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This section includes InterviewSolutions, each offering curated multiple-choice questions to sharpen your knowledge and support exam preparation. Choose a topic below to get started.
| 5001. |
Which of these is a conditions for consumer's equilibrium by indifference curve analysis ? |
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Answer» `MU_(X) = P_(X)` |
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| 5002. |
MC can be direct derived from : |
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Answer» TFC |
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| 5003. |
Suppose a consumer can afford to buy 6 units of good 1 and 8 units of good 2 if she spends her entire income. The price of the two goods are Rs 6 and Rs 8 respectively. How much is the consumer's income ? |
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Answer» Solution :Suppose, the equation of budget line is `P_(X) X + P_(Y)Y = M` (Where X = GOOD 1, `P_(X)` = PRICE of `X, Y =` good 2, `P_(Y)` = price of Y, and M = INCOME) Putting values in the equation, we get: Rs `6 xx 6 + Rs 8 xx 8 = M`, i.e., Income (M) = Rs 100 |
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| 5004. |
Discuss the relationship (with the help of a schedule and diagram) between: (i) AC and AVC (ii) AC and MC (iii) AVC and MC (iv) TC and MC (v) TVC and MC (vi) TC, TVC and TFC |
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| 5005. |
For producer to be in equilibrium, MC should be greater that MR after the equilibrium level. Do you agree with the given statement ? |
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| 5006. |
What is a black market ? |
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Answer» |
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| 5007. |
Suppose total revenue is rising at a constant rate as more and more units of a commodity are sold,marginal revenue would be : |
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Answer» GREATER than AVERAGE REVENUE |
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| 5008. |
The Opportunity Cost arises: |
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Answer» When there is just ONE ALTERNATIVE |
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| 5009. |
All point below the budget line show the various possible bundles which cost exactly equal to consumer's money income |
| Answer» SOLUTION :The bundles which cost EXACTLY EQUAL to costumer's money income LIE on the budget LINE and not below it. | |
| 5010. |
What will be the effect on equilibrium price and equilibrium quantity, when price of complementary goods increases? |
| Answer» Solution :When price of complementary goods increases, keeping other tactors constant, then demand for the given commodity decreases since it becomes relatively EXPENSIVE to consume the two commodities (the given commodity and its complement) together. It will LEAD to excess supply. This LEADS to competition among sellers, which reduces the price. Fall in price leads to DECREASE in supply and rise in demand. These changes continue till supply and demand become equal at a new EQUILIBRIUM price. As there is a decrease in demand only, both equilibrium price and equilibrium quantity will fall. Refer 'Decrease in Demand' given in Section 11.5 for diagrammatic explanation. | |
| 5011. |
Distinguish between substitute goods and complementary goods. Give two example of each. |
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Answer» Solution :Substitute GOODS are the goods which are used in place of ONE another. For example, tea and coffee, coke and pepsi. On the other hand, complementary goods are the ones which are used together or the goods complement the use of one another. For example, car and petrol, pen and ink. (b) There is a POSITIVE RELATION between PRICE of one substitute and the demand for other whereas there exists a negative relation between price of one complementary and demand for its counterpart. |
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| 5012. |
'Dimand and supply are like two blades of a pair of scissors''. Discuss. |
| Answer» SOLUTION :This STATEMENT is defended. Both demand and supply of the commodity are important to determine price just LIKE, two blades of a pair of scissors are important for cutting. In short run, any one of the two may be more important, but in LONG run, both play equally important role. | |
| 5013. |
The measure of price is elasticity of demand of a normal good carries minus sign while price elasticity of supply carries plus sign. Explain why? |
| Answer» Solution :The MEASURE of price of DEMAND has a MINUS sign because there is inverse relation between price and demand of a normal good, while the measure of price elasticity of supply has PLUS sign because there is DIRECT relation between price and supply of a good. | |
| 5014. |
