Short Answer TypeDefine fixed cost. Give an example. Explain with reason the behaviour of Average Fixed Cost as output is increased.
Define marginal product. State the behaviour of marginal product when only one input is increased and other inputs are hold constant.
When price of a commodity falls from Rs 12 per unit to Rs 9 per unit, the producer supplies 75 percent less output. Calculate price elasticity of supply
Long Answer TypeWhy do central problems of an economy arise? Explain the central problem of 'for whom to produce'?
Examine the effect of (a) fall in the own price of good X and (b) rise in tax rate on good X, on the supply curve. Use diagrams.
1. A decline in the own price of Good X shows a positive relationship with the supply of good. When the price declines from P1 to P2, there will be contraction of supply from Q1 to Q2. Hence, the supply curve will move downwards. 
2. Assuming other things remain constant, the levy of a tax on Good X shows a negative relationship with the supply of a good. When there is a tax on a good, the cost of production increases and decreases the profit of the producer. Hence, it leads to a decrease in the supply of a good which shifts the supply curve towards the left, i.e. S2S2 to S1S1.
Explain the implications of the following in a perfectly competitive market
(a) Large number of sellers
(b) Homogeneous products.
Explain the implications of the following in an oligopoly market:
(a) Barriers to entry of new firms
(b) A few or a few big sellers
Short Answer TypeNational income is the sum of factor incomes accruing to:(Choose the correct alternative):
(a) Nationals
(b) Economic territory
(c) Residents
(d) Both residents and non-residents
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