Short Answer TypeExplain “large number of buyers and sellers” features of a perfectly competitive market.
Production in an economy is below its potential due to unemployment. Government starts employment generation schemes. Explain its effect using production possibilities curve.
Explain the conditions of producer’s equilibrium with the help of a numerical example.
The price elasticity of demand for a good is − 0.4. If its price increases by 5 percentage, by what percentage will its demand fall? Calculate.
Ed = percentage change in quantity demanded / Percentage change in price
Ed = -0.4
% change in price = 5
Hence, -0.4 = percentage change in quantity demanded / 5
Percentage change in quantity demanded = -0.4 * 5 = -2
Thus, when the price of good increase by 5%, the quantity demanded falls by 2%.
Explain any two factors that affect the price elasticity of demand. Give suitable examples.
Giving reasons, state whether the following statements are true or false.
A monopolist can sell any quantity he likes at a price.
Long Answer TypeExplain the Law of Variables Proportions with the help of total product and marginal product curves.
Short Answer TypeExplain the relationship between prices of other goods and demand for the given period.
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