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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.
| 5151. |
Distinguish between 'non collusive' and 'collusive' oligopoly. Explain |
| Answer» SOLUTION :If a firm COOPERATE with each other in determining PRICE or output or both, it is called collusive OLIGOPOLY.If firms in an oligopoly market compete with each other, it is called non-collusive oligopoly. | |
| 5152. |
Marginal Utility (MU) in terms of money is equl to: |
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Answer» `("Marginal Utility in utils")/("Marginal Utility of ONE rupee")` |
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| 5153. |
What does the problem ‘for whom to produce’ refer to |
| 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. | |
| 5154. |
Let TR be total revenue, Q be quantity of output, and 'n' the number of units, then marginal revenue equals : (choose the correct alternative) |
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Answer» `TR_(N)-TR_(n-1),` only |
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| 5155. |
State the distinction between explicit cost and implicit cost. Give an example of each |
| Answer» Solution :Salaries, wages and rent are few of the examples of the explicit cost, whereas the interest on OWNER's capital, or the SALARY to the owner are the prominent examples of the IMPLICIT cost. The explicit cost is also known as the out-of-pocket COSTS, whereas the implicit cost is also known as imputed costs. | |
| 5156. |
An economy may operate inside the PPC even if there is full employment of resources. 'Defend or refute. |
| Answer» Solution :The GIVEN statement is defended. When the resources are not UTILIZED efficiently, then an ECONOMY MAY operate inside the PPC when if there is full employment of resources. | |
| 5157. |
Which of the following statements is not example to 8 per thousand in the US. |
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Answer» BIRTH rate in INDIA is 18 per thousand as compared to 8 per thousand in the US. |
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| 5158. |
Discuss the percentage method for calculating price ealsticity of demand. |
| Answer» Solution :This method is also associated with the name of Dr. Marshall. According to this method, “price elasticity of DEMAND is the ratio of percentage change in the AMOUNT demanded to the percentage change in price of the commodity.”Implications:(a) This method should be used when there is a very small change in price and quantity demanded.(b) The coefficient of price elasticity of demand is always negative. It is because when price changes, demand changes in the opposite direction. But by convention, we ignore negative SIGN.(c) The elasticity of demand is relative. It is not expressed in any UNIT rather expressed in percentage or INFRACTIONS. | |
| 5159. |
Calculate the missing figure. {:("Units",1,2,3,4,5,),("TU in utils",5,9,-,14,-,),("MU in utils",-,-,3,-,1,):} |
| Answer» SOLUTION :TU: 5,9,12,14,15MU: 5,4,3,2,1 | |
| 5160. |
state two characteristics of resources which given rise to an economic problem? |
| Answer» SOLUTION :1.They have ALTERNATIVE uses.2.Resources are 'scarce' ... | |
| 5161. |
At what level of production is total cost equal to total fixed cost ? |
| Answer» SOLUTION :At ZERO LEVEL of OUTPUT. | |
| 5162. |
Ceteris Paribus, if the government provides subsidies on electricity bills, what would be the likely change in the market demand of desert coolers ? |
| Answer» SOLUTION :DEMAND for DESERT COOLERS will INCREASE. | |
| 5163. |
When price falls with rise in output,then : |
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Answer» MR curve is STEEPER than AR curve |
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| 5164. |
Draw three demand curves in which price ealsticity of demand remains same at all points. |
| Answer» SOLUTION :Draw demand curves for PERFECTLY ELASTIC, perfectly inelastic and unitary elastic demand. | |
| 5165. |
Find the coefficient of variation from data in Example 1 in section 10.7 |
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Answer» Solution :`barX= (sumX)/(N)= (675)/(10) = 67*5` `sigma = 19*48` `V = (sigma)/(X) xx 100 = (19*48)/(67.5) xx 100 = 28*87`% |
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| 5166. |
Positively skewed curve have their tail more spread towards right. (True / False) |
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Answer» |
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| 5167. |
When will rise in demand be called expansion of demand and when will it be called an increase in demand? |
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| 5168. |
Study of economics is concerned with : |
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Answer» EARNING of INCOME |
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| 5169. |
The process of converting raw material into goods is called : |
