List of top Questions asked in GATE XH-C1

Suppose the demand for a new pharmaceutical drug, on which the manufacturer has a patent monopoly, is given by \( Q = (100 - P)A^{0.5 \), where \( Q \) is output, \( P \) is the price and \( A \) is advertising expenditure. Production cost of the patented drug is given by \( C(Q) = 60Q \). At the firm’s optimal choices, the ratio of advertising expenditure to sales revenue for the pharmaceutical product will be 1: _________ (in integer).}

If a country has flexible exchange rate regime with perfect capital mobility, then according to the Mundell-Fleming Model, an expansionary fiscal policy will lead to

The basic tenets of ‘Monetarism’ are

Consider the following demand–supply model, where
Demand function: \( P = Q^2 - 12Q + 35 \)
Supply function: \( 4P - 3Q = 0 \)
The stable market equilibrium price-quantity combination will be

Trisha’s consumption preference on biryani \( (x) \) and pudding \( (y) \) is given by the utility function \( U(x, y) = x + 4y \). The price per unit of biryani is ₹2 and the price per unit of pudding is ₹3. Trisha’s total income is ₹120. However, she faces an extra quantity constraint as she is not allowed to consume biryani more than 60 units and pudding more than 30 units. The optimum quantity of biryani and pudding consumed by Trisha is

Consider a Cournot type \( n \)-firm natural spring oligopoly where the market demand for natural spring water is given by \( P(Q) = a - Q, a>0 \). The \( n \) firms are symmetric. Each firm incurs a bottling cost of \( C_i = c q_i, c>0 \) and \( a>c \). The equilibrium market price will be:

Goods and Services Tax (GST) is

A Government Security (G-Sec)

For an open economy, the ‘twin deficits’ can be expressed by: \[ \text{[where } S = \text{Savings; } I = \text{Gross Private Investment; } G = \text{Government Expenditures; } TR = \text{Transfer Payments; } TX = \text{Taxes; } X = \text{Exports; } M = \text{Imports and NFIA = Net Factor Income from Abroad]} \]

If expectations about inflation are formed as per the rational expectations hypothesis, then the short-run Phillips curve will be

As economic development proceeds, income inequality tends to follow a(n) ________curve.

India has the highest amount of foreign debt in the form of

If \( S^2 = \frac{1}{n-1} \sum_{i=1}^{n} (x_i - \overline{x})^2 \) is an unbiased and consistent estimator of the population variance, then one can conclude that \( S = \sqrt{\frac{1}{n-1} \sum_{i=1}^{n} (x_i - \overline{x})^2} \) is an_________ estimator of the population standard deviation.

There are many reasons why a poor country may fail to catch up with a rich neighbour. Which of the following is NOT one of these reasons?

In a two country model, an increase in foreign country’s national income generally leads to:

To determine the relationship between y and x1, Rohit estimated two different OLS models. In the first model, Rohit regressed y on x1 and x2 as given below: \[ y = \beta_0 + \beta_1 x_1 + \beta_2 x_2 + u \quad (1) \] In the second model, Rohit regressed y only on x1 as given below: \[ y = \delta_0 + \delta_1 x_1 + \nu \quad (2) \] The estimated coefficients of x1 in the above two models are exactly the same. From this observation we can state conclusively that \begin{itemize} \item (i) \( \text{Cov}(x_1, y) = 0 \) \item (ii) \( \hat{\beta_2} = 0 \) \item (iii) \( \text{Cov}(x_2, x_1) = 0 \) \end{itemize} where \( \hat{\beta_2} \) is the estimated coefficient of x2 in the equation (1).

XYZ Co. Ltd. is a costless monopoly from suburban Mumbai producing and selling exotic mushrooms. The demand for mushrooms is given by \[ Q = 700 - 100P. \text{ Do you agree that XYZ will have a maximum possible total revenue of ₹1500?} \]

In a demand function estimation of a good X, a researcher collected data on various households’ consumption of good X (\( Q_x \)) for various price levels. The researcher also collected data on household income (\( M \)) and household size (\( S \)). The estimated regression result is \[ \log Q_x = -0.345(0.111) - 1.543(2.345) \log P_x + 1.123(0.012) \log M + 0.234(0.123) \log S, \] where \( P_x \) is price per unit of X. The values in the parentheses are the standard errors of the estimated coefficients. From the estimation, one can conclude that

Consider a duopoly market in which the market demand function is as follows: \( P = 40 - Q \). For the two firms producing with identical marginal costs of 10, the Bertrand-Nash equilibrium price will be:

What would be the consequences for the OLS estimator if heteroscedasticity is present in a regression model but ignored? Assume that all the other classical assumptions are valid.

Walras’ Law implies that if there are \( N \) markets in the economy, then one only needs to find equilibrium prices in

The truth is that, despite the recent success of car-makers P and Q, India’s automobile industry is in a state not that different from the bad old days of the license-permit quota raj when two carmakers dominated a captive domestic market with substandard vehicles and with very little, if any, research and development, and low to negligible productivity growth.
High tariff barriers have certainly induced foreign automobile makers to enter the Indian market by setting up local operations, but this so-called “tariff jumping” foreign investment has produced an industry that is inefficient, operating generally at a low scale, and whose products are not globally competitive either in terms of cost or of innovation.
It is noteworthy that the automobile parts industry, which has faced low tariffs (as low as 12.5%) and has been largely deregulated, has been characterised by higher productivity and much better export performance than the completely-built units’ sector in the years since liberalisation.
(Adapted from an Op-Ed in {The Mint})
Which of the following statements can be inferred from the above?

A firm finds that for the product that it produces, its (own) price elasticity of demand is 4. Currently, the firm is selling 2000 units per month at ₹ 5 per unit. If it wishes to increase its sales by 10%, it must

"Inflation increases the average level of prices". Which of the following is(are) necessarily implied by this statement:
(i) The prices of commodities exceed income
(ii) Money supply grows at a higher rate than the real GDP

For the production function \( Q = F(K, L) = \sqrt{KL} \) with \( P_K = 4 \) and \( P_L = 2 \), find the values of \( K \) and \( L \) that will minimize the cost of producing 2 units of output.