Subject Code: PWE1APaper: Welfare economics

Specific Instructions: Answer all the four questions. Marks allotted 100. Each Question carries equal marks. Word limit is 250-300 words

General Instructions: The Student should submit this assignment in the handwritten form (not in the typed format) The Student should submit this assignment within the time specified by the exam dept Each Question mentioned in this assignment should be answered within the word limit specified The student should only use the Rule sheet papers for answering the questions. The student should attach this assignment paper with the answered papers.

Failure to comply with the above Five instructions would lead to rejection of assignment.

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Question No1 A. What assumptions are required for the two fundamental theorems

of welfare economics to hold? Are these so strong that the theorems are devoid of practical relevance?

B. What are the implications of the fundamental theorems of welfare economics for the organization of an economy?

Question No2

“Pareto’s Principles states that there is an optimal solution that cannot be improved upon without disadvantaging at least one group”.Explain.Can you apply this principle in corporate decision making? Give an appropriate example from the point of view of a corporation.

Question No3

Explain the simultaneous general equilibrium of production and exchange. Will it be possible to attain such equilibrium? When the product market is characterized by monopoly and the factor market by monopoly. Question No4

What is ‘Compensation test principle ‘? Can this principle lead to a paradoxical conclusion ? How can you make this principle full proof? Why is the conclusion of this principle considered unethical?