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Answer» production |
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| 5170. |
Some firms under monopolistic competition are successful in creasting a differentiated image of their products through heavy selling costs. It enables them to charge higher prices for their products. However, such product differentiation is sometimes imaginary. As a result, consumers suffer because (i) Do you think, this is justified in terms of moral business ethics? (ii) Why ethical buisness behaviour is important in this modern competitive world? (iii) What can be done to handle this situation? |
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Answer» SOLUTION :(i) No, this is not justified. (II) Ethical buisness behaviour is IMPORTANT as it improves public image, earns people's confidence and trust and leads to greater success. (iii) Even in the present scenario of buyer's market, buyers are often MANIPULATED. Buyers should ensure before buying a costly product that the extra price paid for the product is for extra FEATURES possessed by the product. If an advertisement makes false claim about the quality of a product, then the buyer should make a complaint against the advertiser. |
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| 5171. |
Identify the variable cost from the following : |
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Answer» EXPENDITURE of RAW materials |
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| 5172. |
Define cost. State the behaviour of : (a) Total Fixed Cost and (b) Total Variable Cost as output is increased ? |
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Answer» Solution :Cost denotes the amount of money that a company spends on the creation or production of goods or SERVICES. It does not include the markup for profit. From a seller's point of view, cost is the amount of money that is SPENT to PRODUCE a good or product. Fixed cost refers to the cost of fixed INPUTS. It does not change with the level of output (thus, fixed). Fixed inputs include building, machinery etc. Hence the cost of such inputs such as rent or cost of machinery constitutes fixed costs. The TOTAL variable cost is the cost that varies with the change in the level of output and hence it increases as output increases and decreases as output decreases. |
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| 5173. |
Calculate the coefficient of correlation using Karl Pearson's formula of the series given below: |
Answer» Solution : `bar(X)=(sumX)/(N)=(80)/(5)=16,bar(Y)=(sumY)/(N)=(100)/(5)=20` `r=(sumxy)/(sqrt(sumx^(2)xxsumy^(2)))` Here, `sumxy=84,sumx^(2)=118,sumy^(2)=80` Substituting the values, we get `r=(84)/(sqrt(118xx80))=(84)/(sqrt(9,440))` `=(84)/(sqrt(97.16))=0.864` COEFFICIENT of Correlation (r)=0.864. |
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| 5174. |
What is meant by Cross-Price effect? |
| Answer» SOLUTION :It is the effect of CHANGE in PRICE of related good (SUBSTITUTE or complementary) on demand of a commodity. | |
| 5175. |
Suppose a consumer wants to comsume two goods which are abailable only in integer units. The two goods are equally priced at Rs 10 and the consumer's income is Rs 40 |
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Answer» Solution :(i) Given `P_(1) = P_(2) = Rs 10` and Income (M) = Rs 40. The various bundles that are available to the CONSUMER are: (0,0), (0,1), (0,2), (0,3), (0,4), (1, 0), (1,1), (1,2), (1,3),(2,0), (2,1), (2,2), (3, 0), (3, 1) and (4,0) (ii) Bundles, which cost exactly Rs 40, are: (0,4), (1, 3), (2,2), (3,1) and (4,0) |
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| 5176. |
What economic measure can the government take to reduce demand for commodity x which is harmful for health? |
| Answer» SOLUTION :The GOVERNMENT can INCREASE the TAXES on that COMMODITY. | |
| 5177. |
What are the differences between standard deviation and mean deviation? |
| Answer» SOLUTION :Standard DEVIATION uses the square of deviations to CALCULATE dispersion of the data whereas MEAN deviation uses the mod of deviations in ORDER to calculate the dispersion. | |
| 5178. |
In the demand curve of a individual firm is perfectly elastic, then: |
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Answer» FIRM is a price-taker |
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| 5179. |
Givethe meaning of producer's equilibrium .A producer that quantityof hisproductatwhichmarginal costrevenue are equal . Is he earning maximum profit? |
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Answer» Solution :A producer (FIRM) is SAID to be in equilibrium when thefirmis producingthat quantity ofoutput whichgivesthe firm maximum PROFIT. Fora firmto be inequilibrium costequals marginal revenue. Second along withthefirst condition isthat MCmustbegreaterthan MRbeyond thelevelof output at which MC=MR. Thereforefulfillmentof thefirst condition alonedoes notensuremaximum profits . It ispossiblethatMC =MRcondition may befulfilled at morethan oneoutput LEVELS but onlythatoutput levelbeyondwhich`MC gt MR` is themaximumprofitoutput level. |
