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6401.

How is totally utility derived from marginal utility ?

Answer»

SOLUTION :`TU = SUM MU`
Discussion
6402.

if the proportionate change in the price of a commodity is more than the proportionate change in its quantity demand per unit of time , its pirce elastictiy demand is greater than unity.

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SOLUTION :Price ELASTICITY of demand will be less than unity `( ED GT 1)` as proportionate change in demand is less than proportionate change in price.
Discussion
6403.

Explain the chain effects, if the prevailing market price is below the equilibrium price.

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Solution :The equilibrium PRICE is the price at which the quantity demanded is equal to quantity supplied. If the market price is less than the equilibrium price then there will be EXCESS demand in the economy. As a result of this excess demand, there will be competition between the buyers leading to an increase in price. This increase in price will lead to a fall in demand ACCORDING to law of demand and increase in supply according to law of supply. All these changes will CONTINUE to take place until quantity demanded EQUALS quantity supplied.
Discussion
6404.

Define marginal utility. State the law of DMU

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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 all else equal as consumption INCREASES the marginal utility derived from each additional UNIT declines. Utility is an ECONOMIC term used to REPRESENT satisfaction or happiness.
Discussion
6405.

Why does TU increase at a diminishing rate due to continous increase in consumption ?

Answer»

Solution :It happens because MU derived from each SUCCESSIVE UNIT tends to DIMINISH.
Discussion
6406.

Distinguish between an inferior good and a normal good. Is a good which is inferior for one consumer also inferior for all the consumers? Explain Or Give meaning of normal goods and inferior good. Give example in each case. Or Distinguish between a normal good and an inferior good. Give example in each case.

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Solution :(a) NORMAL goods are the ones which have INCOME effect posititve whereas inferior goods are the ones which have income effect negative.
(b) A rise in income of the consumer LEADS to an increase in demand for the COMMODITY and vice-versa in case of normal goods whereas a rise in income of the consumer leads to a fall in demand for the commodity and vice-versa in case of inferior goods.
Example :- Toned milk when compared to full cream milk..
Whether a good is inferior or not DEPENDS on the income status of the consumer, hence a good which is inferior for a consumer may not be inferior for other consumer.
Discussion
6407.

A 5% fall in the price of X leads to a 10% rise in its demand. In case of GoodY , a2% rise in price leads to a 6% fall in its demand. In the given case, _______ is more elastic.

Answer»

X
Y
Both X and Y are EQUALLY elastic
Both X and Y are inelastic

Solution :N/a
Discussion
6408.

State/Explain the features of: (i) Perfect Competition, (ii) Monopoly, (iii) Monopolistic Competition, (iv) Oligopoly.

Answer»
Discussion
6409.

Explain how the following factors effect the supply of the commodity. (Any two) (a) Price of factor imputs (b) State of technology (c) Government taxation Policy

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Solution :Supply of a commodity is affected by following factors: (Any two)
(a) Price of factor Inputs: When price of factor inputs increases, the cost of production also increases. This decreases the profitability. As a result, seller reduces the supply of the commodity. On the other hand, decrease in prices of factor inputs, increases the supply due to fall in cost of production and subsequent rise in PROFIT MARGIN.
(b) State of Technolgy: Advanced and improved technology reduces the cost of production, which raises the profit margin. It induces the seller to increase the supply. However, technological degradation or complex and outdated technology will increase the cost of production and it will lead to decrease in supply.
(c) GOVERNMENT Taxation Policy: If government increases taxes, it will affect the cost of production adversely and HENCE supply decreases. But if Government decreases the tax, the cost of production will fall and the PRODUCER will be induced to increase the supply of the commodity.
Discussion
6410.

If due to fall in the price of good X, demand for good Y rises, the two goods are:

Answer»

SUBSTITUTES
complements
not related
competitive

Answer :B
Discussion
6411.

Which term is used when more quantily is supplied with a rise in the price of a commodity?

Answer»

SOLUTION :We SAY it is a CASE of EXPANSION of SUPPLY .
Discussion
6412.

A consumer consumes only one good. The marginal utility from the good is 60 utils and its price is Rs 7 per unit. Indicate whether the consumer is at equilibrium or not if marginal utility of money for the consumer is 6 utils. What should he do to attain equilibrium ?

