Economics with Insight

1. Which of the following will be true for both monopoly and monopolistic competition in the short run? (1) Price is greater than marginal revenue. (2) Price is equal to marginal revenue. (3) Price is equal to marginal cost. (4) Price is equal to average cost. 2. Consider the following matrix which describes the respective strategies and the corresponding pay-offs of firms A and B operating in a duopoly: Which of the following statement(s) is/are true for the above game? Select the correct answer from the codes given below: (a) Firm A has no dominant strategy. (b) Firm B has a dominant strategy. (c) The game has a Nash equilibrium. (d) Neither Firm A nor Firm B has a dominant strategy. Code: (1) (a), (c) (2) (b), (c) (3) (d) Only (4) (a), (b) and (c) 3. In the context of oligopoly, consider the following statements: (a) Cournot’s equilibrium is a Nash equilibrium. (b) Stackelberg equilibrium is a Nash equilibrium. Select the correct ...

Meaning:   Economic integration is a process whereby countries in a geographical region (location) cooperate with one another to reduce or eliminate barriers to the international flow of products, people, or capital. It can be of served forms with different degrees of integration. ACCORDING TO SALVATORE’S “Commercial policy of discriminatively reducing or eliminating trade barriers only among the nations joining together” Note: Therefore it refers to a decision or process whereby two or more countries combine into  a larger economic region by removing discontinuities and discriminations existing along national frontiers, and by establishing certain elements of cooperation between them. ON THE BASICS OF COOPERATION WE HAVE THE FOLLOWING TYPES OF ECONOMIC INTEGRATIONS. 1. P referential trading system/Preferential trade arrangements (PTA). 2. Free trade area (FTA). 3. Customs union (CU). 4. Common market. 5. Economic Union (EU). 1. PREFEREN...

On February 27, 2017 Government of India notified the  Specified Bank Notes (Cessation of Liabilities) Act 2017.The Act repealed the Specified Banknotes (Cessation of liabilities) Ordinance 2016 providing for cessation of liabilities for the Specified Banknotes (SBNs) and for matters connected therewith and incidental thereto, with effect from December 31, 2016. The SBNs cease to be the liabilities of the Reserve Bank under Section 34 of the RBI Act and cease to have the guarantee of the Central Government. A grace period has been provided during which the Specified Bank Notes can be deposited at five RBI Offices (Mumbai, New Delhi, Chennai, Kolkata, and Nagpur by Indian citizens who make a declaration that they were outside India between November 9 and December 30, 2016, subject to conditions or any class of persons for reasons that may be specified by notification by the Central Government. The Reserve Bank, if satisfied after making the necessary verifications, that the re...

Personality at a Glance Antoine Augustin Cournot Born:  28 August 1801 Died:  31 March 1877 Known for:  Cournot competition, Oligopoly                                Antoine Augustin  Cournot  was a French  philosopher, mathematician, and economist  who contributed to the development of economic theory.   The oldest determinate solution to the duopoly problem is by the French economist Antoine Augustin Cournot  in  1838  who took the case of two mineral water springs situated side by side and owned by two firms A and B.   Assumptions: This model is based on certain assumptions which are as follows - Interdependence-There are two independent sellers. In other words, the interdependence of the Duopolists is ignored. Homogeneous product-They produce and sell a homogeneous product, mineral water. Perishable good-The total outpu...

G oods and Service Tax (GST)  is a comprehensive tax  levy on the manufacture, sale, and consumption of goods and services  at a national level under which no distinction is made between goods and services for levying of the tax.   GST will be levied on all transactions such as the sale, transfer, purchase, barter, lease, or import of goods and/or services .  It will mostly  substitute all indirect taxes  levied on goods and services by the Central and State governments in India. When  GST (goods or services tax) rolls out on 1 July 2017, it will be the biggest tax reform since Independence. GST will subsume a large number of central and state taxes into a single tax, paving the way for a common national market. Some of the following taxes will be bound together by the GST: Central Excise Duty Commercial Tax Value Added Tax (VAT) Food Tax Central Sales Tax (CST) Octroi Entertainment Tax Entry Tax Purchase Tax Luxury Tax Advert...