For Recruitment to the Posts of Provincial Management Service (PMS)
SUBJECT: Economics (Paper-1)
Time Allowed: 3 Hours
Maximum Marks: 100
Attempt any six questions in all: Four from Section-A and Two from Section-B. Calculator is allowed (Not programmable).
SECTION – A
Q. No. 1 (a) Explain the market equilibrium with the help of a diagram. How do changes in income affect market price and quantity? (b) How can floods affect the supply of agricultural products and what will be the resultant effect on market equilibrium? Explain with the help of a diagram. (10 + 6 = 16 Marks)
Q. No. 2 (a) Differentiate between cardinal and ordinal utility. Which approach is better in analyzing consumer behavior? (b) Explain the slope of indifference curves (IC). Is indifference curve always convex? If not, what possible shapes can IC take? (6 + 10 = 16 Marks)
Q. No. 3 (a) Derive and explain consumer’s equilibrium with the help of indifference curve and budget constraint. (b) How can price effect be decomposed into substitution effect and income effect for normal and inferior goods? Analyze with diagrams. (16 Marks)
Q. No. 4 (a) Explain the concept of production function. How can short-run production function be differentiated from long-run production function? (b) What is the difference between average product and marginal product of labor? Do their behaviors show different stages of production? Discuss. (6 + 10 = 16 Marks)
Q. No. 5 (a) Explain short-run and long-run profit maximization conditions of a firm under perfect competition. (b) What are possible shapes of industry’s long-run supply curve and what conditions determine these shapes? (10 + 6 = 16 Marks)
Q. No. 6 What is monopoly? What determines monopoly power? Derive the shape of demand curve under monopoly. What are social costs of monopoly in comparison to perfect competition? (16 Marks)
Q. No. 7 (a) Explain firm’s demand and supply curve for an input under perfect competition and monopsony with the help of relevant diagrams. (b) How is equilibrium determined in each case? (16 Marks)
SECTION – B
(Attempt any TWO questions)
Q. No. 8 (a) Explain necessary and sufficient conditions for maximization and minimization of a function. (b) Given cost function: C = 8Q³ − 5Q² + 12Q + 75 Demand function: Q = 100 − P
• Formulate total profit function • Find profit maximizing level of output using necessary and sufficient conditions • Find maximum profit (6 + 12 = 18 Marks)
Q. No. 9 (a) What are different types of equations? How do equations differ from identities? (b) Given demand and supply functions: P = 10 − 0.5Q P = 1 + 0.5Q
• Calculate equilibrium price and quantity • Find elasticity of demand and supply at equilibrium • If government imposes unit tax of Rs. 3, determine new equilibrium price and quantity (6 + 12 = 18 Marks)
Q. No. 10 (a) Differentiate between slope and elasticity with example.
(b) Given: Y = C + I + G C = 100 + 0.8Y I = 30 G = 50 T = 15 + 0.25Y
Find equilibrium level of national income and consumption.
(c) Optimize: Z = 8x²y² subject to: 4x + 2y = 12 (using Lagrange multiplier and bordered Hessian for 2nd order condition) (4 + 6 + 8 = 18 Marks)
SUBJECT: Economics (Paper-II)
Time Allowed: 3 Hours
Maximum Marks: 100
SECTION – A (MACROECONOMICS)
NOTE: Attempt any FIVE questions in all, at least TWO from each Section. Attempt in Urdu or English.
Q. No. 1 Explain Quantity Theory of Money (QTM) and discuss Fisher equation and Cambridge equation. Analyze whether money is neutral in short run or long run and its policy implications. (20 Marks)
Q. No. 2 Derive IS-LM model (algebraically and graphically) and establish equilibrium of economy. Discuss full employment and effects of price changes on output and employment. (20 Marks)
Q. No. 3 Develop Aggregate Demand and Aggregate Supply model and explain equilibrium in short, intermediate and long run. Discuss Keynesian vs Classical framework. (20 Marks)
Q. No. 4 Write short notes on any TWO: i. Phillips Curve (short & long run) ii. Random Walk Model (Robert Hall) iii. Tax Multiplier and Simple Multiplier (20 Marks)
Q. No. 5 (a) Agriculture as backbone of Pakistan economy: discuss arguments and productivity improvement. (b) Foreign debt sustainability of Pakistan with empirical justification. (c) Current account and balance of payments adjustment mechanism. (d) Inflation and unemployment in Pakistan and role of monetary & fiscal policy. (20 Marks)
Q. No. 6
Analyze accumulation of foreign debt of Pakistan and discuss its sustainability . ( you must prove your point of view empiically and criteria for justifrcation (s) i.e. for sustainabrtw. (1O+1O=2O Mad<s)
Q. No. 7
Analyze current account and trade (foreign) account of Pakistan. How deficit or surplus of these accounts of Payments are adjusted so that Balance are equal to zero, (1O+1O=2O Marks)
Q. No. 8
Analyze “unemploymenf’and “Inflauon” situation in pakistan. Also evaluate the role of monetary and fiscal policies in this respect; to handle these issues. (1O+10=2O Marks)
