7498 + Interview Questions in Economics in Class 11 Page 107 InterviewSolution

5301.	Value of a factor in its next bext alternative use is
Answer» social cost OPPORTUNITY cost marginal RATE of substitution PPC Solution :VALUE of a FACTOR in its next best ALTERNATIVE use is opportunity cost

Discussion

5302.	Why does the problem of choice arise for producers and for consumers?
Answer» SOLUTION :The PROBLEM of choice arises for producers because resources are limited and have alternative USES. The problem of choice arises for the consumers because their WANTS are unlimited while resources to fulfill these wants are limited.

Discussion

5303.	Cofficient of correlation is between -1 and +1 . How would you express it arithmetically ?
Answer» SOLUTION :When coefficient of correlation is -1, the correlation is PERFECT negative and when coefficient of correlation is +1 , correlation is prefect POSITIVE.

Discussion

5304.	What is price line under perfect competition ?
Answer» Solution :IT is a HORIZONTAL line that REPRESENTS market PRICE FACING a COMPETITIVE firm.

Discussion

5305.	What is meant by stratified or mixed sampling ?
Answer» Solution :In STRATIFIED sampling, population is divided into different strata having different characteristics and some of the ITEMS are selected from each strata, so that the entire population gets REPRESENTED.

Discussion

5306.	Consumer's taste and preferences must change in order to apply Law of demand.
Answer» Solution :Law of Demand states the inverse RELATIONSHIP between price and quantity DEMANDED, keeping other factors constant. So, to apply the Law of Demand, CONSUMER's taste and PREFERENCES (other factors) must not change.

Discussion

5307.	The demand for petrol is increasing continuously. However, being a non-renewable resource, its supply is limited.Discuss any 2 steps that can be taken to overcome this problem?
Answer» Solution :The following STEPS can ease the situation (Any two): (i) Use of CNG (Compressed Natural Gas) run vehicles need to be promoted. (II) Public Transport (like METRO service in Delhi) should be used as much as POSSIBLE. (iii) Encourage car pooling. Carpooling with co-workers with co-workers or family members is a great way to save petrol. (iv) Use Alternate Form of transportation (like bicycle, electronic bikes), whenever possible. (v) Turn the ENGINE off when not in motion. For example, turning the engine off at the red light.

Discussion

5308.	Why does average fixed cost curve shaped ?
Answer» Solution :AVERAGE fixed COST FALLS WITHRISE in the output because of the inverse relationshipbetween average fixed cost and output. The same amount of total fixed costs, whendivided by RISING units of output, gives lesser and lesser average fixed costs.

Discussion

5309.	State three features of monopolistic competition.
Answer» Solution : The features of Monopolistic Competition are as follows: 1) Large no. of SELLERS: There are large no. of firms selling closely related, but not homogeneous products. Each firm acts independently and has a limited share of the market. So, an individual firm has limited control over the market price. Large no. of firms leads to competition in the market. 2) Product differentiation: Each firm is in a position to exercise some DEGREE of monopoly through product differentiation. Product differentiation refers to differentiating the products on the basis of brand, size, color, shape, etc. The product of a firm is close, but not substitute of other firm. 3) Selling Costs: Under Monopolistic Competition, products are differentiated and these differences are made known to the BUYERS through selling costs. Selling costs refer to the expenses incurred on marketing, sales promotion and advertisement of the product. Such costs are incurred to persuade the buyers to buy a particular brand of the product in PREFERENCE to competitor's brand. Due to this reason, selling costs CONSTITUTE a substantial part of the total cost under Monopolistic Competition.

Discussion

5310.	Bring out the various of difference between monopoly and monopolistic competition.
Answer» SOLUTION :~Monopoly: There is a single seller. So, a monopolist has full CONTROL over the market.Monopolistic Competition:There are large no. of sellers. So, a firm does not have much impact on activities of other firms.~Monopoly: There are no close substitutes of the product.Monopolistic Competition: Product are differentiated on the BASIS of brand, size, colour, shape,etc.~Monopoly: There is restriction on entry and exit. So, a firm can earn abnormal profits in the long run.Monopolistic Competition: There is a freedom of entry and exit. However, only a competitive firm can enter or leave the industry.~Monopoly: Monopolist is a price-maker as firm and industry are one and the same thing.Monopolistic Competition: Firm has partial control over price due to product differentiation.~Monopoly: The downward sloping demand curve is less elastic due to absence of close substitutes.Monopolistic Competition: The downward sloping demand curve is more elastic due to presence of close substitutes.~Monopoly: Low SELLING costs are incurred.Monopolistic Competition: Heavy selling costs are incurred on sales promotion.