Answer»

<P>

SOLUTION :A consumer in consumption of single commodity is at equilibrium when:
`("Marginal Utility of Commodity " (MU_(X)))/("Marginal Utility of Money " (MU_(M)))`
Given: `MU_(X) = 60 " utils, P_(X) = RS 7` per util, `MU_(M) = 6` utils.
SUBSTITUTING values, we find that: `(60)/(6) gt 7`
Therefore, consumer is not at equilibrium. As marginal utility is GREATER than the price, consumer should INCREASE the level of consumption.
Discussion
6413.

Define price elasticity of supply.

Answer»

Solution :If refers to the DEGREE of RESPONSIVENESS of supply of a commodity with REFERENCE to a change in PRICE of such commodity. It is always positive due to direct RELATIONSHIP between price and quantity supplied.
Discussion
6414.

Which of these economic problem deals with technique of production?

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What Produce
How to Produce
For whom to Produce
None of these.

Solution :B. This problem refers to selection of technique to be used for PRODUCTION of GOODS and services. A good can be produced USING different TECHNIQUES of production. By ‘technique’, we mean which particular combination of inputs to be used. Generally, techniques are classified as: Labour intensive techniques (LIT) and Capital intensive techniques (CIT).i. In Labour intensive technique, more labour and less capital (in the form of machines, etc.) is used.ii. In Capital intensive technique, there is more capital and less labour utilization.
Discussion
6415.

What are monotonic preferences ? Explain why is an indifference curve: (i) Downward sloping from left to right and , (ii) Convex.

Answer»

Solution :An agent's preferences are said to be strongly monotonic if, given a CONSUMPTION bundle , the agent PREFERS all consumption bundles that have more of at least one good, and not less in any other good.i) Indifference Curves are Downward Sloping:Virtually all indifference curves have a negative slope. That is, they slope downward from left to right. The slope of an indifference curve shows the rate of substitution between two goods, i.e. the rate at which an individual is willing to give up some quantity of good A to get more of good B. If we assume that the individual likes both goods, the quantity of good B has to increase as the quantity of good A decreases, to KEEP the overall level of satisfaction the same. Because both axes each represent one of the two goods, this relationship results in a downward sloping curve. This becomes pretty obvious if we look at the illustration below.ii) Indifference Curves are convex (i.e. BOWED inward):In most cases indifference curves are bowed inward. This has to do with the marginal rate of substitution (MRS). We know that the marginal utility of consuming a good decreases as its supply increases (see also diminishing marginal utility). Therefore consumers are willing to give up more of this good in order to get ANOTHER good of which they have little.
Discussion
6416.

Define change in quantity demanded.

Answer»

SOLUTION :When the QUANTITY changes due to a change in price, keeping other factors constant, it is known as change in quantity demanded.
Discussion
6417.

Prapare a frequency distribution by inclusive method taking class interval of 7 from the following data :

Answer»


Answer :The lowest value is 1 and highest value is 37 . We have to TAKE a CLASS interval of 7. The VARIOUS classes may be 1-7,8-14,15-21,22-28 and 29-35 and 36-42
`(##TRJ_ECO_XI_C04_E01_081_A01##)`
Discussion
6418.

Macroeconomics deals with economic functions of:

Answer»

(a) CENTRAL bank
(b) GOVERNMENT
(C) NITI AYOG
(d) all the above

Answer :d
Discussion
6419.

A __________ is one who produces and/or sells goods and services for the generation of income. (producer/consumer)

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SOLUTION :PRODUCER
Discussion
6420.

What are the features of monopolistic competition ?

Answer»

Solution :The features of monopolistic COMPETITION are as follows:
Large number of sellers and buyers
Product DIFFERENTIATION.
HUGE selling costs
No absolute freedom of entry and EXIT of firms
Lack of perfect KNOWLEDGE
Partial control over price
Non price competition
Downward sloping and more elastic demand curve (AR).
Discussion
6421.

What is the behaviour of average fixed cost as output is decreased?

Answer»
Discussion
6422.

An index number does the following to the variables :

Answer»

MEASURES changes
Averages out changes
Uses 'base' to MEASURE changes
All the above

Solution :D
Discussion
6423.

Explain the implication of non-price competition under oligopoly.

Answer»

Solution :Non- PRICE COMPETITION means competition between firms by means other than CHANGING price, LIKE free gift, home service, customer care etc. The firms in oligopoly do so to avoidprice-war because the frim who starts the price-war may be the ULTIMATE looser.
Discussion
6424.

