7498 + Interview Questions in Economics in Class 11 Page 138 InterviewSolution

6851.	A curve based on a series where there are two classes with highest frequencies is called _______ curve. (Bi-modal / mixed)
Answer» SOLUTION :Bi-modal

Discussion

6852.	Explain the chain of effects of 'increase' in demand of a good.
Answer» Solution :Increase in demand for the good LEADS to a rightward shift in the demand curve. The increase in demand leads to COMPETITION among buyers causing a push in the market price. The INCREASED price leads to an increase in the SUPPLY and a fall in demand leading to a new equilibrium where both the price and quantity DEMANDED are higher.

Discussion

6853.	If there are two supply curves which intersect each other, which supply curve has greater elasticity of supply. Explain.
Answer» Solution :If TWO supply curves are intersecting each other, then the flatter supply curve will have more elasticity than the steeper supply curve. It is clear from the diagram that the effect of change in PRICE form OP to `OP_(1)` is more of flatter supply curve SS as `OQ_(2)gtOQ_(1)`. Hence, it is proved that at the point of INTERSECTION of supply curves, flatter the curve, more elastic it is.

Discussion

6854.	Explain the 'free entry and exit of firms' feature of monopolistic competition.
Answer»

Discussion

6855.	Distinguish between Positive Economics and Normative Economics
Answer»

Discussion

6856.	If due to fall in the price of goofd X, demand for good Y rises, the two goods are : (Choose the correctalternative)
Answer» Subsitutes Complements Not related Competitive Answer :B

Discussion

6857.	Draw a PPC to represent the following on it : (i) Underemployment of resources (ii) Fuller utilisation of resources (iii) Grwoth of resources
Answer» Solution :(i) POINTS L, M, M REPRESENT under-employment of RESOURCES. (ii) Points A, H, D, I, E represent fuller utilisation of resources. (iii) Points S, T, U, represent growth of resources.

Discussion

6858.	Why does an economic problem arise ?
Answer» Solution :An ECONOMIC problem ARISES because we have to SATISFY UNLIMITED wants out of limited RESOURCES having alternative uses.

Discussion

6859.	Demand curve of a firm under monopoly is:
Answer» Dowward sloping Intermediate Upward sloping Perfectly Elastic Solution :A

Discussion

6860.	What are the main nethods of random sampling.
Answer» SOLUTION :In this CASE each individual is CHOSEN ENTIRELY by CHANCE and each member of the population has an equal chance, or probability, of being selected. ...

Discussion

6861.	Explain the concept of non-viable industry with the help of an example.
Answer» Solution :Non-viable industry refers to an industry for which supply and demand curves never intersect each other in the POSITIVE AXIS. For example, the cement industry will become non-viable if the government PUTS an entry tax for the firms because the COST of production will increase i.e the demad and supply curve will not intersect in the positive axis.

Discussion

6862.	Define marginal product, state the behaviour of marginal product when only one input is increased and other inputs are held constant.
Answer» Solution :Marginal PRODUCT is the addition to TOTAL product when one more unit of variable FACTOR is employed, keeping other factors constant. 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

6863.	What is relationship between AC and MC?
Answer» Solution :(i) when MC lt AC, AC falls. (II) When MC = AC, AC is constant and at its minimum point. (III) When MC GT AC, AC rises

Discussion

6864.	When is supply of a good said to be price inelastic?
Answer» SOLUTION :When the PERCENTAGE change in its supply is less than the percentage change in its PRICE.

Discussion

6865.	In a typical demand schedule, quantity demanded :
Answer» Varies directly with price Varies PROPORTIONATELY with price Varies INVERSELY with price Is INDEPENDENT of price Answer :C

Discussion

6866.	Can AP rise when MP starts declining ?
Answer» SOLUTION :Yes, AP can rise when MP STARTS DECLINING. It can happen as long as falling MP is more than AP. HOWEVER, when MP BECOMES equal to AP, then further decline in MP will also reduce the AP.

