- Question 1
Answer briefly each of the questions (i) to (xv) : [15 × 2] = [30 Marks] (i) State any two assumption of Law of the Diminishing Marginal Utility. (ii) What is meant by macro economics ? (iii) If demand increases by 50% due to an increase in income by 75%, calculate the income elasticity of demand. (iv) Draw the supply curve of a perishable commodity. Give a reason for the shape of the supply curve. (v) What is meant by increasing returns to a variable factor ? (vi) What would be the elasticity of demand of a commodity when : (a) Price and total expenditure move in the same direction ? (b) Price and total expenditure move in the opposite direction ? (vii) Identify the type of market which has a characteristic of perfect substitutes. Give one reason for your answer. (viii) What is meant by super normal profit ? (ix) How is personal income calculated from private income ? (x) What is variable cost ? Give two examples. (xi) Differentiate between economic and non-economic services. (xii) Is deficit financing inflationary ? Justify your answer. (xiii) What is a trade union ?** (xiv) How can an increase in public expenditure create more employment in the country ?** (xv) What is meant by unfavourable balance of payment ?.