Discussion

5311.	Expansion in demand leads to :
Answer» RIGHTWARD shift in DEMAND curve Downward MOVEMENT along the demand curve Upward Movement along the demand curve None of these Answer :B

Discussion

5312.	A firm under perfectly market, products of all the firm are homogeneous because :
Answer» NORMAL profit Above NATURAL profit Below normal profit Any ONE of the above Answer :A

Discussion

5313.	Suppose your friend is indifferent to the bundles (5, 6) and (6,6). Are the preferences of your friend monotonic ?
Answer» Solution :No, the preferences are not MONOTONIC. Monotonic PREFERENCE MEANS that he should prefer (6, 6) over (5, 6) as it CONTAINS more of one commodity and no less of the other.

Discussion

5314.	Spot the correct statement about simple correlation and partial correlation :
Answer» Both study relation between only two variables. Both establish cause and EFFECT relationship. SIMPLE CORRELATION takes into consideration other variables, PARTIAL correlation confines to only two variables. Solution :A

Discussion

5315.	Showthataverage revenueand priceare oneandthe same.
Answer» Solution :`" Given : " AR =(TR)/(Q)` `" SINCE" TR =Pxx Q " substituting "` `AR=(PxxQ)/(Q)` `"or" ""AR=P`

Discussion

5316.	How is the demand for a good affected by a rise in the prices of other goods? Explain.
Answer» Solution :There are two types of related goods :- (i) Substitute goods, (II) Complementary goods. In CASE of substitute goods there is a POSITIVE relationship between price of one good and the DEMAND for another i.e as price of one good RISES the demand for its substitute rises. On the other hand, in case of complementary goods there is a negative relationship between price of one good and the demand for its complement i.e as price of one good rises the demand for its complement falls

Discussion

5317.	Give one reason for a shift in demand curve.
Answer» SOLUTION :CHANGE in PRICE of SUBSTITUTE GOODS

Discussion

5318.	If marginal cost is equal to marginal revenue at two output levels, then any one of the output level can be taken as state of producer's equilibrium.
Answer» Solution :Only that OUTPUT level is the state of producer'sequilibriumwhen MARGINAL COST BECOMES greater than marginal revenue after the EQUILIBRIUM .

Discussion

5319.	Statistics deal with :
Answer» QUALITATIVE aspects Quantitative aspects Both (a) and (B) NONE of the above Solution :B

Discussion

5320.	Define marginal utility. State the law of diminishing marginal utility
Answer» Solution :Marginal utility quantifies the added satisfaction that a consumer garners from CONSUMING additional units of goods or services. The concept of marginal utility is used by economists to DETERMINE how much of an item consumers are willing to purchase. The law of diminishing marginal utility states that the marginal utility of a good or service DECLINES as its available supply increases. Economic actors DEVOTE each successive unit of the good or service towards less and less VALUED ends.

Discussion

5321.	What is an economic problem? What is its root cause? Explain.
Answer» SOLUTION :It is the problem of how to make the best use of limited, or scarce, RESOURCES. The economic problem exists because, although the needs and wants of people are ENDLESS, the resources available to satisfy needs and wants are limited.Scarcity, or limited resources, is one of the most basic economic problems we face. We run into scarcity because while resources are limited, we are a society with unlimited wants. Therefore, we have to CHOOSE.

Discussion

5322.	Cross demand tells the relationship between the price and demand for a commodity.
Answer» Solution :CROSS demand SHOWS the relationship between demand for a COMMODITY and prices of RELATED COMMODITIES.

Discussion

5323.	What do the short run marginal cost (SMC), average variable cost and short run average cost (SAC) curves look like ?
Answer» SOLUTION :The CURVES of short-run marginal COST, AVERAGE variable cost and average cost are U-shaped because of Law of variable proportion.

Discussion

5324.	Explain the concept of 'buffer stock' as a tool of price floor.
Answer» Solution :Buffer stock is an important tool in the HANDS of GOVERNMENT to ensure price floor. If in case, the market price is lower than what the government FEELS should be given to the farmers /PRODUCERS, it would purchase the commodity at higher price from the farmers/producers so as to maintain stock of the commodity with itself, to be released in case of shortage of the commodity in future.

Discussion

5325.	"Salary of Permanent staff" is which type of cost ?
Answer» VARIABLE and IMPLICIT Cost Fixed and implicit Cost Fixed and ExplicitCost Variable and EXPLICIT Cost Solution :N//A

Discussion

5326.	Mean of 100 observations is found to be 40. If at the time of computation two items are wrongly taken as 30 and 27 instead of 3 and 72, find thecorrect mean.
Answer» Solution :GIVEN: `N = 100, BARX = 40 ` `barX = (sumX)/N` Or,`""40 = (sumX)/100` `:.""sumX("Wrong") = 40xx 100 = 4,000` Correct values = 3 + 72 = 75 Incorrect values = 30 + 27 = 57 `"Correct "barX=(sumX"(Wrong)+(Correct Value)-(Incorrect Value)")/N` ` = (4,000+75-57)/100=(4,018)/100=40.18` Corrected Mean = `40.18`.

