PUNJAB PUBLIC SERVICE COMMISSION
COMBINED COMPETITIVE EXAMINATION
FOR RECRUITMENT TO THE POSTS OF PROVINCIAL MANAGEMENT SERVICE – 2020
SUBJECT: ECONOMICS (PAPER – I)
TIME ALLOWED: THREE HOURS MAXIMUM MARKS: 100
NOTE: I. All the parts (if any) of each Question must be attempted at one place instead of at different places
II. Write Q. No. in the Answer Book in accordance with Q. No. in the Q. Paper.
III. No Page/Space be left blank between the answers. All the blank pages of Answer Book must be crossed.
IV. Extra attempt of any question or any part of the question will not be considered.
Attempt FIVE Questions in all. Attempt in Urdu or English.
Q. No. 1 (a) Explain the market equlibruim with the help of diagram. How changes in income affect the market price and quantity.
(b) how can foods affect the supply of agricultural products and what will be resultant effect on market equilibrium. Explain with the help of diagram. (10 + 6 = 16)
Q. No. 2 (a) Differentiate between cardinal and ordinal utility. Which of the two approaches is better in analyzing the consumer behavior?
(b) Explain the slope of difference curves (IC) is indifference curve always convex? if no, what possible shapes IC can take? (6 + 10 = 16)
Q. No. 3 (a) Derive and explain the optimal of a consumer with the help of indifference curve and budget constraint.
(b) How price effect can be decomposed into substution effect and income effect for normal and infence goods. Analyze with the help of diagrams. (6 + 10 = 16)
Q. No. 4 (a) Explain the concept of production function. How short-run production function can be differentiate from long-run production function?
(b) What is the difference between average product and marginal product of labor? Does behavior of average and marginal product of average and marginal product curves show different stages of production? Discuss. (6 + 10 = 16)
Q. No. 5 (a) Explain the short-run and long-run profit maximization conditions of a firm under perfect competition.
(b) What are possible shapes of industry’s long-run supply curve and what conditions determine these shapes. (6 + 10 = 16)
Q. No. 6 What is monopoly? What determines monopoly power? Derive the shapes of demand curve under monopoly. what are social costs of monopoly in comparison to perfect competition? (16)
Q. No. 7 (a) Explain form’s demand and supply curve for an input under perfect competition and monopsony with the help of relevant diagrams.
(b) How equilibrium is determined in each case?
Part – II
(Attempt any two questions)
Q. No. 8 (a) Explain the necessary and sufficient conditions for maximization and minimization of a function. 6
(b) Given the total cost function TC = Q3-5Q2+12Q+75 and the demand function Q=100-P.
Formulate the total profit function (2)
Find the profit maximizing level of output by applying the necessary and sufficient condition for maximization. (8)
What is the maximum profit?(2) (6 + 12 = 18)
Q. No. 9 (a) What are different types of equations? How can equations be differentiated from identities?
(b) Given the following demand and supply functions
P= 1O-(2/3)QP= 1+(1/3)Q
Calculate equilibrium price and quantity. What is elasticity of demand and supply at equilibrium? If government imposes a unit tax of Rs. 3, what will be the effect on equilibrium price and quantity? (6+12=18)
Q. No. 10 (a) Differentiate between slope and elasticity with the help of example.
(b) Given: Y=C + Io +G2, C= 100 + 0.8Y4, Ig = 30, G0 = 50, T = 15 + 0.25Y
Find the equilibrium level of National Income and Consumption.
(c) Optimize the objective function Z=8x2y2 subject to 4x + 2y = 12 using the Lagrange Multiplier. Use bordered Hessian determinant for the 2nd order condition. (4 + 6 + 8 = 18)