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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.
| 6951. |
Explain any two sources of restricted entry under monopoly |
| Answer» Solution :The two sources of restricted entry under monopoly are as follows:1) Government Licensing: It means that before a firm can enter an industry, it needs to take PERMISSION from the government. Licensing is used to ENSURE minimum standards of competency. By not granting licenses to new firms, government aims to assure that only one firm operates in the market.2) PATENT rights: Certain big private companies are engaged in research and development ACTIVITIES. At times, they come up with new technologies. As a reward for their risk and investment in research, government grant them patent right. The PERIOD for which patent rights is known as patent life. | |
| 6952. |
Give formula of weighted average. |
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Answer» Solution :`barX_(W)=(sumWX)/(sumW)` Here, `barX_(W)` INDICATES WEIGHTED average, W = Weights. |
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| 6953. |
AVC of one unit of output is rs 10 while that of 2 units is rs 9. MC of one unit is: |
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Answer» rs8 |
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| 6954. |
State any three determinants of indvidual demand other than own price of the good. |
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Answer» Solution :(i) PRICE of substitute goods (ii) Price of complementary goods. (iii) INCOME of its BUYERS. (or any other three RELEVANT determinants) |
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| 6955. |
Explain the causes behind law of demand OR Why is there an inverse relationship between the price of a commodity and its quantity demanded ? |
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Answer» Solution :(i) Law of DIMINISHING Marginal Utility. (II) SUBSTITUTION Effect. (iii) Income Effect. (iv) Additional Customers. (V) Different Uses. |
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| 6956. |
Explain th method of calculating quartile in case of grouped data ? |
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| 6957. |
A firm has been operating in the market for a long time. Its profits have been falling considerably. The producer is not able to decide whether to continue with the operation or exit the industry. As a student of economics, suggest him the way. |
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Answer» Solution :It is clear from the question that the price charged by the FIRM is LESS than the average cost incurred by it. The firm hasto ENSURE the following and accordingly the decision to leave or STAY in the operation can be taken (i) If the firm is able to recover average variable cost FULLY and average fixed cost partially, then it may stay in the business and review its plans and policiesto reduce the losses. (ii) If average variable cost is recovered and average fixed cost is not at all recovered, the firm should close down its operation. It is a shut down point for the firm. |
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| 6958. |
As long as Marginal utility is positive, total utility |
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Answer» REMAINS constant |
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| 6959. |
A firm produces 200 units of good X. Actual money spent on producing this good is Rs. 2000. The owner supplied some inputs worth Rs. 800 for which he does not receive any payment. Economic cost calculated to produce this commodity is Rs. 3000. How do you account for the difference in costs. |
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Answer» Solution :ECONOMIC cost=Explicit cost+Implicit cost Economic cost=(Actual money spent)+(cost of inputs SUPPLIED by the owner+Normal Profit) =3000=(2000)+(800+Normal Profit) Normal Profit = 3000-2800=Rs.200 Difference in COSTS in normal profit. |
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| 6960. |
Median is |
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Answer» A computed AVERAGE |
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| 6961. |
Give two examples of fixed costs. |
| Answer» SOLUTION :(i) Rent, (II) Salary of permanent EMPLOYEE. | |
| 6962. |
PPC will shift to the when there is |
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Answer» underutilisation of resources |
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| 6963. |
What is meant by 'shift in supply curve"? |
| Answer» Solution :When the supply changes DUE to a CHANGE in other factors, at the same price, it results in a shift in the supply curve. | |
| 6964. |
How is MC related to TFC ? |
| Answer» SOLUTION :MC is INDEPENDENT (not RELATED ) of TFCand is affectedonly by CHANGE inTVC. | |
| 6965. |
How are the equilibrium price and quantity affected when: (a) Both demand and supply curves shift In the same direction. (b) Demand and supply curves shift in opposite directions. |
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| 6966. |
Scarcity is a common feature of both developed and developing economy. Still, economising of resources is more important conutries as compared to developed countries? Do you agree? |
| Answer» Solution :Yes, I agree with the given STATEMENT. Developing COUNTRIES NEED more resources as compared to the developed countries. As the resources are scarce, the developing countries should MAKE efficient and OPTIMUM use of available resources. | |
