Explore topic-wise InterviewSolutions in Current Affairs.

Causes of arising economic problem are :

(1) Unlimited wants – human wants are unlimited. New wants arise as soon as Want gets satisfied. Thus, all human wants cannot be satisfied.

(2) Difference in intensity of wants – intensity of wants differs for different goods.

Few wants are very important for a person and less important for the other. On the basis of importance , every person keeps his unlimited wants on different priority basis.

(3) Limited or scarce Resources – Limited or scarce resources indicate that their demand exceeds their supply.

(4) Alternative uses of Resources – Resources are not only limited, but they have alternative uses also. For example, electricity can be used in fans, light, refrigerators etc. Again in this case also problem of choice arises i.e.how to use limited resources in different alternative uses.

(5) Problem of choice – no person, family or country can fulfil all its demand or wants through the limited resources. Thus, they face the problem of choice i.e. Which resources to be used in satisfying which wants and in which quantity ? In other words, the problem of choice arises and this problem of choice is also called ‘Economic Problem’.

It is clear from the above analysis that the problem of choice is basically an economic problem. If resources would have also been unlimited like unlimited wants, then there would have been no problem of choice. In other, words limited resources give rise to economic problems. In other words, unlimited wants and limited resources are the two pillars on which structure of all economic problems stand ‘’Economics’’ comes into existence only when the problem of choice arises.

Marginal Utility:- Marginal Utility is the extra Utility obtained by consuming one extra unit of consumption.Marginal Utility may be measured as the difference between the Utility of total units of stock consumption of a given commodity minus that of consuming one unit less in the considered, Symbolically

MUn=TUn-TUn-1

Law of Diminishing Marginal Utility:-According to this law, other things being equal, as the quantity of commodity consumed or acquired by the consumer increases, the marginal utility of the commodity tends to diminish.

Indifference curve explains the consumer’s behaviour related with the combination of two goods and this consumer’s behaviour is explained with the help of ‘Indifference schedule’ or Indifference set. Various combinations of two goods giving equal satisfaction to the consumer become the component of ‘Indefference schedule’ When indifference schedule is represented on a graph paper, we get indifference curve.

R.M.S. current in one direction is = 200/(100 + 100) = 1A

Average current in the first i.e. positive half cycle is = 1/1.11 = 0.9 A

Similarly, r.m.s. value in the negative half-cycle is = − 200/(100 + 500) = − 1/3 A

Average value = (−1/3)/1.11 = −0.3 A

Average value over the whole cycle is = (0.9 − 0.3)/2 = 0.3 A

Hence, M/C ammeter reads 0.3 A

Average heating effect during the +ve half cycle = I²_rms × R = I 2 × R = R

Similarly, average heating effect during the −ve half-cycle is = (−1/3)² × R = R/9

Here, R is the resistance of the hot-wire ammeter.

Average heating effect over the whole cycle is = 1/2(R +  R/9) =  5R/9

If I is the direct current which produces the same heating effect, then

I²R = 5R/9

∴ I = 5/3 = 0.745 A

Hence, hot-wire ammeter indicates 0.745 A

Stock refres to that quantity of goods which is available with the sellers in the market at a particular point of time while supply refers to that quantity which the seller is ready to sell at a particular price and a particular point of time. If the prevailing price of goods in the maket is low, seller will supply lesser quantity inspite of having larger stock. In other words, supply will be lower than stock at lower price and vice-versa.

The word ‘Equilibrium’ means – absence of changing tendency. Hence, equilibrium price refers to that situation in which changing tendency in price determining forces becomes absent.

 ‘’Equilibrium price is that price which is determined by demand and supply forces at that point where the demand of commodity and the supply of the commodity become equal to each other’’

Equality between demand and supply at equilibrium price means that the determined price is acceptable to both buyers and sellers i.e, the quantity which the buyer wants to buy at equilibrium price will be sold by the seller at the same price.

Difference between National Income at the constant price and National Income at the current price.

Initial velocity describes how fast an object travels when gravity first applies force on the object. On the other hand, the final velocity is a vector quantity that measures the speed and direction of a moving body after it has reached its maximum acceleration.

Work done = \(\int \vec F \cdot d\vec r\)

Let y positive direction be pointing towards ground. 

Then:

\(\vec F_1=-ky\hat j\)

\(\vec F_2 = mg \hat j\)

\(d\vec r = dy \hat j\)

\(20cm = 0.2m\)

Work is then \(\int_0^{0.2}mgdy - \int_0^{0.2}kydy\) =  \(0.2m \cdot 10\frac{m}{s^2}\cdot 2kg - 40\frac{N}{m}\cdot(0.2m)^2\cdot 0.5 = 4J - 0.8J = 3.2J\)

The points showing the difference between the cash credit and overdraft are:

(1) Overdraft is permitted to those customers who have current account with the bank while cash credit can be granted to anyone .

(2) Cash credit is granted after acquiring full security while overdraft is generally given against personal security because current account holders are old and reliable customers of bank .

(3) Overdraft is given for very short period while cash credits are granted for a fixed period .

(4) Interest rates charged on overdraft are higher than interest rate charged on cash credit .

Distinction between a direct tax and indirect tax.

Scope of ‘Micro Economics’ includes mainly three theories. 

(1) Theory of product pricing 

(2) Theory of factor pricing 

(3) Theory of Economic Welfare

 (1) In Theory of Product Princing, price determination of consumption goods is studied which includes both demand as well as supply sides.Demand side studies the behavior and consumers while in supply side, production cost and production conditions are included. 

