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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.
| 5401. |
Give two ezamples of Microeconomic studies. |
| Answer» SOLUTION :(a) DEMAND of a COMMODITY, (B) PRICE of commodity. | |
| 5402. |
Coefficient of perfectly inelastic supply is |
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Answer» infinity |
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| 5404. |
Define coefficient of variation. |
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Answer» Solution :Coefficient of VARIATION is 100 TIMES the coefficient of DISPERSION based on standard deviation of a statistical series. It is calculated as: Coefficient of Variation`=(sigma)/(barX)XX100` |
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| 5405. |
From the following information about a firm, find the firm's equilibrium output in terms of marginal cost and marginal revenue. Give reasons. Also find profit at this output. |
Answer» Solution : The FIRM's equilibrium is ACHIEVED at 4th unit of output. It is because this level of output satisfies both the conditions of producer's equilibrium. (i) MC is equal to MR. MC becomes greater than MR after this level of output (equilibrium). Note, the firm does not achieve equilibrium at 2ND unit of output as MC lt MR, after this level of output) profit at equilibrium level of output = TR - TC = Rs.24 - Rs.23 = Rs.1. |
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| 5406. |
How does the budget line change if consumer's income increases from Rs.20 to Rs.40, given that prices of both the goods remain unchanged ? |
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Answer» |
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| 5407. |
Given below is the utility schedule of a consumer for commodity X. The price of the commodity is Rs 6 per unit. How many units should the consumer purchase to maximize his satisfaction ? (Assume that utility is expressed in utils and 1 until = Rs 1). Given reason for your answer. {:("Consumption units",1,2,3,4,5,6),("Total utility (TU)",10,18,25,31,34,34),("Marginal Utility (MU)",10,8,7,6,3,0):} |
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Answer» Solution :Consumer will purchase 4 units because at `4(th)` unit, MU = Price. `**`The consumer will not purchase LESS than 4 units as `MU gt` Price and there is SCOPE for increasing the TOTAL satisfaction by purchasing more units. `**` SIMILARLY, consumer will not buy more than 4 units as `MU lt` Price and total satisfaction can be increased by purchasing less quantity. |
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| 5408. |
A series in which every class interval excludes items corresponding to its upper limit iscalled: |
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Answer» EXCLUSIVE series |
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| 5409. |
Price elasticityof supply of a good is0.8 . Isthe supply elasticor inelasticand why? |
| Answer» SOLUTION :Supply is inelasticbecause onepercent change in PRICE will leadto only 0.8 PERCENT change in supply i.e, lessthan thepercent change in price. | |
| 5410. |
Explain briefly three features of perfect competittion. |
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| 5411. |
How does change in price of a substitute good affect the demand of the given good ? Explain with the help of an example |
| Answer» Solution :SUBSTITUE GOODS are those goods which can be used in place of ONE another to satisfy a particular want. Price of one substitute good has a positive RELATIONSHIP with qunatity demanded of another substitute good, HENCE an increase in price of one substitue will lead to an increase in demand of another subsitute and vice-versa. For example, if price of coke increases, the demand of pepsi will increase. | |
| 5412. |
Which branch of economics deals with the problem of unemployment, a curse for the society? |
| Answer» SOLUTION :MACROECONOMICS | |
| 5413. |
Macroeconomics generalises : |
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Answer» (a) How ECONOMIC DECISIONS are taken? |
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| 5414. |
Suppose the value of demand and supply curves of a commodity-X is given by the following two equation simultaneously: Q_(d) = 200 - 10 p "" Q_(s) = 50 + 15p (i) Find the equilibrium price and equilibrium quantity of commodity X. (ii) Suppose that the price of a factor inputs used in producing the commodity has changed, resulting in the new supply curve given by the eqation Q_(s) = 100 + 15 p Analyse the new equilibrium the new equilibrium price and new equilibrium quantity as against the original equilibrium price and equilibrium quantity. |
