Syllabus T. Y. B. A. Paper : IV advanced economic theory with effect from academic year 2010-11 in idol

 
4.12 QUESTIONS 
 
1. Define monopoly and explain its features. 
2. Explain how monopolist determine price and output. 
3. Explain the role of time element in determining price. 
4. What do you understand by the term Economic Rent? 
5. Effects of workers unions are not necessarily advantageous to
its members 
– Explain. 
6. Explain how price and output is determine under bilateral 
monopoly. 
7. Rate of interest is determined by the demand for and supply of 
Loanable funds 
– Explain. 
8. Write notes on : 
i) Risk bearing and profit 
ii) Uncertainty bearing and profit 
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5 
MODULE 3
GENERAL EQUILIBRIUM AND SOCIAL 
WELFARE 
 
Unit structure 
 
5.0 Objectives 
5.1 Introduction 
5.2 General Equilibrium and its Existence
5.3 Partial versus General Equilibrium Analysis 
5.4 General Equilibrium of Exchange and Production 
5.4.1 General Equilibrium of Exchange 
5.4.2 General Equilibrium of Production 
5.5 Derivation of the Production-Possibilities Frontier 
5.6 Summary 
5.7 Questions
 
5.0 OBJECTIVES 
To know existence of general equilibrium
To study the meaning of partial and general equilibrium 
analysis and when each is appropriate
To know the meaning and condition for general equilibrium in 
exchange and production 
To derive of production-possibilities frontier
 
5.1 INTRODUCTION 
 
Until this point we have examined the behaviour of individual 
decision-making units (individuals as consumers of commodities 
and suppliers of inputs, and firms as employers of inputs and 
producers of commodities) and the working of individual markets for 
commodities and inputs under various market structures. Generally 
missing from our presentation has been an examination of how the 
various individual pieces fit together to form an integrated economic 
system. 
In this unit, we take up the topic of interdependence or 
relationship among the various decision-making units and markets 

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in the economy. This allows us to trace both the effect of a change 
in any part of the economic system on every other part of the 
system, and the repercussions from the latter on the former. We 
begin the unit with existence of general equilibrium, by 
distinguishing between partial equilibrium analysis and general 
equilibrium analysis and by examining the conditions under which 
each type of analysis is appropriate. Then, we discuss the 
conditions required for the economy to be in general equilibrium of 
exchange, 
production, 
and 
production 
and 
exchange 
simultaneously, and we examine their welfare implications.