Following information pertains to the daily income of 150 families. Calculate the arithmetic mean. {:("Income (in Rs.)",,"Number of Families"),("More than 75",,""150),("More than 85",,""140),("More than 95",,""115),("More than 105",,""95),("More than 115",,""70),("More than 125",,""60),("More than 135",,""40),("More than 145",,""25):} |
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Answer» Solution :Conversion of a CUMULATIVE Frequency Distribution into a Simple Frequency Distribution (Assumed Average, A = 110)  `barX=A+(sumfd')/(sumf)xxC` `=110+(95)/(150)xx10` `=110+6.3` `=116.3` `:." Arithmetic mean = Rs. 116.3."` |
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| 5015. |
Give meaningof an inferior good and explain the same with the help of an example. |
| Answer» SOLUTION :When with the rise in income of a consumer , the consumer buys less QUANTITY of a good , then that good is an inferior good for that consumer . Suppose , when the consumer's income rises , he buys less of coarse cloth and PURCHASES more fine cloth, then for that consumer SPECIFICALLY coarsecloth is an indifference good. | |
| 5016. |
If a farmer grows rice and wheat, how will an increase in the price of wheat affect the supply curve of rice? |
| Answer» Solution :SUPPLY curve of RICE will shift to the left as rice and wheat are SUBSTITUTE goods and producing wheat is more PROFITABLE as compared to producing rice. | |
| 5017. |
The characteristic of a fact that can be measured in the form of numbers is called: |
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Answer» frequency |
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| 5019. |
Distinguish between univariate and bivariate frequency distribution. |
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Answer» |
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| 5020. |
In_a firm faces an infinetely elastic demand curve which means that the firm can sell any amount of a good at the prevaling market price. |
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Answer» OLIGOPOLY market |
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| 5021. |
Explain the problem for 'whom to produce’. |
| Answer» Solution :This studies the problem of distribution of final goods and services or the problem of distribution of income.It has two aspects. The first aspect relates to personal distribution and the second aspect relates to functional distribution.Personal distribution REFERS to output/income share of individuals or households in society.Functional distribution refers to income share of different factors of production.Here, the problem is whether allocation of RESOURCES is promoting equality or not.Equality is a social VIRTUE, and inequality may induce high saving, investment and HENCE high rate of growth. | |
| 5022. |
Draw average revenue curve of the firm under perfect competition. |
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| 5023. |
Discuss the Properties of Indifference Curve |
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| 5024. |
How many types are there of time series graphs? |
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Answer» SOLUTION :There are TWO types of time series graphs: (i) One variable graphs, and (ii) Two or more than two variable graphs. |
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| 5025. |
State any 3 factors that cause an 'increase' in demand of a commodity OR Give any three factors that can cause a rightwardshift of demand curve. |
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Answer» Solution :Three FACTORS that can resultin an increase in demand for a commodity are : (i) An increase in price of substitute good. (ii) A FALL in price of COMPLEMENTARY good. (iii) A favourable CHANGE in tastes and PREFERENCES of the consumer. |
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| 5026. |
Price Elasticity of Demand isinfinty in case of horizontal straight line demand curve. |
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Answer» Solution :In case of horizontal straight line demand curve, SLOPE of demand curve is zero. As a RESULT, price elasticity of demand is infinity . It is PROVED as under. Elasticity of Demand `(E_(d))= 1/("Slope of demand Curve")xxP/Q=1/0xxP/Q=oo` |
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| 5027. |
When income of the consumer falls, the impact on price-demand curve of an inferior good is : |
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Answer» SHIFTS to the right |
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| 5028. |
Although wateris useful, yet it is cheap. On the contrary, diamond is not much of use, still it is very expensive. Give an economic reason for this poradox. |
| Answer» Solution :The economic reason for this paradox is scarcity. Although WATER is USEFUL, YET it is CHEAP due to its abundance in the economy. Diamonds are very expensive because they are scarce and people are ready to pay a HIGH price. | |
| 5029. |
Give the meaning of "inferior" good and explain the same with the help of an example. |