Discussion

6867.	In which of the following market structure, advertising expenses are the least?
Answer» Monopoly Duopoly Monopolistic Competition Oligopoly Solution :N/a

Discussion

6868.	Homogenous Product's is a characteristic of:
Answer» PERFECT competition Perfect OLIGOPOLY only Both a and b None of these Solution :N/a

Discussion

6869.	Explain the implications of the following in an oligopoly market: (i) Interdependence between firms (ii) Barriers to the entry of new firms
Answer» Solution :(i) when there are only a few firms in a market, it islikely that each has some KNOWLEDGE as to how its rivals OPERATE. Each firms expect reaction from its rival firms. Therefore each firms, in deciding price and output, takes into account the expected reactions by its rivals.In this way firms are interdependent on each other. (ii) The main reason why the NUMBER of firms is small is that there are barriers which prevent ENTRY of firms into industry. Patents,large capital requirement, control over crucial raw materials, ETC prevent new firms from entering into industry. Such barriers make an industry oligopoly.

Discussion

6870.	If increases in demand is greater than the increases in supply, then the equilibrium price:
Answer» Decreases Increases Does not CHANGE at all Cannot be determined Answer :(B)

Discussion

6871.	When average cost falls, marginal cost: (Choose the correct alternative)
Answer» FALLS Rises MAY FALL or may RISE NEITHER falls nor rises Solution :May fall or may rise

Discussion

6872.	Why is the number of firms small in oligopoly ? Explain
Answer»

Discussion

6873.	When a firm sells more at the uniform price, TR :
Answer» increases at FALLING RATE incraeses at RISING rate increases at constant rate none of these Answer :C

Discussion

6874.	All per unit cost curves (i.e., AVC and AFCcurves) are U-shaped.
Answer» Solution :FALSE. AC and AVC curves are U-shaped, but AFC is a rectangular hyperbola.The AFC is DEFINED as the FIXED cost, which is a CONSTANT, divided by QUANTITY of output produced. If you were to plot that, you would get a hyperbola. It's called a rectangular hyperbola because the asymptotes (Which are the X- and y-axes) are at right angles.

Discussion

6875.	What happends if: (i) (MU_(X))/(P_(X)) gt (MU_(Y))/(P_(Y)), (ii) (MU_(X))/(P_(X)) lt (MU_(Y))/(P_(Y)), (iii) MRS_(XY) gt (P_(X))/(P_(Y)), (iv) MRS_(XY) lt (P_(X))/(P_(Y))
Answer»

Discussion

6876.	What will be P.e_(D) on any two points of a demand curve which is parllel to X axis ?
Answer» zero unequal equal higher on the POINT to the right. Answer :C

Discussion

6877.	What is meant by price elasticity of demand ? Discuss the factors that affect it.
Answer»

Discussion

6878.	What is the relation between good X and good Y in each case, if with fall in the price of X demand for good Y (i) rises and (ii) falls ? Give reason.
Answer» Solution :(i) The two goods are complementary goods SINCE a fall in PRICE of X LEADS to a rise in demand of Y or there is negative RELATION between price of one good and the demand for another. (ii) The two goods are substitute goods as a fall in price of X leads to a fall in demand for Y or there is a positive relationship between price of X and demand for Y, which is the PROPERTY of substitute goods.

Discussion

6879.	______ classification is according to attributes of the data. (Qualitative/Quantitative)
Answer» ANSWER :QUALITATIVE

Discussion

6880.	MR________when TR increases at a diminishing rate.
Answer» ANSWER :DECREASES POSITIVELY

Discussion

6881.	Diagrams which show total of a set of data simultaneously are know as :
Answer» PERCENTAGE bar diagrams DIFFERENTIAL bar diagrams deviation bar diagrams multiple bar diagrams SOLUTION :B.

