Economics: 2018 : CBSE : [Delhi] : Set 3
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Q1
Which of the following does not cause shift of supply curve of a good?
(Choose the correct alternative)
(a) Price of input
(b) Price of the good
(c) Goods and services tax
(d) Subsidy
Marks:1View AnswerAnswer:
(b) Price of the good
Explanation: Changes in price of goods cause movement along the supply curve.
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Q2
Implicit costs are costs of:
Marks:1View AnswerAnswer:
self-owned resources
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Q3
At what level of production is total cost equal to total fixed cost?
Marks:1View AnswerAnswer:
At zero level of production total cost is equal to total fixed cost. It is because at 0 level of production variable cost is zero.
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Q4
Define opportunity cost.
Marks:1View AnswerAnswer:
Opportunity cost refers to value of a factor in its next best alternative use.
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Q5
Which of the following measures of price elasticity shows elastic supply?
(Choose the correct alternative)
(a) 0
(b) 0.5
(c) 1.0
(d) 1.5
Marks:1View AnswerAnswer:
(d) 1.5
Explanation: Elastic supply of a commodity implies that elasticity is more than 1.
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Q6
If a seller obtains
3,000 after selling 50 units and his average revenue is 60 after selling 51 units then MR will be- Marks:1View AnswerAnswer:
59.62 -
Q7
Explain the central problem of what is produced and in what quantities?
Marks:3View AnswerAnswer:
The central problem what to produce and in what quantities that an economy faces is related to decision what goods and services to be produced in the economy. For instance, if an economy produces only two goods say capital goods (building, tractor, airplane, etc.) and consumer goods (wheat, butter, laptops, etc.). Then, the economy has to take decision in what quantities these goods have to be produced. The economy has to decide which of the capital goods to be produced and in what quantities to be produced. Similarly, the economy has to decide which of the consumer goods to be produced and in what quantities to be produced. It depends on amount of available resources. Thus, the economy has to choose whether it wants more of capital goods and more of consumer goods.
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Q8
In what circumstances may the production possibility frontier shift away from the origin? Explain.
Marks:3View AnswerAnswer:
Production possibility frontier depicts all possible combinations of two goods which can be produced with the given resources and technology with full and optimum utilisation of resources.
The following changes lead to production possibility frontier shift away from the origin:
- Growth of Resources
- Improvement in Technology for production of both commodities
Both the changes lead to increase in productive capacity and thereby causes rightward shift in the PPC.
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Q9
A consumer buys 200 units of a good at a price of Rs 20 per unit. Price elasticity of demand is (–) 2. At what pricewill he be willing to purchase 300 units? Calculate.
Marks:3View AnswerAnswer:
The consumer will be willing to purchase 300 units at price 15 rupees per unit. -
Q10
Explain the conditions of producer's equilibrium under perfect competition.
Marks:4View AnswerAnswer:
A producer is in equilibrium when it produces that level of output which earns him the maximum profits. This point is equilibrium point because a producer does not have incentive to move from this point.
Under perfect competition, there are two ways of studying producer equilibrium:
- TR-TC Approach
- MR-MC Approach
Under TR-TC Approach, the condition is the difference between TR and TC should be maximum.
Under MR-MC Approach, there are two conditions for producer equilibrium:
- MR=MC
- MC cuts MR curve from below
In the figure, MC cuts MR at points A and B. But MC cuts MR from below at point B. So, point B is the point of producer equilibrium.