Identify the central problem which deals with deciding the quantity of goods to be produced:

Answer»

What of Produce
How to Produce
For whom to Produce
None of these.

Solution :A. The PROBLEM of ‘What to produce’ has two aspects:(i) What possible COMMODITIES to produce: An economy has to decide, which consumer goods (rice, wheat, clothes, etc.) and which of the capital goods (machinery, equipment’s, etc.) are to be produced. In the same way, economy has to make a CHOICE between civil goods (bread, butter, etc.) and war goods (guns, tanks, etc.).(ii) How much to produce: After deciding the goods to be produced, economy has to decide the quantity of each commodity that is selected. It means, if involves a decision REGARDING the quantity to be produced, of consumer and capital goods, civil and war goods and so on.
Discussion
6425.

what is the relationship between mode , mean and median

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`Z=3M+OVERLINE(2X)`
`Z=3M-overline(2X)`
`overline(X)=(3M-Z)/(2)`
Both (B) and ( c)

Solution :Z=3M-overline(2X)` or`overline(X)=(3M-Z)/(2)`
Discussion
6426.

If Tea and Coffee are substitutes, a fall in the prices of Tea leads to : (i) Rise in the demand for Tea (ii) Fall in the demand of Tea (iii) Fall in the demand for Coffee (iv) Rise in the demand of coffee.

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Both (II) and (IV)
Both (i) and (III)
Both (ii) and (iii)
Both (iii) and (iv)

ANSWER :B
Discussion
6427.

Giving reasons, state whether the following statement are true or false: (i) A monopolist canfix both, the price of his product and the quantity to be sold at that price. (ii) Under monopolistic competition, a firm faces a perfectly elastic demand curve. (iii) A monopolist can sell any quantity he likes at a price?

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Solution :(i) FALSE, A monopolist can fix either the price or can fix QUANTITY to be sold.
(ii) False. The firm faces downward sloping demand curve because the firm can sell more only by LOWERING the price.
(III) False because if a monopolist wants to sell more he can do so only by lowering the price.
Discussion
6428.

Elasticity of supply is saidto be perfectly inelastic whn.

Answer»

Es= 0
Es=1
Es>1
Es<1

Solution :when there is no CHANGE in quantity supplied DUE to the change in PRICE , thenEs=0 i.e., SUPPLY is perfectly inelastic.our CORRECT answer is (A)
Discussion
6429.

Example of fixed cost

Answer»

COST of RAW material
cost of fuel
depreciation of machinery
all of these

Answer :C
Discussion
6430.

refers to the minimum price, fixed by the government, which is above the equilibrium price.

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PRICE Floor
Minimum SUPPORT price
Both (a) and (b)
NEITHER (a) nor (b)

Answer :(C)
Discussion
6431.

The market in which the number of sellers is small and there is interdependence in decision making by the firms is known as

Answer»

PERFECT competition
Oligopoly
Monopoly
Monopolistic Competition

Solution :N/a
Discussion
6432.

Explain any 2 factors that affect price elasticity of demand. Give suitable examples.

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SOLUTION :1. NATURE of the commodity.
2. Number/Availability of SUBSTITUTES.
Discussion
6433.

Name the economic value achievable when attempts are made to increase resoruces in the country.

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SOLUTION :ECONOMIC GROWTH.
Discussion
6434.

Axis divides the plain of a paper into :

Answer»

TWO quadrants
three qaudrants
four quadrants
none of these

Solution :C
Discussion
6435.

Show inequality in wages in two different firms using Lorenz Curve approach, given the following data:

Answer»

Solution :Estimation of Cumulative Sum and PRECENTAGE


Observations: Both in firm A and firm B distribution of wages is far firm EQUAL. However, INEQUALITY is more pronounced in case of firm B than firm A as the LORENZ curve for firm B is FARTHER away from the line of equal distribulation.
Discussion
6436.

The availability of fresh water may become the most crucial problem over the coming decades. Enumerate some of the steps which need to be taken to savewater?

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Solution :The following steps can help to save water :
(i) Turn off the tap while brushingor SHAVING. When washing dishes, turn off the tap whenever possible. Do not letwater run purposelessly while soaping or cleaning.
(ii) INSTALL rainwater harvesting SYSTEM: It is economical and effective way of saving water.
(iii) Avoid using a shower for bathing. Try using a bucket instead.
(iv) Ensure that your home has no LEAKAGES. Any type of leakage should be taken care of immediately.
Spread awareness regarding waterconservation.
Do not wash just couple of your clothes daily. Plan a day and wash the complete LOAD of clothes together.
Discussion
6437.

