Saved Bookmarks
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.
| 5201. |
A consumer consumes only two goods, For a consumer to be in equilibrium, why must MRS be equal to the ratio of prices of two goods |
|
Answer» Solution :MRS MUST be EQUAL to Px/Py. Because at this point the rate at which the consumer is willing to substitute GOOD x for good y(SLOPE of IC Curve) coincides with the rate at which market allows the consumer to substitute good x for good y(Slope of BUDGET line) |
|
| 5202. |
The price of a commodity is Rs.12 per unit and its quantity supplied is 500 units. When its price rises to Rs. 15 per unit , its quantity supplied rises to 650 units. Calculate its price elasticity of supply. Is supply elastic ? |
|
Answer» Solution :`E_(s)=(P)/(Q_(s))xx(DeltaQ_(s))/(DeltaP)=(12)/(500)xx(150)/(3)=1.2` Yes, the SUPPLY is elastic because `E_(s) GT 1` |
|
| 5203. |
Equilibrium price is determined when : |
|
Answer» MARKET Demand for a commodity is zero |
|
| 5204. |
Slope of budget line is |
|
Answer» MARGINAL OPPORTUNITY cost |
|
| 5205. |
An indifference curve is convex to the origin because of the law of equi-marginal utility. |
| Answer» SOLUTION :Indifference CURVE is convex to the origin because of the LAW of diminishing marginal RATE of substitution. | |
| 5206. |
How is price elasticty of demand affected by: (i) Number of substitutes availble for the good (ii) Nature of the good ? |
|
Answer» Solution :If there are several substitutes or brands available for a product, then the elasticity of demand for the product will be high because consumers can SHIFT from one brand to ANOTHER depending on the change in price. Chocolates, for instance, is a good example of substitutes. Consumers can choose between several brands of chocolates. (ii)i. When a commodity is a necessity like food grains, vegetables, medicines, etc., its demand is generally inelastic as it is required for human survival and its demand does not FLUCTUATE much with change in price. ii. When a commodity is a comfort like fan, refrigerator, etc., its demand is generally elastic as consumer can postpone it. (iii) When a commodity is a luxury like AC, DVD player, etc., its demand is generally more elastic as compared to demand for comforts. iv. The term ‘luxury’ is a relative term as any item (like AC), may be a luxury for a poor person but a necessity for a RICH person. consumption. |
|
| 5207. |
Explain why will a producer not be in equilibrium if the conditions of equilibrium are not met. |
|
Answer» SUPPOSE MC=MR condition is notmet. Let `MC gtMR`.In this , it will be profitable for the firm to produce more or less depending upon the RELATIVE change in MC and MR TILL MC = MR. Similarly , if `MC gt MR`, it will also be profitable to produce more till MC=MR. Now Suppose `MCgt MR` after equilibrium condition is not met and `MC lt MR` after equilibrium . in this case, the firm will not be in equilibrium because it can increase its profits by producing more. |
|
| 5208. |
In case of bar diagrams,…………………remains the same. (length of the bar/ beradth of the bar) |
|
Answer» |
|
| 5209. |
If the investigator wants to select a sample on the basis of diverse characterstics of the population, which method should he use ? |
|
Answer» Convenience SAMPLING METHOD |
|
| 5210. |
State the conditions of consumer's equilibrium in case of two commodities |
|
Answer» <P> Solution :Consumer's Equilibrium in case of two commodities is determined when: (i) The ratio of MARGINAL UTILITY to Price is same in case of both the GOODS, i.e., `(MU_(x))/(P_(x)) = (MU_(y))/(P_(y)) " Or " (MU_(x))/(MU_(y)) = (P_(x))/(P_(y))`, (ii) MU falls as consumption increases. |
|
| 5211. |
What is meant by returns to a factor ? State the law of diminishing returns to a factor |
|
Answer» Solution :Returns to factor studies the BEHAVIOUR of OUTPUT when more and more units of varibale factor are EMPLOYED with the fixed factors. The law of diminishing returns to a factor states that Marginal Product of a factor INITIALLY rises with its employment level, but after a certain level of employment it starts falling and ultimately becomes negative. |
|
| 5212. |
How will an increase in price of coffee affect demand for tea? |
| Answer» SOLUTION :DEMAND of TEA will INCREASE | |
| 5213. |
