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5451.

Assume that a PPF for butter and guns is drawn so that it is a straight line. It means:

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Less and less units of butter are sacrificed to gain an additional UNIT of gun.
More and more units of butter are sacrificed to gain an addittional unit of gun.
Same unit of butter are sacrificed to gain an additional unit of gun.
None of these.

Solution :C. PPC can be a straight line if we assume that MRT is CONSTANT i.e same amount of a COMMODITY is sacrificed to gain an additional unit of another commodity. It is possible only when we assume that all the resources are EQUALLY efficient in production of all goods. In such CASE ppf will be a straight line.
Discussion
5452.

Imposition of price floor ______ the equilibrium price leads to ______ supply.

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SOLUTION :N/a
Discussion
5453.

Can there be a positive level of output that a profit-maximising firm produces in a competitive market at whichmarket price is not equal to marginal cost ? Give an explanation.

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Solution :No. it is not possible as equality between market price and marginal cost is a NECESSARY CONDITION for perfectly COMPETITIVE firm to be in EQUILIBRIUM. (It must be NOTED that market price is equal to marginal revenue when price remain constant at all outputlevels, i.e., in caseof perfect competition.)
Discussion
5454.

Why is it that on one hand coal is found in plenty, yet is is scarce, while a rotten fruit is are but not scarce ?

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Solution :Coal is SCARCE because its demand is greater than its SUPPLY. On the other HAND, a rotten FRUIT is not scarce because there is no demand for rotten fruit.
Discussion
5455.

What do all pointsindifference curve indicate ?

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Solution :The different POINTS on a single indifference curve indicate all those consumption BUNDLES that YIELD same level of utility to the consumer and have same rank in the consumer's PREFERENCE order.
Discussion
5456.

Describe the procedure of drawing a (i) frequency polygon, and (ii) frequency curve.

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Discussion
5457.

Under whatmarket conditionsdoes AR always equals MR ? Explain.

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Solution :It isunder the marketconditionwhena firmcan SELL moreat thegivenpriceand AR=MR THROUGHOUT as production is increased by thefirm . It isbecause the firm is a PRICE taker. Itmeansthatprice which is sameas AR, remainsuchanged throughout. By THEAVERAGE -marginalrelationship ,AR remainsuchanged when AR=MR throughout .
Discussion
5458.

Give the behaviour of marginal product and total product as more and more units of only one input are employed while keeping other inputs as constant.

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Solution :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.
Discussion
5459.

The central problems of 'How to produce' is the problem of deciding the use of:

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labour intensive technique only
CAPITAL intensive technique only
Both labour and capital intensive techniques as PER objectives of the producer
None of these

Solution :The central problems of 'How to PRODUCE' is the problem of DECIDING the use of:Both labour and capital intensive techniques as per objectives of the producer
Discussion
5460.

If MRS is increasing throughout the indifference curve will be

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DOWNWARD SLOPING convex
downward sloping concave
downward sloping STRAIGHT line
upward sloping convex

Solution :B
Discussion
5461.

Explain how the following problems of an economy be solved with the help of price mechanism: (i) What to produce ?(ii) How to produce ?

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Solution :(i) Price mechanism automatically solves the problems of what to produce. Profit motive is the main motive od producers. If demand for a commodity increases, it would increase profit of producers and encourage them to produce more of this commodity. THEREFORE automatically, the commodity that is more in demand would get produced. The opposite happens when demand of the commodity falls. So
(a) `UARR` Demand `- uarr` Price, `- uarr` Profits `- uarr` Production
(b) `darr` Demand `- darr` Price, `- darr` Profits `- darr` Production
(ii) Is the price of labour (wages) and price of CAPITAL (interest) that would HELP the producers in decidingbetween labour intensive and captial intensive technique.
In a labout surplus economy, wages would be low, which means less cost of production IMPLYING moreprofits to the producers so he would choose labour intensive technique.
In a capital surplus economy, price of capitial being low, the profits would be more, so the producers would choose capital intensive technique.
Discussion
5462.

What is the relationship between TR and Price line ?

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Solution :Area under the MR curve=Area under the PRICE LINE =TR.
Discussion
5463.

Define quartile range.

