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.
Explain the implications of the following in a perfectly competitive market
(a) Large number of sellers
(b) Homogeneous products.
(a) A perfectly competitive market is a market which consists of buyers and sellers. They produce a homogeneous product. When the number of buyers is more, the demand of an individual buyer is only a small portion of the market demand. Individual buyers cannot influence the market price of a good by varying their demands, and thus, an individual buyer is a price taker and not a price maker.
(b) In a perfectly competitive market, buyers will treat the products of all the firms in the market as homogeneous. There is zero degree of product differentiation and the firm cannot take any control of the price. Here, the firm does not involve in advertisement and sales promotion activities. Hence, uniform price prevails in a perfectly competitive market for 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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