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Answer» Solution :(i) We KNOW that the EQUILIBRIUM price and QUANTITY are achieved at: `Q_(d) = Q_(s)` `200 - 10p = 50 + 15p` `150 = 25 p` Therefore, Equilibrium Price `(p) = Rs 6` And Equilibrium Quantity `(Q) = 200 - (10) (6) = 140` units (ii) If the price of factor of production has changed, then under the NEW conditions: `Q_(d) = Q_(s)` `200 - 10 p = 100 + 15p` `25p = 100` Therefore, Equilibrium Price `(p) = Rs 4` And, Equilibrium Quantity `(q) = 200 - (10)(4) = 160` units Thus, as the equilibrium price is decreasing, the equilibrium quantity is increased. |
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| 5416. |
What is a patent right |
| Answer» Solution :Patenet RIGHT is an exculusive right, granted to a FIRM to produce a PARTICULAR product or use a particular TECHNOLOGY, as a reqard for its risk and INVESTMENT is research | |
| 5417. |
A budget line can shift if : |
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Answer» Price of the GOOD on X AXIS changes. |
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| 5418. |
In which market from is there product differentiation ? |
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| 5419. |
What is the relationship between TC and MC? |
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Answer» Solution :(i) When TC rises at a DIMINISHING rate, MC DECREASES. (ii) When the rate of INCREASES in TC stops diminishing, the MC is at its minimum point. Iiii) When the rate of increase in TC starts rising, the MC increases. |
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| 5420. |
A firm in perfect competition earns _________ in the long run. |
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Answer» NORMAL profits |
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| 5421. |
The 'Marginal Product' of a variable input is best described as : |
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Answer» PRODUCT divided by the number of units of VARIABLE input |
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| 5422. |
Define demand. Explain why 4 factors that affect demand for a commodity. |
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Answer» Solution :Demand is quantity of a COMMODITY that a consumer is willing and able to BUY, at each possible price during a period of time. (i) Price of related GOODS. (ii) Income of the consumer. (iii) TASTES and Preferences. (iv) Own price of the commodity. |
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| 5423. |
A consumer's satisfaction from a commodity is maximum when MU is : |
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Answer» EQUAL to price |
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| 5424. |
What is the behaviour of Average Revenue in a market in which a firm can sell any quantity of good at a given price ? |
| Answer» SOLUTION :AVERAGE revenue is CONSTANT at all levels of OUTPUT. | |
| 5425. |
A consumer consumes only two goods. If price of one of the good falls, the Indifference Curve : |
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Answer» SHIFTS UPWARDS |
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| 5426. |
State thre features of monopolistic compotition. |
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| 5427. |
Define variable cost. Explain the behaviour of total variable cost as increases |
| Answer» Solution :a cost that VARIES with the level of OUTPUT. 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. | |
| 5428. |
What is the relation between price of a good and demand of its complementary good ? |
| Answer» Solution :There EXISTS an ''inverse relationship'' between PRICE of the GOOD and demand of its complementary good, i.e, as price of the good RISES, demand of its complementary good falls. | |
| 5429. |
Calculate the coeficient of correlation between X and Y. |
Answer» SOLUTION : `gamma=(NSigmaXY-(SigmaX)(SigmaY))/(sqrt(NSigmaX^(2)-(SigmaX)^(2))sqrt(NSigmaY^(2)-(SigmaY)^(2)))` `=((5xx45)-(15xx15))/(sqrt((5xx55)-(15)^(2))sqrt((5xx45)-(15)^(2)))` `=(225-225)/(sqrt(275-225)xxsqrt(225-225))` `=(0)/(sqrt(50)xxsqrt(0))=(0)/(0)=0` |
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| 5430. |
The following table gives the average product schedule of labour. Find the total product and marginal product schedules. It is given that the total product is zero at zero level of labour employment. |{:("Labour",1,2,3,4,5,6),("AP of labour (units)",2,3,4,4.25,4,3.50):}| |