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Solution :Difference between third Quartile `Q_(3)` and FIRSTQUARTILE `(Q_(1)` of a SERIES is called INTER quartile range.Thus,
Inter Quartile Range`=Q_(3)-Q_(1)`
Discussion
5464.

Explain the method of calculating the coefficient of range.

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SOLUTION :It is ALSO known as range COEFFICIENT. In the case of grouped data, the range is the difference between the upper BOUNDARY of the highest CLASS and the lower boundary of the lowest class. It is also calculated by using the difference between the mid points of the highest class and the lowest class.
Discussion
5465.

What is the relation between AVC and ATC if TFC is zero.

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SOLUTION : If TFC is zero, AFC also becomes zero. As a result, TVC = TC SINCE the DIFFERENCE between total COST and total variable cost is represented by TFC.
Discussion
5466.

The supply curves passing through the origin are unitary elastic. Defect or refute.

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Solution :The statement is defended. Any straight line supply curve which passes through the origin has unitray elastic supply. These CURVES (X, Y, Z in the diagram) may make any angle at the origin, the PRICE elasticity of supply of all the curves passing through the origin would be one (can be verified using geometric method DISCUSSED in 'An extra Mile' of the chapter.)
Discussion
5467.

A statistical enquiry is limited to:

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Only collection of DATA
Only PRESENTATION of data
Only analysis of data
All the above.

SOLUTION :D
Discussion
5468.

The word 'Economic' is most closely concted with the word:

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Free
Scarcity
Unlimited
RESTRICTED

Solution :B. The word 'Economic' is most closely connected with the word: Scarcity.Resources are SCARCE in relation to our wants and ECONOMY cannot PRODUCE all what people want. It is the principal reason for existence of economic problems in all ECONOMIES.
Discussion
5469.

Which of the following is an example of complementary goods ?

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TEA and Coffee
Coke and Pepsi
Rice and Wheat
None of these

Answer :D
Discussion
5470.

In case of perfectly inelastic demand , expenditure on the commodity does not change with change in its price.

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Solution :In CASE of perfectly inelastic DEMAND, demand REMAINS constant irrespective of change in PRICE. It means, expenditure on the commodity will change in price.
Discussion
5471.

Tabulation is an orderly arrangement of data in columns and rows.

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SOLUTION :TRUE
Discussion
5472.

A consumer 's income is Rs. 200 . Hespends it on purchase of good x and good y. Price of x and y are Rs.40 and Rs. 20 per unit respectively.Answer the following questions :(a)Write the such equation of his budget line.(b)Wirte two such combinations of x and y which lie on the budget line.( c) Write two such combinations of x and y which are apart of his budget set but do not lie on his dudget line.

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SOLUTION :(a)`40x+20y=200`
(B)`1x+8y,2x+6y`
( C)`1x+2y, 2x+2y`
Discussion
5473.

Which of the following is an assumption of Production Possibility Frontier?

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RESOURCES are not fully employed
Resources are not fully efficient for production of two goods.
Resources are not efficiently employed.
Resources available are not fixed.

Solution :assumptions underlying production possibilities analysis are: (1) resources are used to PRODUCE one or both of only two goods, (2) the quantities of the resources do not change, (3) technology and production TECHNIQUES do not change, and (4) resources are used in a TECHNICALLY efficient way.
Discussion
5474.

Explain the problem 'how to produce’.

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Solution :This studies how to organise PRODUCTION. It is the second basic ECONOMIC PROBLEM of RESOURCE allocation.It is concerned with the choice of technique production. For example, production of cloth is possible either by handlooms or by modern machines.This problem is concerned with the efficient use of resources which implies more production with low cost.Thus, one needs to decide the efficient technique of production which uses the least amount of scarce resources to provide the same amount of output.
Discussion
5475.

Which of the following is not a measure of central tendency?

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Mean
Mode
Standard deviation
Median

Solution : Standard deviation is a quantity expressing by how MUCH the MEMBERS of a GROUP differ from the mean value for the group.It is not a CENTRAL TENDENCY.
Discussion
5476.

When is a consumer said to be rational ?

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Solution :A consumer is SAID to be 'rational' when he AIMS at MAXIMIZING his utility from the consumption of the given commodity, within his MONEY INCOME.
Discussion
5477.