| Answer» SOLUTION :Inferior goods are the ONES which have income effect negative i.e as the income of the consumer rises the demand for an inferior GOOD falls and vice-versa. For example, toned milk as COMPARED to full CREAM milk. | |
| 5030. |
Zero should be used only to indicate the …................ Of a variable (quantity/non-availability of data) |
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Answer» |
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| 5031. |
Give an example of direct inervention by government in market mechanism. |
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| 5032. |
Briefly explain the relation between TR and MR curves in (i) Perfect competition(ii) Monopoly or monopolistic competition. |
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Answer» SOLUTION :(i) Under perfect competition MR is constant at all levels and hence TR increases at a constant rate. TR CURVE is a positively sloped line making an angle of 45 DEGREES with the axis. (ii) (i) TR increases as long MR is positive. (ii) TR is maximum and constant when MR is zero. (III) TR falls when MR becomes negative. |
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| 5033. |
State with reasons, whether the following items will have elastic ro inelastic demand. (a) Match box (b) Pepsi© Medicines (d) NCERT Textbooks/school unifrom € eleticity (f) Liquor (g) Butter for a poor person (h) salt (i) Particular brand of lipstick (i) Mobile phone |
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Answer» (b) Pepsi. Elastic demand, as there are close subsititutes AVAILABLE. (c) Medicines. Inelastic demand , as demand of medicines cannot be postponed. (d) NCERT Textbooks/school uniform. Inelastic demand, as nature of books and school unifrom is a necessity. (e) Electricity . Elastic demand, as it can be used in diverse ways and its uses can be restricted. f. Liquor. Inelastic demand , if its consumers are habituted towards it. (G) Butter for a poor person, Elastic demand as it is LUXURY item for a poor person. (h) Salt. Inelastic demand, as it does not have close substitutes also a necessity. (i) Particular brand of lipstick. inelastic demand , as a consumer is habituated or her tastes are in favour of this commodity. Also may be elastic if the consumer can shift to other brands. (j) Moblie phone, Elastic demand, as there are close substitutes available: also its demand can be postponed. |
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| 5034. |
When quartile is a fraction Let us colculate Q_(1) from the following array. |
Answer» SOLUTION : `Q_(1)=(N+1)/(4)"th ITEM" =(20+1)/(4)"th item"=5.25"th item"` Value of 5th item = Rs. 66 Value of 6th item = Rs. 68 DIFFERENCE = Rs. 2 `(=68-66).` `thereforeQ_(1)=66+(25xx2)=66+0.5=66.5` |
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| 5035. |
What are unattainable combinations on PPC ? |
| Answer» Solution :Combinations of GOODS which cannot be produced with the help of GIVEN resources and TECHNOLOGY are unattainable combinations.These are indicated by points by points lying to the RIGHT of PPC. | |
| 5036. |
A consumer wants to consume two goods. Good A and Good B. Good A is priced at Rs 2 per unit and Good B at Rs 4 per unit. The income of the consumer is fixed at Rs 20. On the basis of this information, anser the following question: (i) Write down the bundles that are available to the consumer. Or Mention all the bundles which come under the 'Budget Set' (ii) Find out the bundles which cost exactly Rs 20. Or Mention the bundles which can be represented on the 'Budget Line' (iii) How much units of good A can be purchased if the entire income is spent on the good ? (iv) Write down the algebraic expression of budget line. (v) Determine the slope of the buget line ? |
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Answer» SOLUTION :(i) Bundles available to the consumer (i.e. bundles which come under the budget set are), `(0,0), (0,1), (0,2), (0,3), (0,4), (0,5), (1,0), (1,1), (1,2), (1,3), (1,4), (2,0), (2,1), (2,2), (2,3), (2,4), (3,0), (3,1), (3,2), (3,3), (4,0), (4,1), (4,2), (4,3), (5,0), (5,1), (5,2), (6,0), (6,1), (6,2), (7,0), (7,1), (8,0), (8,1), (9,0), (10,0)`. (ii) Bundles that cost exactly Rs 20 are : `(0,5), (2,4), (4,3), (6,2), (8,1), (10,0)` (iii) When entire income is spent on good A, consumer can purchase: `("Income")/("Price of Good A") = (20)/(2) = 10` units (iv) Price of Good A `(P_(A)) = Rs 2`, Price of Good B `(P_(Y)) = Rs 4`, Income = Rs 20. Now, the equation of budget line will be: `2x + 4y = 20`. (v) The SLOPE of a budget line measures the amount of change in good 2 required per unit of change in good 1 along the budget line. it is MEASURED as FOLLOWS: Slope `= (-P_(1))/(P_(2)) = (-P_(X))/(P_(Y)) = (-2)/(4) = -0.5` |
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| 5037. |
Macroeconomics deals with study of cotton extile industry. |
