Explore topic-wise InterviewSolutions in Current Affairs.

According to the author, the right people to set the standards are the cyberspace communities themselves.

To describe cyberspace the author has used the metaphor of real estate. Real estate is an intellectual, legal, artificial environment constructed on top of land. It recognizes the difference between parkland and shopping mall, between red-light zone and school district, between church, state and drug store. In the same way we can think of cyberspace as a giant and unlimited world of virtual real estate.

Addition to the stock of capital of a firm is known as Net investment (flow).

The returns to scale can happen only in the long run as both the factors (labour and capital) can be changed. One special case, in the long run, occurs when both factors are increased by the same proportion or factors are scaled up. 

a. Constant returns to scale: When a proportional increase in all inputs results in an increase in output by the same proportion, the production function is said display constant returns to scale. 

b. Increasing returns to scale: When proportional increase in all inputs results in an increase in output by a larger proportion, the production function is said to display increasing returns to scale. 

c. Decreasing returns to scale: When a proportional increase in all inputs results in an increase in output by a smaller proportion, the production function is said to display decreasing returns to scale.

For example, if in a production process, all inputs get doubled. As a result, if the output gets doubled, the production function exhibits constant returns to scale, if output is less than doubled, exhibits decreasing returns to scale and if it is more than doubled, exhibits increasing returns to scale.

In the market, at a given price level if market demand is greater than market supply, then it is called excess demand. In the market, at a given price level if market supply is greater than market demand, then it is called excess supply.

Cyberspace is a voluntary destination because you have to go someplace in particular. People can choose where to go and what to see. I fully agree with the author.

The assumption of Ceteris paribus which literally means other things remaining equal or constant.

The price at which equilibrium is reached is called equilibrium price. The quantity bought and sold at equilibrium price is called equilibrium quantity. 

Therefore, price and quantity will be in equilibrium if qD(p) = qs (p), where p is price and qD is quantity demanded and qs is quantity supplied.

The inferior goods are those goods for which the demand increases with the fall in income of consumer and vice-versa. That is, there will be a negative relationship between income of consumer and demand for inferior goods. Example: ragi, jowar, etc.

1 – d, 2 – c, 3 – b, 4 – e, 5 – a.

Isoquant is the set all possible combinations of the two inputs that yield the same maximum possible level of output. Each isoquant represents a particular level of output and is labelled with that amount of output. The isoquants are negatively sloped.

This is because, when the marginal products are positive, with greater amount of one input, the same level of output can be produced by using lesser amount of the other. So, isoquants are negatively sloped.

RBI is the only institution which can issue currency in India.

Monopoly is a market with only a single seller or firm.

The inferior goods are those goods for which the demand increases with the fall in income of consumer and vice-versa. That is, there will be a negative relationship between income of consumer and demand for inferior goods. Example: ragi, jowar, etc.

1-c; 2-d; 3-a; 4-e; 5-b.

A few important reasons of emerging monopoly are as follows. 

1. Centralization of Raw material:- When the raw material of the production of a particular commodity is centralised at a particular place, monopoly situation emerges. For example, Bengal was having monopoly of Jute industry before the partition of the country. 

2. Legal Monopoly:- Some monopoly is established through the law. For example, when the government provides monopoly power of water distribution in a particular city to a particular industry, it gives birth to legal monopoly. 

3. Cut throat competition:- When firm make cartels for saving them from cutthroat competition and controlling the supply of the commodity, monopoly emerges. 

4. Patent rights:- Patent rights also create monopoly situation. Producers obtain patent right or trademark monopoly regarding the shape, design or other characteristics of the product. Patent right prohibit the use of trademark by others.

The macroeconomic decision-makers/players are Reserve Bank of India, Securities, and Exchange Board of India and other similar institutions.

When the consumer always prefers more of the product which gives him higher level of satisfaction it is called monotonic preferences. That is, an increase in the amount of good 1 along the indifference curve is associated with a decrease in the amount of good 2. This implies that the slope of the indifference curve is downward. 

Here, the consumer will not remain indifferent between two combination of commodities when he has an opportunity to have more quantity in one combination than the other.

The requirements of a monopoly market structure are as follows: 

1. Existence of a single producer of a particular commodity. 

2. No other commodity works as a substitute for this commodity. 

3. The monopoly situation has to persist over a time. 

4. Restrictions to prevent other firms entering the market and selling the commodity.

The minimum level of profit that is needed to keep a firm in the existing business is called as normal profit.

Industrial Estate is the place where required facilities as well as factory accommodation are provided by the government.

Government would mainly establish the complete aspects for the industries in much more efficient way.

Industrial estates utilised effective tool as growth and promotion of small-scale industries.

It is mainly used as effective tool for decentralizing the industrial activity across the rural as well as backward areas.

It is planned investment. It is made with an intention to create capital goods during a particular period of time. Here, the investment is assumed and it is imaginary. It is the anticipated investment during a year.

Mixed economic system is followed in Pakistan.

(b) State Government

The government imposed lower limit on the price that may be charged for a particular good or service is called price floor. Example, agricultural price support programmes and minimum wage legislation.