Calculate arithmetic mean from the following data by Short-cut Method: {:("Class Interval",20-25,25-30,30-35,35-40,40-45,45-50,50-55),("Frequency"," "10," "12," "8," "20," "11," "4," "5):}

Answer»


ANSWER :ARITHMETIC MEAN = 35.5
Discussion
5478.

What are the average fixed cost, average variable cost and average cost of a firm ? How are they related ?

Answer»

SOLUTION :Average fixed cost (AFC) REFERS to the per unit fixed cost of PRODUCTION. Average variabe cost (AVC) refers to the per unit variable cost of production. Average cost (AC)refers to the per unit total cost of production. AC is the sum total of AFC and AVC.
"ImportantObservation: AC, AVC and AFC"
1.AC curve will always lie above the AVC curvebecause AC,at all levels of output includes both AVC and AFC.
2.AVC reaches its minimum point at a level of output lower than that of AC because when AVC is at its minimum point, AC is still falling because of falling AFC.
3.As the output increases,the gap between AC and AVC curves decreases,but, they NEVER intersect each other .It happens because the vertical distance between them is AFC , which can never be zero.
Discussion
5479.

Following is the height of 10 students: {:("Students",A,B,C,D,E,F,G,H,I,J),("Height(cm)",155,153,168,160,162,166,164,180,157,165):} Calculate arithmetic mean using Direct and Short-cut Methods.

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ANSWER :ARITHMETIC MEAN = 163 CM
Discussion
5480.

Why are seller costs not incurred in perfect competition?

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SOLUTION :Selling costs are not incurred in PERFECT competition as there EXISTS perfect knowledgeamong the buyers and sellers.
Discussion
5481.

MC Curve cutsthe AVC and ATC Curves :

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From Above
From below
Either (a) and (B)
NEITHER (a) nor (b)

SOLUTION :N//A
Discussion
5482.

Explain the effect of the change in the prices of related goods on the demand for a given good.

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Solution : If the two goods are substitues, then a fall in PRICE of ONE good LEADS to fall in demand of the other good. On the other HAND, if the two goods are COMPLEMENTARY goods, a fall in price of one good leads to an increase in demand of the other good.
Discussion
5483.

Given that Es is 4 and a firm supplies 300 units at a price Rs. 8 per unit. At what price will the firm be willing to supply 600units ?

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ANSWER :RS. 10
Discussion
5484.

Explain briefly three features of monopolistic competition.

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Discussion
5485.

What is false base line?

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SOLUTION :False BASE LINE is indicated by a cut or a link on the X-axis or Y-axis, as in the adjoining picture. It is used when the values in a SERIES are very large and the difference between the smallest value and ZERO is high.
Discussion
5486.

Derive Supply Curve from Rising Part of Marginal Cost (MC) Curve

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SOLUTION :Derivation of Supply Curve from Rishing Part fo Marginal COST (MC) Curve.
Supply curve finds its origin from the rising potion of marginal cost curve in a perfectly completitive market.
Referring to the diagram given below, a producer is in equilibrium at point E(not ar point W) as conditions of producer equilibrium are satisfied at point E(Refer to section 8.1 of chapter 8 for details). So at OP price the output produced by the producer is OM.
If price is `OP_(1)`, the producer is in equilibrium at point `E_(1)` (MR=MC), therefore he supplies `OM_(1)` at price `OP_(1)`. Further if the price rises to `OP_(2)`, eqilibrium is at point `E_(2)` (MR=MC) and quantity supplied is `OM_(2)`. At `E_(3)` quanity supplied in `OM_(3)`.
For profit maximising firm the price must be greater than or equal to AVC because if
(i) Price lt AVC, a firm will not produce the firm is not able to recover its variable cost e.g., at price equal to `OP_(0)`, the price charged by the price charged by the firm is less than minimum AVC (OP). Hence the firm will produce zero output.
(ii) Price = AVC represented by point E where price = AVC = OP. Hence a firm will produc OM level of output. Here the firm is just able to recover its variable cost.
(iii) Price gt AVC represented by points `E_(1)`, `E_(2)` and `E_(3)` then firms increase production. At `E_(1)`, the price (`OP_(1)`) charged by firm is higher than its minimum AVC(OP). Hence a firm will increase production form OM to `OM_(1)` similarly at `E_(2)`, Price gt AVC (`OP_(2)` gt OP) so the firm further increases production to `OM_(2)` and then to `OM_(3)`.
Hence we observe that the producer produces and supplies more at higher levels of price which also satisfies law of supply indicating positive relation between price and quantity supplied. The supply curve we OBTAIN from the above diagram would be `EE_(3)` which shows that the firm produces that level of output where market price is greater than or equal to minimum AVC. Thus the firm's MC curve above the minimum AVC curve becomes the firm's supply curve.
Discussion
5487.

