6 MARKS (LONG QUESTIONS)
01. Discuss the economic problems related to allocation of resources. [6]
Q2
Why a consumer is said to be in equilibrium when he buys that combination
of goods which lies at that point on the indifference curve where the budget
line is tangent to the indifference curve?
[6]
Q3 Explain the Law of Diminishing Marginal Utility with the help of Total Utility
schedule.
[6]
Q4. Explain with suitable examples the various factors that affect the price
elasticity of demand.
[6]
Q5. State and explain the various factors that determine the demand of a
commodity
[6]
Q6. Distinguish between change in quantity demanded' and 'change in demand'
of a commodity. Use Diagram.
[6]
Answers
Answer:
1.The problem of externalities. The economic problem of pollution. ...
Environmental issues. ...
Monopoly. ...
Inequality/poverty. ...
Volatile prices. ...
Irrational behaviour. ...
Recession. ...
Inflation.
2. Let the two goods be X and Y as shown in the diagram. The tangent is at point E where: slope of indifference curve = Slope of budget line Or
. <br> The equilibrium purchase is
of X and
of Y on the indifference curve
3.The Law Of Diminishing Marginal Utility states that all else equal as consumption increases the marginal utility derived from each additional unit declines. Marginal utility is derived as the change in utility as an additional unit is consumed. Utility is an economic term used to represent satisfaction or happiness
4. There are several factors that affect how elastic (or inelastic) the price elasticity of demand is, such as the availability of substitutes, the timeframe, the share of income, whether a good is a luxury vs. a necessity, and how narrowly the market is defined.
5. As mentioned above, apart from price, demand for a commodity is determined by incomes of the consumers, his tastes and preferences, prices of related goods. Thus, when there is any change in these factors, it will cause a shift in demand curve.
6. A change in demand means that the entire demand curve shifts either left or right. ... A change in quantity demanded refers to a movement along the demand curve, which is caused only by a chance in price. In this case, the demand curve doesn't move; rather, we move along the existing demand curve.
please please mark as a brainlist answer ☺️☝️☝️