| 6967. |
Give an example each of fixed cost and variable cost. |
| Answer» SOLUTION :Fixed COST: RENT, Variable Cost, EXPENDITURE on raw matierals. | |
| 6968. |
Cost function is a "____" concept: |
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Answer» Economical |
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| 6969. |
Why is the study of consumer's equilibrium a subject matter of microeconmics ? |
| Answer» SOLUTION :CONSUMER's equilibrium is a SUBJECT matter of microeconomics because it relates to the problem of an INDIVIDUAL unit and not of the entire ECONOMY. | |
| 6970. |
Why is the short run marginal cost curve 'U'-shaped? |
| Answer» SOLUTION :Short RUN MARGINAL cost CURVE is U-shaped because of the LAW of Variable Proportions. | |
| 6971. |
The following table shows number of firms in two different areas 'A' and 'B' according to their annual profits. Present the data by way of Lorenz curve. |
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| 6972. |
Define secondary data. |
| Answer» Solution :ACCORDING to Wessel, "DATA collected by other persons are called secondary data." These data are, therefore , called second-hand data. Since these data have ALREADY been collected by somebody else, these are AVAILABLE in the form of published or unpublished reports. | |
| 6973. |
At why point does the SMCcurve cut the SAC curve ? Give reason in support of youranswer. |
| Answer» SOLUTION :SMC curve cuts the SAC curve at its minimum point. It happens becausewhen SAC FALLS, SMCis less than SAC. When SAC starts rising, SMCis more than SAC. So, it is only when SAC is constant and at its minimum point, that SMC is EUQAL to SAC. | |
| 6974. |
An unemployed person, Ramesh is looking out for a job. Ramesh received 2 job offers: one for Rs. 20,000 from ICICI Bank and other offer Rs. 15,000 from HDFC Bank. What is the oportunity cost for Ramesh if he accepts the offer of ICICI Bank? |
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Answer» |
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| 6975. |
AC is obtained by dividing TC by the level of : |
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Answer» Labouremployed |
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| 6976. |
Statistical calculations in classified data are based on |
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Answer» the ACTUAL VALUES of observations |
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| 6977. |
What is the reason for the long run equilibrium of a firm in monopolistic competition to be associated with zero profit ? |
| Answer» SOLUTION :The reason why firm in monopolistic competition EARNS zero profit in the long run is free ENTRY and exit of firms. If firm earns super normal profits in the short run then new firms will ENTER in the long run and if there ae losses then firm will exit in the long run. The RESULT is zero abnormal profits in the long run. | |
| 6978. |
Explain the following: (i) Free entry and exist features of perfect comeptition, (ii) Differentiated product. Features of monopolist competition. |
| Answer» Solution :i) 'Freedom of entry' signifies that there are no barriers to the entry of new firms into industry. When the existing firms are earning abnormal profits, the new firms, ATTRACTED by the prospects of profit, enter the industry. This raises market supply, which in turn, leads to fall in market price and consequently profits. Te entry continues till each firm is earning just the NORMAL profits. 'Freedom to exit' signifies that there are no barriers which restrict the existing firms from leaving the industry. The firms try to leave when they are facing losses. As the firms start leaving, market supply falls, leading to rise in market price and consequently reduction in losses. The firms continue to leave till the losses are wiped out and each existing firm is earning just the normal profits.ii)PRODUCT differentiation:In monopolistic competition, 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 | |
| 6979. |
Explain the effect on equilibrium price and equilibrium quantity in the following cases: (a) Demand curve shifts to the left, (b) Supply increases when the demand is perfectly elastic, (c) Both demand and supply increase in same ratio. |
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Answer» Solution :(a) Both equilibrium price and qunatity DEMANDED falls. (B) Equilibrium price remains the same whereas equilibrium QUANTITY INCREASES. (c) Equilibrium quantity increases whereas the equilibrium price remains the same. |
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| 6980. |
Like price, quantity to be sold by a firm under perfect competition is also fixed by the market. |
| Answer» Solution :FIRM is free to sell any QUANTITY. Generally, a perfectly competitive firm produces that LEVEL of output at which there is minimum AVERAGE cost. | |
| 6981. |
When TP curve is upward sloping and convex to X axis, MP curve is : |
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Answer» DOWNWARD sloping |
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| 6982. |
Total product falls when MP |
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Answer» FALLS positively |
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| 6983. |
Give relation between TR and MR when price is constant.(ii) AR and MR when price is constant. |