| Answer» Solution :Cotton TEXTILE INDUSTRY is a MICRO concept as it is one of the part of industry. So it is studies under MICROECONOMICS. | |
| 5038. |
Total fixedremainssame even if output is zero. |
| Answer» Solution :True.Total fixed COST is incurred on fixed FACTORS. The PAYMENT to such factors remains fixed EVEN if OUTPUT is zero. | |
| 5039. |
Distinguish between 'decrease in demand' and 'decrease in quantity demanded' of a commodity. |
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Answer» SOLUTION :(i) When the demand for a commodity falls due to an increase in price of the commodity, keeping other factors constant, it is known as decrease in qunatity demanded WHEREAS when the demand for a commodity falls due to a change in other factors other than the price of the commodity, it is known as decrease in demand. (ii) In case of decrease in quantity demanded, there is an upaward movement along the same demand curve whereas in the case of decrease in demand the demand curve shifts leftwards. (iii) Decrease in qunatity demanded occurs due to an increase in own price of the commodity whereas a decrease in demand is CAUSED by other facotors such as decrease in price of substitues, decrease in income of the consumer in case of NORMAL goods etc. |
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| 5040. |
How is price elasticity of demand affected by: (i) Number of substitutes available for the good, (ii) Nature of the good. |
| Answer» SOLUTION :1. Nature of the Good:The elasticity of demand for a good depends upon the nature of the good, i.e., whether the good is a NECESSARY or a luxury good. The elasticity of demand for a necessary good is relatively small. For example, if the price of such a good rises, its buyers generally are not able to reduce its demand.2. Availability of Substitute GOODS:If close substitutes for a PARTICULAR good are available in the market, then the demand for the good would be relatively more elastic. For example, SINCE tea, a close substitute for coffee, is available in the market, a rise in the price of coffee would result in a considerable fall in its demand and a consequent rise in the demand for tea | |
| 5041. |
What causes a downward movement along a demand curve? |
| Answer» SOLUTION :FALL in PRICE of the COMMODITY | |
| 5042. |
Law of demand is a …......... Statement as it represents direction of change in demand of a commodity due to change in its price. |
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Answer» |
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| 5043. |
In a commodity market, excess demand exists when: |
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Answer» market PRICE is GREATER than equilibrium price |
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| 5044. |
If a consumer has monotonic preferences, which bundle would be preferred by him ? |
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Answer» (12,8) |
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| 5045. |
Define an indifference map. Explain why an indifference curve to the right shows higher utility level. |
| Answer» Solution :An indifference CURVE is a graph showing combination of two goods that GIVE the CONSUMER equal satisfaction and utility. Each POINT on an indifference curve indicates that a consumer is indifferent between the two and all points give him the same utility. Higher Indifference Curve represents higher level of satisfaction, in other words, any combination that lies on a higher Indifference Curve i.a. away from origin represents a higher level of satisfaction.The underlying assumption here is the assumption of monotonic preference which represents that a consumer will PREFER a combination which contains more of at least one and no less of the other. | |
| 5046. |
Market demand curve is a graphical presentation of market ….............. |
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Answer» |
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| 5048. |
The bundles that the consumer can purchase by spending his entire money income at given prices is represented by |
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Answer» BUDGET line |
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| 5049. |
Explainthe distinction between "change inquantity supplied" and "change in supply". Use diagram. |
| Answer» Solution :Difference between CHANGE in supply and change in quantity supplied occurs due to CHANGES in factors AFFECTING supply. When price of the commodity supplied changes then there is change in quantity supplied. There is a movement along the same supply curve. It brings a change in only ONE SINGLE pair in the supply curve. | |
| 5050. |
When two dmeand curves intersect each other , which one is more elastic ? |
| Answer» Solution :If two DEMAND CURVES intersect each other then the CURVE which is relatively flatter will have a higher PRICE ELASTICITY. This is because flatter the demand curve, greater is the change in demand due to change in price. | |