State three cause each for a rightward shift and a leftward shift in the demand curve

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Discussion
5488.

What is the shape of a supply curve'?

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Solution : Supply curve is a positively SHAPED (UPWARD sloping) curve because there isa direct RELATIONSHIP between the PRICE of the commodity and its supply.
Discussion
5489.

What is Producer's Equilibrium ?

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Solution :Producer's Equilibrium refers to that PRICE and output COMBINATION which BRINGS maximum profit to the producer and profitdeclines as more is PRODUCED.
Discussion
5490.

Give three reasons (or causes) of a leftward shift of demand curve.

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Solution :(a) A FALL in income of the consumer.
(b) An UNFAVOURABLE change in tastes and preferences of the consumer.
(c) Expectation of fall in PRICE of the commodity in the near FUTURE.
Discussion
5491.

The area of an economy is confined to :

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(a) A region of a COUNTRY
(B) country as a WHOLE
(c) WORLD as AWHOLE
(d) Any of the above

Answer :D
Discussion
5492.

The problem of price determination of a product comes under the purview of macroeconomics.

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SOLUTION :It COMES under the PURVIEW of MICROECONOMICS.
Discussion
5493.

Explain the 'exclusive' and 'inclusive methods' used in classification of data.

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Solution :Exclusive Method– This method is used for those series in which the upper limit of ONE class becomes the lower limit of the next class. It is called as exclusive series because the FREQUENCIES of the upper limit of a class interval are not INCLUDED in that particular class. In such type of series, the upper limit of one class becomes the lower limit of the next class, for example, 0–10, 10–20, 20–30 and so on. The upper limit is excluded but the lower limit is included in the class interval. This method is most appropriate for data of continuous variables.
Inclusive Method– Under this method of classification of data, the classes are formed in such a manner that the upper limit of a class interval does not repeat itself as the lower limit of the next class interval. In such a series, both the upper limit and the lower limit are included in the particular class interval, for example, 1–5, 6–10, 11–15 and so on. The interval 1–5 INCLUDES both the limits i.e. 1 and 5.
Discussion
5494.

Answer the following questions with the help of following diagram: Which of the following point represent underutilisation of resources?

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G
E
A
F

Solution :D. Points at the LEFT of PPC shows underutilisation of RESOURCES. So POINT F shows underutilisation of resources.
Discussion
5495.

What is meant by total physical product (TPP) or total product ?

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Answer :It is the total OUTPUT at a particular LEVEL of a VARIABLE input when EMPLOYMENT of all other inputs is kept fixed.
Discussion
5496.

Why should MC curve cut MR curve from below to achieve producer's equilibrium ?

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Solution :One of the two conditions of the establishement of stable EQUILIBRIUM of a firm is that its MC curve should CUT the MR curve from below. Not from above . If the MC curve cuts the MR curve from above. The equilibrium so ESTABLISHED shall not be stable as it will be possible to add to profits by PRODUCING more. The idea is that beyond the point of equilibrium the MC should be greater then MR so that further production BECOMES uneconomical.
Discussion
5497.

Give the formula for coeficient of quartile deviation?

Answer»

Solution :Coeficient of quartile DEVIATION is calculated using the following formula: Formula:
COEFFICIENT of Quartile Deviation`=(Q_(3)-Q_(1))/(Q_(3)+Q_(1))`
Discussion
5498.

Define fixed costs.

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Solution :Fixed costs, indirect costs or overheads are BUSINESS EXPENSES that are not dependent on the LEVEL of goods or services PRODUCED by the business.
Discussion
5499.

What is the shape of demand curve under the perfect competition?

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Solution :Demand CURVE is a straight line parallel to the X-axis (PERFECTLY ELASTIC).
Discussion
5500.

A person who does not spend his entire income on purchase of 2 goods, stays on the Budget line.

Answer»


ANSWER :A::B::C::D
Discussion