Answer» SOLUTION :
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| 5431. |
Why does Marginal cost curve cut the Average Variable Cost Curve at its minimum point? |
| Answer» Solution :It happens because when AVERAGE VARIABLE COST (AVC) FALLS, Marginal Cost (MC) is less than AVC. When AVC starts rising, MC is more than AVC. So, it is only curve cuts AVC is constant and at its minimum point, that MC is equal to AVC. Therefore, MC curve cuts AVC curve at is minimum point. | |
| 5432. |
Define substitude goods. |
| Answer» Solution :SUBSTITUTE goods are those goods, which can be used in PLACE of each other for SATISFACTION of a PARTICULAR want. For example, Tea and Coffee, PEPSI and Coke. | |
| 5433. |
Distinguish between behaviour of average revenue of a firm under monopolistic competition and perfect competition. Use diagram. |
| Answer» SOLUTION :N/a | |
| 5434. |
Complete the following table |
| Answer» Solution :`|{:("Variable INPUT","TP","AP"," MP"),(" (units)","(units)","(units)","(units)"),("0","0","0","0"),("1","20","20","20"),("2","46","23","26"),("3","66","22","20"),("4","76","19","10"),("5","80","16","4"):}|` | |
| 5435. |
Define average cost |
| Answer» SOLUTION :It refers to PER unit total cost of production.By per unit cost of production, we mean that all the FIXED and variable cost is taken into the consideration for calculating the average cost. | |
| 5436. |
Define law of supply. |
| Answer» SOLUTION :It STATES the direct RELATIONSHIP between price and quantity supplied, ASSUMING other FACTORS to be constant. | |
| 5437. |
Which of the following represents market demand curve ? |
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Answer» `D_(1)D_(1)` |
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| 5438. |
Why does the difference between ATC and AVC decrease with an increase in the level of output? Can these two be equal at some level of output? Explain. |
| Answer» Solution :As we increase the level of output, the difference between ATC and AVC decreases because ATC = AFC + AVC and Total Fixed Cost remain constant at all levels of output, but with rise in level of output, AFC decreases. That's why the difference between ATC and AVC decreases with rise in level of output.The difference between the AVERAGE total cost (ATC or AC) and the average variable cost (AVC) LIES DUE to the average fixed cost incurred by the firm. Thus, ATC and AVC can NEVER be equal at any level of output. | |
| 5439. |
What happens at equilibrium price.? |
| Answer» SOLUTION :At equilibrium price, there is neither shortage nor EXCESS of DEMAND and supply. | |
| 5440. |
Producer Equilibrium is attained only when marginal revenue is equal to marginal cost. Is it correct ? |
| Answer» Solution :The GIVEN statement is incorrect. Equally of marginal revenue (MR) and marginal cost (MC) is only one CONDITION for the EQUILIBRIUM of the firm. Another condition also NEEDS to be fulfilled for the establishment of the firm's equilibrium and that is: 'MC must be greater than MR after MC = MR OUTPUT level'. | |
| 5441. |
When marginal cost rises, average cost also rises. |
| Answer» Solution :False. AVERAGE COST risesonly when MARGINAL Cost is greater than Average Cost. Average cost falls as long as marginal cost is below average cost(IRRESPECTIVE of the fact that marginal cost is rising or falling). | |
| 5442. |
_____ curve is a horizontal straight line parallel to X-axis in perfect competition. |
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Answer» AR |
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| 5443. |
What change in total revenue will result in (i)a decrease in marginal revenue, and (ii) an increase in marginal revenue ? |
| Answer» Solution :(i) MR is the rate of change of TR or MR is the additional REVENUE earned by selling one more unit of OUTPUT. So, if we want to decrease the MR, TR should increase at a decreasing rate. HENCE, TR INCREASES at a DIMINISHING rate (ii) Here we want MR to increase, so TR should increse at an increasing rate as change in total revenue is MR. Hence, TR increases at an increasing rate. | |
| 5444. |
The problem of allocation of resources among different goods and services is a problem of__________. |
| Answer» SOLUTION :What to PRODUCE | |
| 5445. |
