PUNJAB PUBLIC SERVICE COMMISSION
Combined Competitive Examination (CCE) 2022
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
Attempt any FIVE questions in all. At least TWO from each section.
Attempt in Urdu or English.
Equations must be used to explain your point of view. Calculator allowed (Not programmable).
Q. No. 1
(i) Briefly explain and differentiate between changes in supply and changes in quantity supplied. Point out their impact on price of commodity.
(ii) Analyze backward bending supply curve of labor. Explain its special shape and market conditions.
(10 + 6 = 16 Marks)
Q. No. 2
(i) Describe elasticity of demand so that you can identify demand for normal goods, Giffen goods and inferior goods.
(ii) Explain Engel curve and justify the shape of indifference curve applied in this case. Also explain whether indifference curve could be a straight line; if yes, how consumer will make a decision?
(16 Marks)
Q. No. 3
(i) Explain income and substitution effect as a result of price change. You must apply Hick’s method to explain your point of view.
(ii) Apply (i) above in the case of demand for potato and identify the nature of this commodity (normal or inferior) etc.
(16 Marks)
Q. No. 4
(i) Explain any two types of production functions and discuss their characteristics.
(ii) Explain iso-cost and iso-quant curves and apply cost minimization for decision making. How economies of scale affect such curves?
(16 Marks)
Q. No. 5
(i) Explain monopoly and monopsony. Analyze price determination under monopoly.
(ii) Why do monopolists prefer price discrimination and under what conditions can monopsonist succeed in it?
(16 Marks)
Q. No. 6
Analyze industry’s demand for factors of production under perfect competition.
(ii) Describe expansion path (due to changes in wages of factors of production) and its implications for factor demand of a firm.
(16 Marks)
Q. No. 7
Write a note on any TWO of the following:
i) How is monopoly different from oligopoly? Also explain decisions of firms (supply and prices) under these conditions.
ii) Explain efficiency loss under monopoly. How can such losses be avoided or minimized by imposing taxes or subsidies?
iii) Derive average cost and marginal cost curves from total cost curve and discuss their economic implications. How do their shapes and values change along the curve?
(8 + 8 = 16 Marks)
PART-II
Q. No. 8
Consider the following model:
Y = C + I₀ + G₀
C = 20 + 0.5Y
I₀ = 14
G₀ = 16
Find:
(i) Y and C
(ii) Value of multiplier
(b) What is the significance of derivative in economics?
(14 + 4 = 18 Marks)
Q. No. 9
(a) Given demand and average cost functions:
Q = 300 − 2P
AC = 7Q + 3 + 100
A subsidy of Rs. 3 per unit is paid to the firm.
(i) Find profit maximizing price and output
(ii) Find profit maximizing price and output without subsidy
(b) Given demand and supply functions:
Demand = 250 − 9P − 4P²
Supply = 200 + 4P²
Find elasticity of demand.
(12 + 6 = 18 Marks)
Q. No. 10
(a) What are maxima, minima and point of inflection?
(b) Maximize:
U = 64x − 2x² + 4y − 4y² + 32y − 14
Subject to:
x + y = 79
(6 + 12 = 18 Marks)
PAPER-II
SECTION-A
Q. No. 1
Write notes on:
(i) Keynesian Absolute Income Hypothesis
(ii) Life Cycle Hypothesis
(20 Marks)
Q. No. 2
Explain any TWO:
(i) Liquidity Preference Theory
(ii) Balanced Budget Multiplier
(iii) Purchasing Power Parity Theory
(20 Marks)
Q. No. 3
Give an example of how government might hurt young generations even while reducing government debt they inherit.
(20 Marks)
Q. No. 4
Explain Permanent Income Hypothesis. Why are consumption changes unpredictable under rational expectations?
(20 Marks)
Q. No. 5
(a) Causes of industrial backwardness in Pakistan
(b) Suggest Remedies to solve the problems faced by the industrialists in Pakistan.
Q. No. 6
Presently Pakistan is under severe internal and External debt burden. Discuss its causes and future consequences for Pakistan’s development.
Q. No. 7
write a note on the following:
(d) Pros and cons of foreign aid
(e) WTO and textile sector of Pakistan (1O+1O=20 Marks)
Q. No. 8
Explain causes of Energy crisis in Pakistan. Why energy crises in pakistan is not controlled? (1O+1O=20 Marks)
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