The market demand curve for a commodity and the total cost for a monopoly firm producing the commodity is given by the schedule below : Use the information to calculate the following : (i) The MR and MC schedules. (ii) The quantites for which MR andMC are equal. (iii) The equilibrium quantity of output and the equilibrium price of the commodity. (iv) The total revenue, total cost and profit in equilibrium. |
Answer» SOLUTION :(i)  (ii) At 6 units, MR=MC. (iii) Equilibrium is achieved when MR=MC. So, equilibrium quantity = 6 units and equilibrium price = Rs. 19. ltbtgt (IV) Total Revenue = Rs. 144 Total Cost = Rs. 109 Total PROFIT = TR-TC = 114 - 109 = Rs.5 |
|
| 5214. |
Which of the following is a shape of frequency distribution curve? |
|
Answer» A-shaped |
|
| 5215. |
Under which market form, the demand curve is steeper as compared to monopolistic com |
|
Answer» Monopoly |
|
| 5216. |
Is it true to say that there would be no economic problem if there is no scarcity. |
| Answer» Solution :YES, it is TRUE because scarcity of RESOURCES is the BASIC reason for economic problem. | |
| 5217. |
Which of the following is an example of "Implicit cost" ? |
|
Answer» INTEREST that could have been EARNED on retained earnings used by the firm to finance expansion |
|
| 5218. |
According to tally bar method, which of the following symbols indicate the frequency offive? |
|
Answer»
|
|
| 5219. |
The average fixed cost at 4 units of output is Rs 20. Average variable costs at 5 units of output is Rs 40. Average cost of producing 5 unit is : |
| Answer» Answer :C | |
| 5220. |
Why is an indifference curve negatively sloped ? |
| Answer» Solution :The indifference CURVES MUST slope down from LEFT to right. This means that an indifference curve is negatively SLOPED. It slopes downward because as the consumer increases the consumption of X commodity, he has to give up certain units of Y commodity in order to maintain the same level of satisfaction. | |
| 5221. |
Trendy Jewellery if tastes and preferences are in favour of this jewellery |
|
Answer» |
|
| 5222. |
Marginal Revenue can never be zero. |
| Answer» SOLUTION :False : MARGINAL Revenue can be ZERO at a LEVEL of output in a market when a firm can sell more only by LOWERING price. | |
| 5224. |
How does the budget line change if the consumer's income increases to Rs 40 but the prices remain unchanged ? |
Answer» Solution :If CONSUMER's income to Rs 40, then the consumer can buy more of both the goods. It will shift the BUDGET LINE towards RIGHT from AB to `A_(1)B_(1)`. But, new budget line will be parallel to the old budget line as there is no change in slope (i.e., price ratio) of budget line 
|
|
| 5225. |
What is revenue ? Explain the relation between marginal revenue and average revenue. |
| Answer» Solution :Revenue is total receipts generated from selling a particular number of units of a good by a firm. Relationship between MR and AR : (i) When MR is greater than AR then AR INCREASES. (ii) When MR is equal to AR then both the curves coincide with each other and are parallel to x-axis. (iii) When MR is LESS than AR, AR DECREASES. | |
| 5226. |
Which of the following is correct statement showing showing the relationship between AP and MP ? |
|
Answer» When `MP GT AP, AP` increases |
|
| 5227. |
What is meant by economizing resources? |
| Answer» Solution :ECONOMIZING of RESOURCES REFERS to MAKING optium use of the AVAILABLE resources. | |
| 5228. |
Explain quartile deviation with the of a formula. |
|
Answer» SOLUTION :Quartile DEVIATION is half of INTER Quartile Deviation. QD = `=(Q_(3)-Q_(1)`)/2 |
|
| 5229. |
Discuss the effect of change in supply on equilibrium price and equilibrium quantity, when demand is perlectly inelastic. |
| Answer» SOLUTION :When DEMAND is perfectly INELASTIC, a change in SUPPLY will only lead to change in EQUILIBRIUM price. There will be no change in equilibrium quantity since the demand is perfectly inelastic. | |
| 5230. |
What is the effect on price when a perfectly competitive firm tries to sell more ? |
| Answer» | |
| 5231. |
Demand of a commodity may rise or fall even when price of the given commodity remains constant. |
|
Answer» |
|
| 5232. |
Express average total cost in terms of average fixed cost and average variable costs. |
| Answer» Solution :The average variable COST (AVC) is the total variable cost per unit of output. This is found by dividing total variable cost (TVC) by total output (Q).Fixed COSTS are those costs incurred that do not VARY with production; they are fixed at a certain price no matter how MUCH is produced | |
