Question 1: Compute the price elasticity of demand for a commodity when its price rises by 25 percent and quantity demanded drops from 150 units to 120 units.
Question 2: Describe the relation between marginal revenue and average revenue if a firm is capable to sell more quantity of output:
a) At similar price.
b) Only by lowering the price.
Question 3: Why does the difference between Average Total Cost and Average Variable Cost reduce with a raise in the level of output? Can these two be equivalent at some level of output? Describe.
Question 4: Describe the implications of the given features of the perfect competition:
a) Large number of buyers and sellers.
b) Freedom of entry and exit of firms.
Question 5: For a consumer to be in equilibrium why should marginal rate of substitution be equivalent to the ratio of prices of two goods?
Question 6: Why is the consumer in equilibrium when he buys only that combination of the two goods which is shown at the point of tangency of the budget line with an indifference curve? Describe.
Question 7: Give the meaning of the involuntary unemployment.
Question 8: Illustrate the relationship between marginal propensity to save and marginal propensity to consume?
Question 9: Price of 1 US Dollar has fallen from Rs 50 to Rs 48. Has the Indian currency appreciated or depreciated?
Question 10: Illustrate the two components of money supply.