A consumer consumes only two goods X and Y both priced at Rs 3 per unit. If the consumer choose a combination of these two goods with Marginal Rate of Substitution equal to 3, is the consumer in equilibrium ? Give reason. What will a rational consumer do in this situation ? Explain ltrbgt OR State and explain three properties of indifference curves. |
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Answer» Solution :Given `P_(x) = 3, P_(y) = 3 " and " MRS = 3`. A consumer is said to be in equilibrium when `MRS = (P_(x))/(P_(y))` Substituting values we FIND that: `3 gt (3)/(3)` i.e., `MRS gt (P_(x))/(P_(y))` Therefore, consumer is not in equilibrium. `MRS gt (P_(x))/(P_(y))` means that consumer is willing to pay more for one more unit of `x` as compared to what market demands. `-` The consumer will buy more UNITS of `x` `-` As a result, MRS will fall due to the LAW of Diminishing Marginal Utility `-` This will continue till `MRS = (P_(x))/(P_(y))` and consumer is in equilibrium. OR 1. Indifference curves are always Convex to the origin: An indifference curve is convex to the origin because of diminishing MRS. MRS declines continuously because of the law of diminishing marginal utility. 2. Indifference curve SLOPE downwards: It happens because if the consumer decides to have more units of one good, he will have to reduce the number of units of another good, so that total SATISFACTION remain the same. 3. `Higher Indifference curves represent higher levels of satisfaction: Higher indifference curve represents large bundle of goods, which means more satisfaction because of monotonic preference. |
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| 5446. |
Explain the condition of producer's equilibrium with the help of a total cost and total revenue schedule. |
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| 5447. |
What ist he relationship between TR and MR, when price remains constant ? |
| Answer» Solution :TR INCREASES at a constant rate and the rate TR CURVE is a `45^(@)` positively sloped straight line due to constant MR. | |
| 5448. |
"How does a Monopoly Structure Arise" ? Or "The Various Causes of Emergence of Monopoly" |
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Answer» Solution :A monopoly structure may arise in any of the following ways : 1. Covernment Licensing/Government Control. The government may grant license for production of particular commodity only to one producer leadig to monopoly. Licensing is used to ENSURE minimum standards of competency. The government may control the owner an exclusively through its departmental undertakings. (For example, Railways) Patents are value for a specific time period, which is called Patent life. After the expiry of patner life OTHE fims can use the technoligy. 3. Cartels. It is a GROUP of firms which hav explicity agreed to woek together. This is done to avoid competition and secure monopoly control of the market. A cartle jointly coordinates its price and output LEVELS in such a way that is acts like a monopolist. Most widely recognized example of a cartel is the 'Organisation of Petroleum Exporting Countries (OPEC)'. 4. Control of Resources. Monopoly sometimes occurs due to substantial control over certain resources required in the production. For example , DeBeers company of South Africa controls about `80%` of the world's production of diamonds, which is sufficient enough to possess monopoly control. Though in recent YEARS the company has experienced growing competition, its impact on diamond market is still considerable. |
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| 5449. |
On 11 September, 2012, Delhi government enforced a complete ban on the manufacture, sale and storage of "Gutka" in the national capital. How will it affect the market demand and supply of gutka? |
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Answer» Solution :The ban on gutka will have the following EFFECTS: `**` The ban will decrease its supply as firms PRODUCING gutka will SHIFT their factors of production in the production of other RELATED goods. `**` The ban will also lead to decrease in demand for gutka. In this way, both the demand and supply of gutka will reduce. |
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| 5450. |
Explain the relationship between the Marginal Product and Total Product of an input. |
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Answer» Solution :TP = `sum`MP When MP is POSITIVE and increasing TP increases at an increasing rate. When MP is positive but DECREASING TP increases at a decreasing rate. When MP BECOME negative, TP STARTS falling. |
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