- Question 1
Answer briefly each of the questions (i) to (xv) : [15 × 2] = [30 Marks] (i) Differentiate between Micro and Macro Economics. Give two examples of each. (ii) Define income effect. (iii) What is the price elasticity of demand when : (a) the change in price and total expenditure move in the opposite direction ? (b) the change in price and total expenditure move in the same direction ? (iv) Distinguish between autonomous and accommodating capital flow in Balance of Payment. (v) What is the price elasticity associated with a straight line supply curve passing through the origin ? Explain with a diagram. (vi) Differentiate between private income and personal income. (vii) Why is the MR curve below the AR curve under imperfect competition ? (viii) Draw a diagram to show the effect of total product on marginal product of a variable factor when total product reaches its maximum. (ix) Differentiate between break-even point and shut-down point. (x) State two similarities between perfect competition and monopolistic competition. (xi) Define transfer earnings.** (xii) When is the national product of a country higher than domestic product. (xiii) It is possible to measure profits earned by a firm in the following diagram ? Explain why.
(xiv) Distinguish between gross profit and net profit.** (xv) What is fiscal deficit ?