- Question 1
What is positive economics?
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- Question 2
When is a firm called ‘price-taker’?
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- Question 3
Define budget set.
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- Question 4
What is meant by ‘increase’ in supply?
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- Question 5
Define supply.
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- Question 6
Why is a production possibilities curve concave? Explain.
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- Question 7
A consumer buys 10 units of a good at a price of Rs. 6 per unit. Price elasticity of demand is (−) 1. At what price will be buy 12 units? Use expenditure approach of price elasticity of demand to answer this question.
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- Question 8
Giving examples, explain the meaning of cost in economics.
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- Question 9
Draw average revenue and marginal revenue curves in a single diagram of a firm which can sell more units of a good only by lowering the price of that good. Explain.
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- Question 10
Explain the implication of ‘freedom of entry and exit to the firms’ under perfect competition.
OR
Explain the implication of ‘perfect knowledge about market’ under perfect competition.
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- Question 11
Explain the conditions determining how many units of a good the consumer will buy at a given price.
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- Question 12
Explain how the demand for a good is affected by the prices of its related goods. Give examples.
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- Question 13
Define ‘Market-supply’. What is the effect on the supply of a good when Government imposes a tax on the production of that good? Explain.
OR
What is a supply schedule? What is the effect on the supply of a good when Government gives a subsidy on the production of that good? Explain.
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- Question 14
What is meant by producer’s equilibrium? Explain the conditions of producer’s equilibrium through the ‘total revenue and total cost’ approach. Use diagram.
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- Question 15
Explain the concept of Marginal Rate of Substitution (MRS) by giving an example. What happens to MRS when consumer moves downwards along the indifference curve? Give reasons for your answer.
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- Question 16
Market for a good is in equilibrium. There is an ‘increase’ in demand for this good. Explain the chain of effects of this change. Use diagram.
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