Discussion

5327.	In most of the weighted index numbers the weightpertains to: (i) base year(ii) current year(iii) both base and current year
Answer» ANSWER :(i), as changing the WEIGHT EVERY YEAR is CUMBERSOME.

Discussion

5328.	In describing a given production technology, the short run is best described as lasting :
Answer» Up to SIX MONTHS from now Upto FIVE years from now As long as all INPUTS are fixed As long as at least one input is fixed Answer :D

Discussion

5329.	Discuss the main forms of a table.
Answer» SOLUTION :N/a

Discussion

5330.	If the consumption of an additional unit of a commodity casues no change in TU, then the resultant MU is:
Answer» Zero Positive Negative Constant Answer :A

Discussion

5331.	Differentiated product' is a characteristic of :
Answer» MONOPOLISTIC COMPETITION only Oligopoly only Both monopolistic competition and oligopoly Monopoly Answer :C

Discussion

5332.	What is meant by ogive or cumulative frequency curve ? From the following distribution construct the 'less than ' ogive
Answer»

Discussion

5333.	What is profit maximisation ?
Answer» Solution :Profit MAXIMISATION of a producer MEANS maximising the difference between total revenue and total COST.

Discussion

5334.	The title of a table must be provided at the bottom centre of the table.
Answer» SOLUTION :FALSE

Discussion

5335.	When is a good called a normal good?
Answer» SOLUTION :Normal goods are the goods with income EFFECT positive i.e as the income of the consumer INCREASES the DEMAND for the good increases and vice-versa.

Discussion

5336.	What is efficiency in production ?
Answer» Solution :It MEANS that an alternative allocation of resources cannot INCREASE production of any COMMODITY EVEN by a single UNIT.

Discussion

5337.	The central problemsof an economy are
Answer» what to PRODUCE and how MUCH how to produce for whom to produce all of these Solution :The CENTRAL problemsof an ECONOMY arewhat to produce and how much,for whom to produce

Discussion

5338.	Which point on the following PPC shows a "productively efficient" level of output?
Answer» A B E All of these SOLUTION :D. SINCE, A,B and E lies on the PPC ,so, they shows a "productively efficient" level of OUTPUT

Discussion

5339.	Howe dosetechnologicalprogress affect thesupply curveof a frim ?
Answer» Solution :Supplycurvewill shiftto therightdue totechnologicalprogress as it will lead to the REDUCTION in PER UNIT cost of the commodity and hence increases its profit margin.

Discussion

5340.	Change in supply will not change the equilibrium quantity in case of perfectly elastic demand.
Answer» SOLUTION :In CASE of perfectly elastic demand, equilibrium quantity will vary DIRECTLY with change in supply (HOWEVER, there will be no change in equilibrium price).

Discussion

5341.	Distinguish between any two of the following : (i) Perfect Competition (ii) Monompoly (iii) Monopolistic competition (iv) Oligopoly
Answer»

Discussion

5342.	Mention any three factors that affect the price elasticity of demand for a commodity.
Answer» Solution :FACTORS AFFECTING ELASTICITY OF DEMAND1. 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.3. Proportion of Income Spent on the Good:The price-elasticity of demand for a good also depends on the proportion of their income the buyers spend on the good. If the buyers spend a small proportion of their income, then they would not considerably decrease their purchase of the good as its price INCREASES.

Discussion

5343.	Explain the reaction of the consumer when Price Ratio (or Market Rate of Exchange) is higher than marginal Rate of Substitution
Answer» Solution : when Price Ratio (or Market Rate of EXCHANGE) is higher than marginal Rate of Substitution, it means that to OBTAIN ONE more unit of X, the consumer is willing to SACRIFICE less units of Y as compared to what is required in the market. It induces the consumer to buy less of X and more of Y. As a result, MRS rises till it becomes equal to the ratio of PRICES and the equilibrium is achieved.

Discussion

5344.	A producer borrows money to run a business but manages the business himself. Identify implicit cost.
Answer» SOLUTION :IMPUTED SALARY of the PRODUCER.

Discussion

5345.	Under exclusive method:
Answer» the upper CLASS LIMIT of a class is excluded in the class interval the upper class limit of a class is INCLUDED in the class interval the LOWER class limit of a class is excluded in the class interval the lower class limit of a class is included in the class interval Answer :A::D

Discussion

5346.	In case of horizontal straight line demand curve, demand does not change ecen with cahnge in price.
Answer» Solution :In case of horizontal straight line dmeand curve, there is an infinte DEMAND at a PARTICULAR price and demand BECOME zero with a SLIGHT RISE in the price.