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Answer» Solution :When price is constant, MR = AR = Price. MR and AR coincide, both being PARALLEL to the X-axis. SInce MR is constant at all output LEVELS, TR is a positively sloped straight line making an angle of 45 DEGREES with the axis. When price is constant, AR = MR or both the curves coincide each other and are parallel to the X-axis |
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| 6984. |
"The demand cuve under oligopoly is interminate". Comment |
| Answer» Solution : DEMAND curve under oligopoly: The demand curve for an oligopoly firm is indeterminate, i.e. it cannot be DRAWN accurately as exact behavior pattern of a producer cannot be ASCERTAINED with certainty. | |
| 6985. |
"In a hypothetical market of mobile phones, the brand AWAAZ was leading the market share. Its nearest competitor VAARTA suddenly changed its strategy by bringing in a new model of the moblile phone at a relatively lesser price in response, AWAAZ to slashed its price. " Based on the above information, identify the form of market represented and discuss any one feature of the market. |
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Answer» Solution :(i) few big firms and large no. of buyers (ii) Price RIGIDITY (Non-price competition) (III) Barriers to entry of fiems (IV) INTERDEPENDENCE (Note. For detail REFER to Section 10.6 of chapter 10) |
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| 6986. |
An index number is useful for |
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Answer» For making government policies |
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| 6987. |
Give the meaning of production function. |
| Answer» Solution :PRODUCTION FUNCTION is an expression of the technological RELATION between PHYSICAL inputs and output of a GOOD. | |
| 6988. |
The central problem of ‘how to produce’ is basically the problem of deciding to undertake production with the help of: |
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Answer» (a) CAPITAL only |
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| 6989. |
Rising average product is possible only when MP is more than AP. |
Answer» Solution :True. When MP is more than AP, MP PULLS AP up. So, rising AP is possible only when `MP GT AP`, i.e. before POINT E in Fig. 5.5 
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| 6990. |
The total utility derived by Shyam by eating 6 apples of 300 utils. Marginal Utility of the 7^(th) apple is 30 utils. The total utility for 7 apples will be _____ utils |
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Answer» 330 |
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| 6991. |
Area under MC Curve is equal to : |
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Answer» TVC |
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| 6992. |
Large number of technical raining institutions have been started by the government. State its economic value in the context of production possibilities frontier. |
| Answer» SOLUTION :The ECONOMIC value of techncal training is that it ralses the production POTENTIAL of the COUNTRY by raising the efficiency of the labor. | |
| 6993. |
Explain the meaning and need for 'Price Floor'. |
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Answer» SOLUTION :Price Floor means that producers are not allowed to sell the GOOD or service below some price FIXED by the government. The NEED for price floor arises when government finds that the equilibrium price is too low for the producers. |
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| 6994. |
when is the demand for a good said to be perfectly inelastic ? |
| Answer» Solution :The demand for a GOOD is SAID to be perfectly inelastic when there is no CHANGE in quantity DEMANDED when the PRICE of the commodity changes. | |
| 6995. |
When market demand is more than market supply, it refers to a situation of : |
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Answer» EXCESS Supply |
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| 6996. |
when change in total cost is divided by change in output, we get : |
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Answer» AVERAGE COST |
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| 6997. |
"Scarcity and Choice go together commodity. |
| Answer» Solution :We live in a world of scarcity. All of us want better food, clothing, housing, schooling entertainment, ETC. But resources are not enough to meet all our WANTS. Even the richest economy (like U.S.A.) cannot satisfy all the NEEDS of people. It MEANS, scarcity of resources is a common feature of very economy and it gives RISE to the problem of choice, i.e., how to make the best possible use of available resources. If resources were available in plenty there would not have been any problem of choice. Hence, economics is concerned with the problem of choice under the condition of scarcity | |
| 6998. |
In case of perfect competition, the horizontal straight line demand curve indicates that an individual firm has no control over price of his product. Comment. |
| Answer» Solution :The given statement is correct. An individual firm under perfect COMPETITION is a PRICE TAKER and has to accept the price FIXED by the market forces of demand and SUPPLY. | |
| 6999. |
Explain the law of demand with the help of a demand schedule |
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| 7000. |
Calculate the missing figures. {:("Units",1,2,3,4,5,),(TU ("in utils"),16,-,-,-,40,),(MU ("in utils"),-,12,8,6,-,):} |
Answer» SOLUTION :
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