(2) In Theory of Factor princing, Price determination of Factors of production (i.e rewards to factors for their contributions in production) is studied. 

(3) Theory of Economic Welfare, is the central point of micro economic analysis in which it is studied how to distribute the given quantities of goods and services among different consumers so as to maximize the economic welfare.

Slope of demand curve is negative, i.e. it falls from left to right which means less goods are brought or demanded at high prices and viceversa.

Negative slope of the demand curve is due to the following reasons:- 

(1) Law of Diminishing Marginal Utility- Law of Demand is based on law of diminishing marginal utility.According to it, marginal Utility of a good diminishes as an individual consumers more units of goods.In other words, as a consumer takes more units of a goods, the extra utility or satisfaction that he derived from an extra law of diminishing marginal utility means that the total utility increases but at a decreasing rate. 

(2) Increase in Purchasing power or Income effect- When price of a goods decreases, real income or purchasing power of consumer increases due to which he can maintain his previous level of consumption with less expenditure.In this way, at lower prices, more goods could be purchased.On the contrary consumer decreases due to which his consumption decreases.This kis the law of demand. 

(3) Substitution Effect- Substitution effect is due to inverse relation between price and demand of a goods. Whenever there is a change in the relative prices of goods, a rational consumer will be induced to substitute the relatively dearer commodity by buying the cheaper one.Such effect of the change in relative prices of goods is thus, described as the substitution effect. Substitution effect is the change in quantity demanded of a commodity resulting from a charge in its price relative to the prices of other commodities, the consumer’s real income or satisfaction level being held constant.In this way, due to substitution effect, at low price, demand increases and at high price demand decreases. 

(4) Change in consumer Number- Change in price also affects the number of consumers. When price decreases, the number of consumers increases as cheaper goods can be purchased by many consumers, i.e., even those consumers start purchasing goods which were not using it earlier due to high prices.On the contrary, when price increases, many consumers stop consumption or decrease it due to which demand decreases i.e., low price increases demand and high decreases it. This is the Law of Demands.

According to Meyers,” We may define supply as a schedule of the amount of goods that’s would be offered for sale at all possible prices at any one instant of time, or during any one period of time (e.g, a day, a week and so on ) in which conditions of supply remain the same’’ Determinants of supply of a commodity. 

(1) Price of the commodity:- There is a direct relationship between price of a commodity and its quantity supplied.At higher price, quantity supplied will be higher and vice-versa. 

(2) Price of Related Goods:- The supply of a commodity is also indirectly affected by the price of related goods.For example with increase in price of rice, supply of wheat falls because increased price of rice will induce producers for producing rice hence, wheat production will fall which further decreases the supply of wheat . 

(3) Prices of Production Factors:- Supply of a commodity is also affected by the price of Factors used in the production of the commodity.If the factor Price decreases, cost of production also declines, accordingly supply increases.Conversely, if the factor price increases cost of production also increases and supply tends to decrease. 

(4) Technological level:- Technological level and its change also affects supply of the commodity.Investment in the technique of production reduces cost of production.Consequently profits tend to increase inducing an increase in supply. 

(5) Number of firms :- Market supply of a commodity also depends upon number of firms in the market.Inrease in the number of firms results in the increase market supply. On the other hand,decrease in the number of firms results in the decrease in market supply of a commodity. 

(6) Goal of the firm :- If the goal of the firm is to maximize profits, more quantity of the commodity will be offered at higher.

(7) Expected Future Price:- Expected price change in the future also affects the supply.If the producer expects price of the commodity to rise in the near future, current supply of the commodity should reduce. 

(8) Government policy :- ‘Taxation and Subsidy’ policy of the government also affects market .market supply of the commodity. Increase in taxation tends to reduce the supply, while subsidies tend to induce the producer to provide greater supply of the commodity.

In modern times, banks also provide various services related to social welfare and economic development in the country.Banks also provide help in trade, industry, etc.,which accelerates the pace of economic development . 

such functions of Banks are:- 

(1) Increase in capital productivity – Bank collects surplus money from the public and grants loan for productive services which increases the productivity of capital, production and national income in the economy. 

(2) Investment Promotion – In modern times, big industries need huge amount of fixed and working capital which is met by banking system and this promotes investment in the country. 

(3) Encouragement to Capital Formation – Commercial banks mobilise idle savings of the people and invest the same in productive activities. Thus, they help in promoting capital formation and accelerating the rate of economic development. 

(4) Increase in Employment - Banking development not only provides employment in banking sector but due to increased investment in trade and industry through bank loaning also increases employment level in the economy. 

(5) Increase in Employment – Extending use of cheques, bank makes the payments easier which has removed the fear of cash loss 

(6) Elasticity of Monetary system – Banks extend or contract credit as per requirement of the economy. It maintains elasticity in monetary system. 

(7) Encouragement to Foreign Trade – Banks help in promoting foreign trade by arranging foreign currency for the traders and providing various assistance to foreign trade. 

(8) Development of Enterpreneurs – In modern times, commercial banks are also providing assistance in development an entrepreneurship in the economy by providing loans to them.

Marshall gave the definition of Economics related to welfare.

Production possibility curve is Concave to the axis.

(d) All of these 

ΔTU/ΔQ the calculate marginal utility.

Indifference curve slops From Left to Right.