Equilibrium price is the price at which equilibrium is reached in the market.

The equilibrium quantity is defined as the quantity which is bought and sold at equilibrium price. Therefore, price and quantity will be at equilibrium when

Qd (p*) = qs (p*)

p* denotes the equilibrium price and Qd (p*) and qs (p*) denote the market demand and market supply, respectively.

(d) All of the above

It is a special case of oligopoly where there are exactly two sellers or firms.

OR

It is a market with two sellers or firms with many buyers. It is special case of oligopoly market.

Opportunity cost of some activity is the gain foregone from the second-best alternative activity. For example, you have Rs. 10000 which you decide to invest in your family business. What is the opportunity cost of your action? If you do not invest this money, you can either keep it in the house safe which will give you zero return or you can deposit it in either bank A or bank B in which case you get an rest at the rate of 20% or 10%, respectively.

So the maximum benefit that you may get from other alternative activities is the interest from the bank A. But this Opportunity will no longer be there once you invest the money in your family business. The opportunity cost of investing the money in your family business is, therefore, the amount of forgone interest from the bank A.

• The following conditions needed for profit by a firm under perfect competition:
• The price P must be equal to MC 
• Marginal cost must be non-decreasing at q₀ 
• The firm to continue to produce, in the short run, price must be greater than the average variable cost and in the long run, price must be greater than the average cost.

Transaction motives speculative motive.

Economic agents are those individuals or institutions which take economic decisions. They can be consumers, producers, government, corporation, banks, etc.

The types of returns to scale are: 

1. Constant returns to scale. 

2. Increasing returns to scale. 

3. Decreasing returns to scale.

National income accounting is the study of the income and expenditure of the entire economy.

When the market structure has large number of firms, free entry and exit of firms and differentiated goods, then it is called monopolistic competition.

For example, there is large number of soaps producing firms. But many of the soaps being produced are associated with some brand name and are distinguishable from the other companies. The consumer develops a preference for a particular brand of soap over time or becomes loyal to a particular brand like some people always prefer Mysore Sandal Soap.

The concepts of short-run and long run are defined aa a period simply by looking at whether all the inputs can be varied or not. It is not advisable to define short run and long run in terms of days, months or years.

In the short run, at least one of the factor – labour or capital cannot be varied and therefore, remains fixed. In order to vary the output level, the firm can vary only the other factor. The factor that remains fixed is called the fixed factor and the other factor which the firm can vary is called the variable factor.

In the long run, all factors of production can be varied. A firm in order to produce different levels of output, in the long run, may vary both the inputs simultaneously. So, in the long run there is no fixed factor.

These are the goods used by other producers as material inputs. These are used as raw material for production of other commodities. These are not final goods.

Price elasticity of demand is a measure of the responsiveness of the demand for a good to change in its price. In the words of Prof. Stonier & Hague, “Price elasticity of demand is a technical term used by economists to describe the degree of responsiveness of the demand for a good to a change in its price. It is measured by using the following formula.

PED = (Percentage change in demand for the good/Percentage change in price of the good)

Substitutes- 

Substitutes are such products which have the capacity to satisfy the same needs, i.e., they can be used for the same purpose in place of each other e.g., Tea-coffee. In this case, when price of one goods increases, other things being equal, demand of substitutes also increases e.g., price of coffee increases, then demand of tea also increases. 

Complementary Goods- 

Those goods are used together for satisfying a particular want e.g, scooter-petrol. If price of scooter increases, then demand of its complementary goods is affected although price of petrol remains unchanged. In this way, inverse relation exists between price and quantity demanded of complementary goods.

(d) All of the above

Monotonic preference refers to that preference of a consumer of a bundle which has at least one commodity more than the other bundle.

A Consumer’s preferences are monotonic if and only if between any two bundles, the consumer prefers the bundle which has more of at least one of the goods and no less of the other goods as compared to other bundle.

Example: A consumer with monotonic preference will prefer the bundle (2,3) to bundles (2,2),(1,3) and (1,2) bundles. 

A consumer’s preferences are said to monotonic if and only if between any two bundles, the consumer prefers the bundle which has more of at least one of the goods and no less of the other good as compared to the other bundle.

For instance, the consumer between any bundles say (x₁, x₂) and (y_1, y₂), if (x₁, x₂) has more of at least one of the goods and no less of the other good compared to (y₁, y₂) then the consumer prefers (x₁, x₂) to (y₁, y₂). This is called monotonic preferences. Here, the consumer will not remain indifferent between two combinations of commodities when he has an opportunity to have more quantity in one combination than the other.

Wages is determined at the point where the demand for labour and supply of labour curves interect.

(i) Given C = 500 + 0.8y

I = 500

We know, Y = C + I 

Y = 500 + 0.8y + 500

Y – 0.08y = 1000

y = 1000/0.2 = 5000

(ii) C = Y – I

= 5000 – 500

= Rs. 4500 Crores

Correct answer is (A)Competing usages

The answer is (c) es = 0

Correct answer is (C) es = 0