Question

All the inputs used in production of a good are increased simultaneously and in the same proportion. What are its possible effects on Total Product? Explain with the help of a numerical example. [6]​

Answer 1

Answer:

Question.l. Define ‘Marginal Rate of Transformation’.

Answer. Marginal Rate of Transformation is the rate at which one more unit of any good X is substituted for good Y. Symbolically,

MRT=ΔYΔX

Question.2. What is a demand schedule?

Answer. It is a two-column table which indicates various quantities demanded corresponding to various market prices.

Question.3. Define ‘production function’.

Answer. Production function explains the relationship between factor inputs and output under given j technology.

Question.4. What is ‘market supply’.

Answer.It is the total supply of a product (commodity) of all the producing firms at a given price at a given time.

Question.5. Define ‘equilibrium price’.

Answer. The price, where quantity demanded and quantity supplied are equal, is equilibrium price.

Any price other than this will lead to a situation of either excess demand or excess supply.

Question.6. Explain the central problem of ‘choice of technique’.

Answer. A number of techniques are available for producing a commodity, such as more of labour and less of capital or less of labour and more of capital. Therefore, a firm has to decide as } to which technique should be used for producing a commodity. This choice is made because

of the difference in the availability of resources. The technique, which is the cheapest, should be used. If labour is abundant and cheap, labour intensive technology would lead to cost effective production.

In case labour is scarce and costly, capital intensive technology would be used.

Question.7. Price elasticity of demand of a good is (-) 1. At a given price the consumer buys 60 units of the good. How many units will the consumer buy if the price falls by 10 per cent?

% change in quantity demanded

Answer.

cbse-sample-papers-for-class-12-economics-outside-delhi-2008-1

cbse-sample-papers-for-class-12-economics-outside-delhi-2008-2