Introduction
Below are the complete solved answers for the IGNOU MEC-101: Micro Economic Analysis Tutor Marked Assignment (TMA) for the academic year 2024-25. Click on each question below to view its full answer in simple, student-friendly language.
Assignment Questions with Answer Links
- 1. a. The production function of a small factory that produces and sells toys is: Q = 5√(L.K). Suppose 9 labour hours and 9 machine hours are used every day, what is the maximum number of toys that can be produced in a day? Calculate the marginal product of labour when 9 labour hours are used each day together with 9 machine hours. Suppose the firm doubles both the amount of labour and machine hours used per day. Calculate the increase in output. Comment on the returns to scale in the operation.
👉 Click for Answer - 1. b. Define the term ‘Shepard’s lemma’. Assume that the production function of a producer is given by Q=5L0.5 K0.3, where Q,L and K denote output, labour and capital respectively. If labour cost ₹ 1 per unit and capital ₹2, find the least cost combination of inputs (L&K).
👉 Click for Answer - 2. Consider a Cobb-Douglas utility function U (X, Y) = Xα Y (1- α), 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:
a. Marshallian demand function for goods X and Y.
b. Indirect utility function for such a consumer.
c. The maximum utility attained by the consumer where α =1/2, Px =₹ 2, Py = ₹ 8 and M= ₹ 4000.
d. Derive Roy’s identity.
👉 Click for Answer - 3. a. What do you mean by market failure? What are its causes?
👉 Click for Answer - 3. b. What are the two principles of justice as mentioned by the philosopher Rawls?
👉 Click for Answer - 4. a. Define games of complete and incomplete information.
👉 Click for Answer - 4. b. From the following pay-off matrix, where the payoffs (the negative values) are the years of possible imprisonment for individuals A and B, determine:
(i) The optimal strategy for each individual.
(ii) Do individuals A and B face a prisoner’s dilemma?
👉 Click for Answer - 5. a. What are the conditions of Pareto optimality?
👉 Click for Answer - 5. b. Suppose an investor is concerned about a business choice in which there are three prospects. The probability and returns are given below:
Probability Returns
0.4 → 100
0.3 → 30
0.3 → -30
What is the expected value of the uncertain investment? What is the variance?
👉 Click for Answer - 6. a. Do you agree that by paying higher than the minimum wage, employers can retain skilled workers, increase productivity, or ensure loyalty? Comment on the statement in the light of efficiency wage model.
👉 Click for Answer - 6. b. There are two firms 1 and 2 in an industry, each producing output Q1 and Q2 respectively and facing the industry demand given by P=50-2Q, where P is the market price and Q represents the total industry output, that is Q= Q1 + Q2. Assume that the cost function is C = 10 + 2q. Solve for the Cournot equilibrium in such an industry.
👉 Click for Answer - 7. Write short notes on the following:
(a) vNM expected utility theory
(b) Slutsky’s theorem
(c) Arrow Pratt measure of risk averseness
(d) Bergson-Samuelson Social welfare function
👉 Click for Answer
Conclusion
Each answer is written in simple language, suitable for undergraduate economics students. These solutions help you complete your IGNOU MEC-101 TMA for the 2024-25 session with conceptual clarity and accuracy.