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| 5180. |
Variable factors refer to those factors of production : |
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Answer» Which can be only CHANGED in the long run |
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| 5181. |
Explicit cost includes opportunity cost of resources owned andused by the firm's owners. |
| Answer» Solution :False. It is the 'Implict Cost' and not the EXPLICIT cost. Explicit costis the acutal PAYMENT made to outsiders for hiring their FACTOR SERVICES. | |
| 5182. |
Explain the implications of ''freedom of entry and exit of firms'' under perfect competition |
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Answer» Solution :Freedom of Entry's signifies that there are no BARRIERS to the entry of new firms into INDUSTRY. When the existing firms are earning abnormal profits, the new firms, attracted by the prospects of profit, enter the industry. This RAISES market supply, which in turn, LEADS to fall in market price and consequently profits. The entry constinues TILL each firm is earning just the normal profits. 'Freedom to exit' signifies that there are no barriers which restrict the existing firms fro leaving teh industry. The firms try to leave when they are facing losses. As the firms start leaving, market supply falls, leading to rise in market price and consequently reduction in losses. The firms continue to leave till the losses are wiped out and each existing firm is earning just the normal profits. |
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| 5183. |
Error of _______arises when the respondent do not offer the required information. (non-response/calculation) |
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Answer» |
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| 5184. |
Statistics in the plural sense is : |
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Answer» NUMERICAL data |
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| 5186. |
Assuming that no resource is equally efficient in production of all goods, name the curve which shows production potential of the economy. Explain, giving resons, its properties. |
| Answer» Solution :The curve is calles Production possibilities FRONTIER (PPF). DISCUSS the following TWO Properties of PPF, (i) PPF is downward sloping, (ii) PPF is CONCAVE Shaped. | |
| 5187. |
Why is demand ddfor water and salt inelastic ? |
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Answer» Solution :DEMAND for water is INELASTIC as water is a necessity of LIFE. Demand for salt is inelastic as it is an ESSENTIAL good. |
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| 5188. |
(a) A consumer, Mr Aman is in state of equilibrium consuming two good X and Y, with given prices P_(x) " and " P_(y). What will happen if MU_(x)//P_(x) gt MU_(y)/P_(y)? (b) Identify which of the following is not true for the Indifference Curves theory. Give valid reasons for choice of you answer. a. Lower indifference curve represents lower level of satisfaction. b. Two indifference curves can intersect each other. c. Indifference curve must be convex to origin at the point of tangency with the budge line at the consumer's equilibrium. OR A consumer has total money income of Rs 500 to be spent on two goods X and Y with prices of Rs 50 and Rs 10 per unit respectively. On the basis of the given information, answer the following question. (a) Give the equation of the budget line for the consumer. ltrbgt (b) What is the value of slope of the budget line ? (c) How many units can the consumer buy if he is to spend all his money income on good X? (d) How does the budget line change if there is a 50% fall in price of good Y ? |
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Answer» Solution :(a) If `MU_(x)//P_(x) gt MU_(y)//P_(y)`, then consumer is getting more marginal utility in case of good X as compared to Y. Therefore, he will buy more of X and less of Y. This will lead to fall in `MU_(X) " and rise in " MU_(Y)`. The consumer will continue to buy more of X till `MU_(x)//P_(x)` becomes equal to `MU_(y)//P_(y)`. (b) The second statement Two indifference CURVES can intersect each other is not true. As two indifference curves cannot REPRESENT the same level of satisfaction, they cannot intersect each other. It means, only one indifference curve will pass through a given point on an indifference map. In the following diagram, satisfaction from point A and from B on `IC_(1)` will be the same. SIMILARLY, point A and C on `IC_(2)` also give the same level of satisfaction. It means, point B and C should also give the same level of satisfaction. However, this is not possible, as B and C lie on two different indifference curves, `IC_(1) " and " IC_(2)` respectively and represent different levels of satisfaction. Therefore, two indifference curves cannot intersect each other.  (a) `P_(x) Q_(x) + P_(y) Q_(y) = M` `50 Q_(x) + 10Q_(y) = 500` (b) Slope of Budget Line `= (-)P_(x)//P_(y) = (-) 50//10 = (-) 5` (c) If `Q_(y) =` Zero, then `50Q_(x) + 10Q_(y) = 500` `50Q_(x) + 10 (0) = 500` `Q_(x) = 500//50 = 10` units (d) Old `P_(y) = 10` New `P_(y) = 5` (50% of Rs 10 = Rs 5) If `P_(y)` falls, the consumer will be able to buy more of good Y in the same money income. It will push the Y-intercept of the Budget Line away from origin, keeping the X-intercept constant, i.e., it will rotate outwards. The equation will be `50Q_(x) + 5Q_(y) = 500` |