Total cost can be obtained as summation of marginal costs.

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SOLUTION :FALSE. Marginal cost does not include total FIXED cost. So, summation of marginal cost indicates totalvariable cost and not total cost.
Discussion
6438.

Marginal utility refers toutility :

Answer»

From the LAST UNIT consumed
From ONE more unit consumed
From one less unit consumed
All the above

ANSWER :D
Discussion
6439.

The price of a commodity is Rs. 5 per unit and its quantity suppled is 600 units. If its price rises to Rs. 6 per unit , its quantity supplied rises by 25 percent. Calculate its price elasticity of supply.

Answer»

Solution :`E_(s) =(%"Change in SUPPLY")/(%"change in price")=(25)/((1)/(5)xx100)=(25)/(20)=1.25`
Supply is ELASTIC because `E_(s)GT 1`.
Discussion
6440.

What does the slope of PPF indicate?

Answer»

Solution :PPF is a downward sloping CONCAVE shaped curve.
(i) Its downward slope INDICATES that more of one good can be PRODUCED only by taking resources away from the production of another good.
(ii) Its concave shape indicates that more and more units of one commodity have to be SACRIFICE to gain an ADDITIONAL unit of another commodity.
Discussion
6441.

an "inferior" good is one which is:

Answer»

A LOW quality good
A low PRICED good
Below the income STATUS
All the above

Answer :C
Discussion
6442.

Define indifference curve.

Answer»

SOLUTION :An indifference curve is a graph showing combination of two goods that give the consumer equal SATISFACTION and utility. Each point on an indifference curve INDICATES that a consumer is INDIFFERENT between the two and all points give him the same utility.
Discussion
6443.

In case of two commodities,MU of a commodity must fall to attain consumer's equilibrium

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Solution :If MU does not fall as consumption INCREASES, the consumer will end up buying only one GOOD which is UNREALISTIC and consumer will NEVER reach the EQUILIBRIUM position.
Discussion
6444.

Discuss the relationship between (i) MP and TP (ii) AP and MP

Answer»

Solution :(i) RELATIONSHIP between MP and TP :-
(i) As LONG as MP is positive and INCREASING, TP increases at an increasing rate.
(ii) When MP is positive but decreasing, TP increases at a diminishing rate.
(iii) When MP = 0, TP is maximum and constant.
(IV) When MP BECOMES negative, TP starts falling.(ii) Relationship between AP and MP :-
(i) When MP`gt`AP, AP rises.
(ii) When MP = AP, AP is maximum and constant.
(iii) When MP`lt`AP, AP falls.
Discussion
6445.

How does the budget line change if the price of good 2 decreased by a rupee but the price of good 1 and the consumer's income remain unchanged ?

Answer»

Solution :When price of GOOD 2 decreases, then the budget LINE will shift to the right from AB to `AB_(1)`. The new budget line meets the X-axis at the same POINT A because there is no change in the price of good 1. But it will touch the Y-axis to the right of B at point `B_(1)` because the consumer can purchase more of good 2 at the same income LEVEL.
Discussion
6446.

Variance is simply the square of …………………….(Mean deviation/standard deviation)

Answer»


SOLUTION :STANDARD DEVIATION
Discussion
6447.

Point of Inflexion' is represented by :

Answer»

POINT M
Point Q
Point R
Point S

Answer :B
Discussion
6448.

Identify positive or normative statements from the following : 5% population of India is below poverty line

Answer»

SOLUTION :POSITIVE STATEMENTS because it is FACT
Discussion
6449.

Pulp and paper production is the third largest producer of air, water and land pollution. Suggest three ways toovercome this problem?

Answer»

Solution :We can overcome this problem through following ways:
(i) Promote Digital Age: Promote use of e - bills, e-cards, e-book, e-newspaper instead of paper invoices cards, ETC.
(II) Use both SIDES of each paper. On a notebook, WRITE on both sides of the sheet.
(iii) Promote use of RECYCLED paper products whenever possible.
Discussion
6450.

Explain diagrammatically greater/less than unitary elastic demand.

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Discussion