Question

practice sheet for economics
1. define consumer's equilibrium.
2. what do you understand by law of of diminishing marginal utility? explain with the help of table and diagram.
3. using utility approach explain consumer equilibrium.
4. using indifference curve approach explain consumer's equilibrium.
5. what is law of demand? explain.
6. state the factors affecting law of demand.
7. what are the degrees of price elasticity of demand? explain.
8. a consumer consumes 10 units of commodity atta price is 20 per unit. find out price elasticity of demand if the consumer purchase 15 minutes fan price decreases to rupees 10 per unit.
9. what is supply differentiate between change in quantity supplied and change in supply.
10. state the features of of perfect market competition.
11. what are the features of oligopoly market? also differentiate between collusive and non collusive oligopoly.
12. a consumer consumes two goods X and y, his marginal utility is 20x/ 25y. whether he is in equilibrium or not? what are rational consumer will do in this situation?
13. indifference curve? explain the properties of of IC curve.
14. a consumer consumes two goods X and y. At at our consumption level he finds that marginal rate of substitution is higher than the ratio of the prices. explain the reaction of
the consumer.
15. define cost. why MC is always u shaped?
16. what do you understand by returns to a variable factor? what are the causes of increasing returns?
17. explain the factors affecting supply of the commodity.
18. state the factors affecting price elasticity of supply.​

Answer 1

Answer:

1) Consumer's equilibrium is a situation when he spends his given income on the purchase of one or more commodities in such a way that he gets maximum satisfaction and has no urge to change this level of consumption, given the prices of commodities.

2)It should be carefully noted that is the marginal utility and not the total utility than declines with the increase in the consumption of a good. ... The law of diminishing marginal utility means that the total utility increases but at a decreasing rate.

3) Consumer Equilibrium It refers to a situation under which a consumer spends his entire income on purchase of a good in such a manner that gives him maximum satisfaction and he has no tendency to change it. ...

4) Explain. Consumer's Equilibrium through Indifference Curve. According to indifference curve approach, a consumer attains equilibrium under two conditions: (i) When marginal rate of substition is equal to ratio of prices of two goods i.e., MRSxy = Px/Py.

5) Definition: The law of demand states that other factors being constant (cetris peribus), price and quantity demand of any good and service are inversely related to each other. When the price of a product increases, the demand for the same product will fall.

6)The demand for a good depends on several factors, such as price of the good, perceived quality, advertising, income, confidence of consumers and changes in taste and fashion. We can look at either an individual demand curve or the total demand in the economy.

7) Perfectly Inelastic Demand:

Perfectly inelastic demand is opposite to perfectly elastic demand. Under the perfectly inelastic demand, irrespective of any rise or fall in price of a commodity, the quantity demanded remains the same. The elasticity of demand in this case will be equal to zero (ed = 0).

8)

9) A change in quantity supplied is a movement along the supply curve in response to a change in price. A change in supply is a shift of the entire supply curve in response to something besides price.

10)Features of a Perfectly Competitive Market

*Free and Perfect Competition: In a perfect market, there are no checks either on the *buyers or sellers. ...

*Cheap and Efficient Transport and *Communication: ...

*Wide Extent: ...

*Large number of firms: ...

*Large number of buyers: ...

*Homogeneous Product: ...

*Free entry and exit: ...

* Perfect knowledge:

11) Collusive oligopoly is a form of market in which few firms form a mutual agreement to avoid competition.

Non-collusive oligopoly is a form of market in which few firms. Each firm has its price and output policy is independent of the rival firms in the market.

12)

13) The four properties of indifference curves are: (1) indifference curves can never cross, (2) the farther out an indifference curve lies, the higher the utility it indicates, (3) indifference curves always slope downwards, and (4) indifference curves are convex.

14)

15) Marginal Cost. Marginal Cost is the increase in cost caused by producing one more unit of the good. The Marginal Cost curve is U shaped because initially when a firm increases its output, total costs, as well as variable costs, start to increase at a diminishing rate. ... Then as output rises, the marginal cost increases.

16) Once an investment is made in an indivisible fixed factor, then addition of more and more units of variable factor, improves the utilisation of fixed factor. The increasing returns apply as long as optimum level of combination between variable and fixed factor is achieved

17)At higher prices the supply of a commodity increases. This increases the profitability of the producer. The supply of a product not only depends on its price but also price of other goods- The increase in price of the other good is more profiable the producer will shift production and increase the supply of that good

18)There are numerous factors that impact the price elasticity of supply including the number of producers, spare capacity, ease of switching, ease of storage, length of production period, time period of training, factor mobility, and how costs react.