Discussion

6882.	Define price elasticity of supply. Discuss the percentage method for calculating price elasticity of supply.
Answer»

Discussion

6883.	The following factor will cause increase in supply of a good
Answer» RISE in PRICE of good increase in EXCISE TAX rate improvement in technology all of these. Answer :C

Discussion

6884.	If TP of employing one unit of variable factor is 12 units and that of 2 units of variable factor is 16 units, the marginal product of 2 units of variable factor is :
Answer» 3 units 4 units 8 units 16 units Answer :B

Discussion

6885.	Identify break-even point from the following diagram :
Answer» Solution :Break-even point REFERS to the SITUATION in which a firm is able to RECOVER all its costs. In other words it is a situation of normal profits ( A situation of No Profit - No Loss ). In the above figure point 'E' refers to Break-even point. If a firm operates to the left of point 'E' it is enjoying super-normal profits (TR gt TC). (Also break-even point can be determined from equality between AR and AC. Refer to section 8.3 SPECIFIC analysis : (1) Normal profits)

Discussion

6886.	When price remains same with rise in output, AR curve is :
Answer» VERTICAL STRAIGHT line parallel to Y-axis Horizontal straight line parallel to X-axis DOWNWARD sloping Positively SLOPED SOLUTION :N/A

Discussion

6887.	Which of the following is not a reason for operation of increasing returns to a factor ?
Answer» Better UTILIZATION of FIXED factor LIMITATION of fixed factor Increase in efficiency if VARIABLE factor Indivisibility of fixed factor Solution :B. Limitation of fixed factor is not a reason for operation of INCREASING returns to a factor.

Discussion

6888.	How will an increase in the price of petrol affect the demand curve of scooter ?
Answer» SOLUTION :The demand CURVE of scooter will SHIFT to the LEFT.

Discussion

6889.	Explain why are there only a few firms in an oligopoly market.
Answer» Solution :The main reason why the numbers of firms is few is that there are barriers which prevent entry of firms into INDUSTRY. PATENT, LARGE CAPITAL requirement, control over crucial raw materials etc. Prevent new firms from entering into industry. Only those who can CROSS these barriers are able to enter.

Discussion

6890.	Define Maximum Price ceiling.
Answer» Solution :MAXIMUM Price ceiling MEANS the maximum price the PRODUCERS are allowed to charge. In other words, price ceiling is fixing the price of a COMMODITY at a lower LEVEL than the equilibrium price.

Discussion

6891.	Giving examples, explainthe meaning of costin economics.
Answer» Solution :Cost is the TOTAL expenditure incurred in producing a commodity. In economics, cost is the sum total of : EXPLICIT cost and implicit cost. for EXAMPLE,wages PAID to employees.

Discussion

6892.	Economic problem is basically the problem of choice making :
Answer» (a) between inputs (b) Between OUTPUTS (C) About DISTRIBUTION of OUTPUT (d) All the above Answer :D

Discussion

6893.	Rightward shift of PPC indicates:
Answer» GROWTH of resources underutilisation of resources decrease in availability of resources none of these Solution :RIGHTWARD SHIFT of PPC INDICATES:growth of resources

Discussion

6894.	Define individual supply.
Answer» Solution :It refers to quantity of a commodity that an INDIVIDUAL firm is willing and ABLE to sell at a GIVEN price during a given TIME PERIOD.

Discussion

6895.	A farmer can produce 1000 quintals of sugar on a plot of land. With same resources, he can also produce 800 quintals of rice. What is the opportunity cost of producing sugar?
Answer» Solution :A farmer produces 1000 quintals sugar on a plot of land. With same RESOURCES, the next best alternatives use of plot of land is to grow rice, which produces 800 quintals of rice. HENCE, OPPORTUNITY cost of PRODUCING sugar is 800 quintals of rice.

Discussion

6896.	Agrecultural production if price of inputs rises.
Answer» ANSWER :SHIFTS to LEFT.

Discussion

6897.	Define marginal revenue (MR)
Answer» Solution :MR is the ADDITION to TR by selling an additional UNIT of commodity

Discussion

6898.	What is meant by short run (short period) ?
Answer» Answer :A short PERIOD is the period of time in which a firm can make changes in VARIABLE FACTOR (like labour, raw material) and not in fixed factor (like factory BUILDING, machinery, ETC).

