InterviewSolution
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InterviewSolution
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State whether the following statements are true ox false. Give reasons. (a) Inflation has a favourable effect on producers. (b) In a perfectly competitive market producers are price makers.(c) When change in demand is greater than the change in price, it is a case of inelastic demand.(d) Savings is essential for capital formation.(e) An increase in the rate of tax with an increase in income is called proportional tax. |
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Answer» (a) True. During Inflation, the producers gain in the short period. Usually the cost of production does not rise as fast as the price of their product and so there is an artificial margin of profit. (b) False. As there are a large number of buyers and sellers of the commodity so neither a single seller nor a single buyer can influence the market price. So producers are price-takers not price makers. (c) False. When a large change in price does not bring so much change in the demand, the demand is said to be inelastic. (d) True. The whole process of capital formation depends upon savings. (e) False. Because in case of proportional tax rate of tax remains constant, though income increases. |
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