nations?

7) Explain the meaning of cost-benefit analysis. Describe briefly the usual steps taken in a
typical cost-benefit exercise.

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 MEC-005/105: INDIAN ECONOMIC POLICY
Assignment (TMA)
Course Code: MEC-005/105
Assignment Code: MEC-105/AST/2019-20
Maximum Marks: 100

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
1. What do you understand by the term ‘quality of employment’? State the various dimensions
of deterioration in the quality of employment in India. Also examine the implications of
slow-down in women’s work force participation.
2. What is the distinction between Human Resource Development and Human Development?
Have the economic reforms initiated since 1991 been successful in improving human
development and standard of living? Give reasons. Which policy measures would you like to
suggest in this regard?

Section B
3. Do you think that major institutional obstacles come in the way of improving the conditions
of Indian agriculture? What kind of technology and institutional alternatives would you like
to suggest in this regard?
4. State the various targets of monetary policy. State the various criterions used to define a good
target variable. How monetary policy can be useful to achieve sustainable high economic
growth.
5. Explain the important issues which are crucial and hence need to be addressed in India’s
trade policy.
6. Critically examine the various steps taken by the Government of India towards removal of
regional disparities. Which suggestions would you like to make to overcome the problem of
regional imbalances?
7. How far India is from the welfare state it wished to become? To what extent the
implementation of development policies adopted so far are responsible for this state of
affairs?