Discussion

5347.	Mention of the four demerits of the sample method.
Answer» Solution :1. ABSENCE of Being Representative:Methods, such as purposive sampling may not PROVIDE a sample, that is representative.2. WRONG Conclusion:If the sample is not representative, the results will not be correct. These will lead to the wrong conclusions.3. Small Universe:Sometimes universe is so small that proper samples cannot be taken not of it. Number of units are so less.4. Specialised Knowledge:It is a SCIENTIFIC method. Therefore, to get a good and representative sample, one should have special knowledge to get good sample and to perform proper analysis so that reliable result may be achieved.

Discussion

5348.	When actual price of a commodity is less than equilibrium price, its price:
Answer» STARTS risisng starts falling starts fluctuating remains constant Answer :(a)

Discussion

5349.	Explain the effects of floods in Jammu and Kashmir on its production possibilities frontier.
Answer» SOLUTION :Floods have damaged and reduced resources. Since POTENTIAL production declines the production POSSIBILITY frontier shifts to the LEFT.

Discussion

5350.	How is the price elasticity of demand fo a commondity affected by the number of its substitutes ? Explain.
Answer» Solution :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.

Discussion

Explore topic-wise InterviewSolutions in .

Value of a factor in its next bext alternative use is

Why does the problem of choice arise for producers and for consumers?

Cofficient of correlation is between -1 and +1 . How would you express it arithmetically ?

What is price line under perfect competition ?

What is meant by stratified or mixed sampling ?

Consumer's taste and preferences must change in order to apply Law of demand.

The demand for petrol is increasing continuously. However, being a non-renewable resource, its supply is limited.Discuss any 2 steps that can be taken to overcome this problem?

Why does average fixed cost curve shaped ?

State three features of monopolistic competition.

Bring out the various of difference between monopoly and monopolistic competition.

Expansion in demand leads to :

A firm under perfectly market, products of all the firm are homogeneous because :

Suppose your friend is indifferent to the bundles (5, 6) and (6,6). Are the preferences of your friend monotonic ?

Spot the correct statement about simple correlation and partial correlation :

Showthataverage revenueand priceare oneandthe same.

How is the demand for a good affected by a rise in the prices of other goods? Explain.

Give one reason for a shift in demand curve.

If marginal cost is equal to marginal revenue at two output levels, then any one of the output level can be taken as state of producer's equilibrium.

Statistics deal with :

Define marginal utility. State the law of diminishing marginal utility

What is an economic problem? What is its root cause? Explain.

Cross demand tells the relationship between the price and demand for a commodity.

What do the short run marginal cost (SMC), average variable cost and short run average cost (SAC) curves look like ?

Explain the concept of 'buffer stock' as a tool of price floor.

"Salary of Permanent staff" is which type of cost ?

Mean of 100 observations is found to be 40. If at the time of computation two items are wrongly taken as 30 and 27 instead of 3 and 72, find thecorrect mean.

In most of the weighted index numbers the weightpertains to: (i) base year(ii) current year(iii) both base and current year

In describing a given production technology, the short run is best described as lasting :

Discuss the main forms of a table.

If the consumption of an additional unit of a commodity casues no change in TU, then the resultant MU is:

Differentiated product' is a characteristic of :

What is meant by ogive or cumulative frequency curve ? From the following distribution construct the 'less than ' ogive

What is profit maximisation ?

The title of a table must be provided at the bottom centre of the table.

When is a good called a normal good?

What is efficiency in production ?

The central problemsof an economy are

Which point on the following PPC shows a "productively efficient" level of output?

Howe dosetechnologicalprogress affect thesupply curveof a frim ?

Change in supply will not change the equilibrium quantity in case of perfectly elastic demand.

Distinguish between any two of the following : (i) Perfect Competition (ii) Monompoly (iii) Monopolistic competition (iv) Oligopoly

Mention any three factors that affect the price elasticity of demand for a commodity.

Explain the reaction of the consumer when Price Ratio (or Market Rate of Exchange) is higher than marginal Rate of Substitution

A producer borrows money to run a business but manages the business himself. Identify implicit cost.

Under exclusive method:

In case of horizontal straight line demand curve, demand does not change ecen with cahnge in price.

Mention of the four demerits of the sample method.

When actual price of a commodity is less than equilibrium price, its price:

Explain the effects of floods in Jammu and Kashmir on its production possibilities frontier.

How is the price elasticity of demand fo a commondity affected by the number of its substitutes ? Explain.