Discussion

6899.	What is law of diminishing returns to a factor or diminishing marginal product ?
Answer» Answer :The law states, if we keep increasing the EMPLOYMENT of an INPUT, with other input FIXED, additionaloutput of that input will start falling. i.e., when MP falls (positively,zero and negative) after a CERTAIN level.

Discussion

6900.	The relationship between AR and MR depicted in the following diagram is possible when :
Answer» Price REMAINS CONSTANT with rise in OUTPUT Price falls with rise in output Price INITIALLY falls and then remains constant with rise in output None of these Solution :N/A

Discussion

Explore topic-wise InterviewSolutions in .

A curve based on a series where there are two classes with highest frequencies is called _______ curve. (Bi-modal / mixed)

Explain the chain of effects of 'increase' in demand of a good.

If there are two supply curves which intersect each other, which supply curve has greater elasticity of supply. Explain.

Explain the 'free entry and exit of firms' feature of monopolistic competition.

Distinguish between Positive Economics and Normative Economics

If due to fall in the price of goofd X, demand for good Y rises, the two goods are : (Choose the correctalternative)

Draw a PPC to represent the following on it : (i) Underemployment of resources (ii) Fuller utilisation of resources (iii) Grwoth of resources

Why does an economic problem arise ?

Demand curve of a firm under monopoly is:

What are the main nethods of random sampling.

Explain the concept of non-viable industry with the help of an example.

Define marginal product, state the behaviour of marginal product when only one input is increased and other inputs are held constant.

What is relationship between AC and MC?

When is supply of a good said to be price inelastic?

In a typical demand schedule, quantity demanded :

Can AP rise when MP starts declining ?

In which of the following market structure, advertising expenses are the least?

Homogenous Product's is a characteristic of:

Explain the implications of the following in an oligopoly market: (i) Interdependence between firms (ii) Barriers to the entry of new firms

If increases in demand is greater than the increases in supply, then the equilibrium price:

When average cost falls, marginal cost: (Choose the correct alternative)

Why is the number of firms small in oligopoly ? Explain

When a firm sells more at the uniform price, TR :

All per unit cost curves (i.e., AVC and AFCcurves) are U-shaped.

What happends if: (i) (MU_(X))/(P_(X)) gt (MU_(Y))/(P_(Y)), (ii) (MU_(X))/(P_(X)) lt (MU_(Y))/(P_(Y)), (iii) MRS_(XY) gt (P_(X))/(P_(Y)), (iv) MRS_(XY) lt (P_(X))/(P_(Y))

What will be P.e_(D) on any two points of a demand curve which is parllel to X axis ?

What is meant by price elasticity of demand ? Discuss the factors that affect it.

What is the relation between good X and good Y in each case, if with fall in the price of X demand for good Y (i) rises and (ii) falls ? Give reason.

______ classification is according to attributes of the data. (Qualitative/Quantitative)

MR________when TR increases at a diminishing rate.

Diagrams which show total of a set of data simultaneously are know as :

Define price elasticity of supply. Discuss the percentage method for calculating price elasticity of supply.

The following factor will cause increase in supply of a good

If TP of employing one unit of variable factor is 12 units and that of 2 units of variable factor is 16 units, the marginal product of 2 units of variable factor is :

Identify break-even point from the following diagram :

When price remains same with rise in output, AR curve is :

Which of the following is not a reason for operation of increasing returns to a factor ?

How will an increase in the price of petrol affect the demand curve of scooter ?

Explain why are there only a few firms in an oligopoly market.

Define Maximum Price ceiling.

Giving examples, explainthe meaning of costin economics.

Economic problem is basically the problem of choice making :

Rightward shift of PPC indicates:

Define individual supply.

A farmer can produce 1000 quintals of sugar on a plot of land. With same resources, he can also produce 800 quintals of rice. What is the opportunity cost of producing sugar?

Agrecultural production if price of inputs rises.

Define marginal revenue (MR)

What is meant by short run (short period) ?

What is law of diminishing returns to a factor or diminishing marginal product ?

The relationship between AR and MR depicted in the following diagram is possible when :