| 5233. |
Average product cannot be negative because : |
|
Answer» TOTAL product can never be ZERO |
|
| 5234. |
What is the price line ? |
Answer» Solution :PRICE line is the same as AVERAGE Revenue Curve of a firm. It SHOWS the relationship between the market price and firm's output level. e.g.AB is price line in the following DIAGRAM 
|
|
| 5236. |
A negative sign with coefficient of price elasticity of demaned denotes. |
|
Answer» DIRECT RELATION between PRICE and quantity dmeanded |
|
| 5237. |
Minimum price ceiling refers to the minimum price at which : |
|
Answer» the BUYER is WILLING to buy |
|
| 5238. |
Explain the causes of a rightward shift in demand curve of a commodity of an individual consumer. |
|
Answer» SOLUTION :(i) Increase in price of substitue GOODS. (II) Fall in price of complementary goods. (iii) Increase in income of the consumer in case of a normal good. (iv) Favourable CHANGE in tastes and PREFERENCES. (v) Expectation of increase in price in the future. |
|
| 5239. |
If change in price of good A affects the demand for good B, then : |
|
Answer» A is a SUBSTITUDE of good B |
|
| 5240. |
When quantity demanded of a commodity does not change with change in price. Then coefficient o price elasticity of demand is zero. |
| Answer» SOLUTION :it is a CASE of PERFECTLY INELASTIC DEMAND . | |
| 5241. |
Can there be fixed cost of a firm in the long run ? |
|
Answer» |
|
| 5242. |
Market for a good is in equilibrium. There is simultaneous "decrease" both in demand and supply of the good. Explain its effect on market price. |
|
Answer» Solution :If the decrease in demand is EQUAL to decrease in SUPPLY then the EQUILIBRIUM PRICE will not change. If the decrease in demand is more than the decrease in supply then the equilibrium price will fall. If the decrease in demand is less than the decrease in supply then the equilibrium price will INCREASE. |
|
| 5243. |
In a fancy-dress competition, two judges accorded following ranks to the 10 participants : Calculate coefficient of rank correlation |
Answer» Solution : `r_(K)=1-(6sumD^(2))/(N^(3)-N)` Here, N=10,`sumD^(2)=264` `r_(k)=1-(6xx264)/((10)^(3)-10)` `=1-(1,584)/(990)` `=1-1.6=-0.6` Coefficient of Rank Correlation (`r_(k)`)=-0.6 There is a negative coefficient of rank correlation of the tune of -0.6 which is fairly high. High negative correlation suggets that two sets of judgements are fairly opposite to each other. |
|
| 5244. |
Telephone survey is the most suitable method of collecting data, when the population is literate and spread over a large area (true/false). |
|
Answer» |
|
| 5245. |
What will likely be the impact of large scale inflow of foreign capital in India on Production Possibilities Curve and why? |
| Answer» Solution :Inflow of foreign capital will RAISE PRODUCTION potentialof the coundtry LEADING to UPWARD shift of PP curve. | |
| 5246. |
Explain the central problem of 'what to produce’ by giving examples. |
| Answer» Solution :As there is the problem of choice, the economy has to DECIDE which goods and SERVICES are to be produced. For example, which of the consumer goods such as WHEAT, rice, cloth are to be produced and which of the capital goods such as machines and TOOLS are to be produced.When an economy has TAKEN a decision as to what goods or services to be produced, then it has to be about its quantity. How much of consumer goods and capital goods are to be produced.For example, if an economy decides to produce rice and wheat within a given period with limited resources then it will have to use less of machineries. | |
| 5247. |
Define supply. |
| Answer» Solution :Supply refers to quantity of a COMMODITY that a firm is WILLING and able to OFFER for sale at a given price during a given PERIOD of time. | |
| 5248. |
Briefly discuss the consumer's equilibrium in case of two commodities |
| Answer» | |
| 5249. |
Define : (a) Micoeconomics (b) Macroeconomics |
|
Answer» SOLUTION :(a) Microeconomics. It is the study of individual UNITS of an economy e.g., a household, a firm, an industry etc. (b) Macroeconomics. It is study of AGGREGATE units of an economy or study of economy as a WHOLE e.g., all INDUSTRIES in the economy. |
|
| 5250. |
Define mean deviation. |
| Answer» Solution :MEAN Deviation is the arithmatic average of the deviations of all the VALUES TAKEN from some average value (mean, median, MODE) of the series, ignoring SIGNS (+ or -) of the deviations. | |
