Section A
Q1. Answer all the following seven parts:
(a) Define MRS (Marginal Rate of Substitution). Calculate MRS for a utility function U = q1α q2β.
(b) Specify the Cobb-Douglas production function taking two inputs in producing one output. Interpret the parameters used in this function.
(c) Comment on the role of conjectural variations in the determination of oligopoly equilibrium.
(d) "Rent is not the income of a particular factor of production but merely an aspect of income of any factor of production." Discuss.
(e) State and explain the Coase theorem.
(f) Write down the economic meaning of a first order derivative of a short-run production function. Interpret the situation where one second order derivative of that function is zero.
(g) Explain why adjusted R2 is important for testing the goodness of fit of a regression model.