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.
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.
False, a monopolist cannot sell any quantity he likes at a price because the monopolist controls only the supply and not the demand. A monopolist can only determine one of two things. It has to be either price or quantity; this is because there is a fixed price consumers are willing to pay for a given quantity. As a result a monopolist can only charge the price corresponding to the specific quantity he has set otherwise the goods he has produced won’t be sold. This is because he has no control over the quantity that he can sell in the market. Rather, it depends on the buyers that what quantity of output they want to purchase at the price fixed by the monopolist. If the monopolist fixes a higher price, then lesser quantity of the output will be demanded and lesser quantity will be sold in the market. On the other hand, if he fixes a lower price, then higher quantity of the good will be sold.
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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