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| 5189. |
Why does the vertical distance betweenAC curve and AVC curve graduallydecline ? |
| Answer» Solution :The vertical DISTANCE between AC and AVC ( costs such as wages or COST of supplies) curves continues to fall with INCREASE in output because the gap between them is AFC, which continues to decline with rise in output.Due to the Law of Variable Proportions both AC and AVC curves are U- shaped. | |
| 5190. |
What is opportunity cost ? Explain with the help of a numerical example. |
| Answer» Solution :OPPORTUNITY cost is the next best alternative foregone in choosing the best one. SUPPOSE an economy produces only TWO goods X and Y. further suppose that by employing all resources fully and efficiently, the economy can PRODUCE 1X + 10 Y. if the economy decides to produce 2X, it has to cut down production of Y by 2 units because resources are limited. in this case opportunity cost of PRODUCING one more unit of X is 2Y. | |
| 5191. |
Define a budget line. When can it shift to the right ? |
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Answer» Solution :Budget line is a graphical REPRESENTATION of all possible combinations of two goods which can be purchased with GIVEN income and price, such that the cost of each of these combinations of two goods which can be purchased with given income and price, such that the cost of each of these combinations is equal to the money income of the consumer. Budget Line SHITS to the RIGHT when. (i) When there is an increase in income, assuming no change in prices of the two goods, (ii) When there is decrease in prices of both the gods, assuming no change in income of the consumer |
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| 5192. |
There are large number of sellers in perfectly competitive market. Explain the significance of this feature. |
| Answer» SOLUTION :N/a | |
| 5193. |
A farmer produces 100 kg of wheat on a piece of land with the help of a given quantity of reasources. If this farmer can also produce 70 kgof rice with the same quantity of resourced, then what is the opportunity cost of producing wheat? |
| Answer» Solution :The OPPORTUNITY cost of PRODUCING WHEAT is 70 kg of RICE. | |
| 5194. |
Give the meaning of : (i) Total product, (ii) Average product, (iii) Marginal product, (iv) Short run Production Function, (v) Long run Production Function |
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| 5195. |
Quartile is a type of: |
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Answer» MATHEMATICAL average |
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| 5196. |
The following diagram depicts the situation of : |
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Answer» EXCESS Supply |
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| 5197. |
When marginal product is less than average product, average product falls. |
Answer» SOLUTION :TRUE. Marginal product (MP) pulls the average product (AP) up or down. So, AP falls when MP is lees than AP. In Fig. 5.5, it happens after POINT E. 
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| 5198. |
What is meant by price rigidity under oligopoly |
| Answer» SOLUTION : Under oligopoly, firms are in a position to influence the prices. However, they TRY to avoid price COMPETITION for the fear of price war. They follow the policy of price rigidity. Price rigidity refers to a situation in which price tends to stay fixed irrespective of changes in demand and supply conditions. Firms use other METHODS LIKE advertising, better services to customers, etc. to compete with each other. | |
| 5199. |
A Producer invests his ownsavings in starting a business and employs a manager to look after it. Identifyimplicitand explicitcostsfrom thisinformation. |
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Answer» Solution :Implicit cost: IMPUTED interest on savings. ITIS a costbecause he looses interest whichhe would habv EARNED if he hadlent his saving . EXPLICIT Cost : Salary paidto manager . It is a cost because it is actualmoney expenditure on an INPUT. |
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| 5200. |
The effect of changes in price of related goods on demand of a commodity is |
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Answer» INCOME EFFECT |
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