|
 |
 | Quick Links : | |
|
|
|
|
|
|
|
 |
|
 |
|
| Covering Chapters |
1. |
Micro and Macro Economics |
8. |
Forms of Market: Perfect Competition, Monopoly
and Monopolistic Competition |
2. |
Elementary Theory of Demand |
9. |
The Theory of Distribution I: Marginal Productivity
Theory and Wages |
3. |
Elasticity of Demand |
10. |
The Theory of Distribution II: Rent, Interest and Profit |
4. |
Elementary Theory of Supply: Law of Supply and Price Elasticity of Supply |
11. |
National Income: National Income Aggregates,Measurement of National Income Nature of Goods and Services and Circular Flow of National Income |
5. |
Law of Returns: Return to a Factor and Returns to Scale |
12. |
Public Finance: Taxation, Expenditure, Debt, Fiscal Policy, Deficit Financing, Government Budget |
6. |
Equilibrium Price Market Equilibrium |
13. |
International Trade and Balance of Payment |
7. |
Cost and Revenue |
|
|
|
|
| Questions |
| Question 16 |
Marks [14]
Time : 18 mins |
| (A) |
What is an indifference curve? What are the properties of indifference curve? |
| (B) |
Define price elasticity of demand? Explain percentage method of measuring price elasticity of demand? |
|
| Question 17 |
Marks [14]
Time : 18 mins |
| (A) |
Explain the law of variable proportion with the help of the diagram. |
| (B) |
Differentiate between : |
| |
(i) Micro and Macro economics |
| |
(ii) Extension in supply and increase in supply |
|
| Question 18 |
Marks [14]
Time : 18 mins |
| (A) |
Distinguish between the movement along the demand curve and shift of the demand curve with the help of diagram and proper explanation. |
| (B) |
Explain the simultaneous shift in demand and supply curve : |
| |
(i) When equilibrium price rises |
| |
(ii) When equilibrium price falls |
|
| Question 19 |
Marks [14]
Time : 18 mins |
| (A) |
Describe the short-run equilibrium of firm under perfect competition showing super-normal profit. |
| (B) |
Explain the features of monopoly. |
|
|
|
| Solutions Tips and Guidelines |
| Solution 17 (A) |
Marks [8]
Time : 10 mins |
|
| The law of variable proportion holds good in short period. In short period, one factor is fixed and scarce. Keeping one factor fixed, if additional units of the variable factor are employed, then the total output first increases at an increasing rate. After a point, if further units of the factor are employed then the total output increases at a constant rate and then at a diminishing rate. |
| In other words, keeping one factor constant if additional units of a variable factor are employed then to begin with, the average and the marginal product will rise. Thereafter, these will remain constant for a while and if any further units of variable factor are employed, then they will decline. |
| According of Benham, "As the proportion of one factor in a combination of factors is increased, after a point first the marginal and then the overall product of that factor will diminish." |
|
| Assumptions of the law : |
1 |
One factor is variable and others are constant. |
|
2 |
Technology is assumed to be given and unchanged. |
|
3 |
It is possible to change factor proportions. |
|
 |
|
| Explanation of the stages : |
| |
Stage I : The first stage goes from the origin to point where the average output is the maximum. Here the firm expands output by increasing the quantity of variable factors, average product increases. In this stage the marginal product increases and total product also increases at an increasing rate. This stage is called the stage of increasing returns. |
|
|
|
|
|
 |
|
|
|
|
|
|
Copyright © 2007 www.globalclassroom.in All rights reserved. |
|
|
|
