Commerce Classes for CBSE & CUET By Virender Sir @ 8860020762

Micro-Economics Assignment
Question bank

1. The total utility is maximum when: -

(a) MU is Zero
(b) AU is maximum
(c) MU is maximum
(d) MU is equal to AU
2. From the set of statements given in column I and column II, choose the correct pair of statements:
Column I Column II
1) Microeconomics a) Deals with the aggregate at the level of the economy as a
whole
2) Choice b) process of selection from available limited alternatives.
3) Positive economics c) involves value judgment
4) Normative economics d) statements as based on facts and figures related to past,
present and future
5) Mixed economics e) The consumer is not sovereign
3. The opportunity cost of 100 kg of rice produced on a land which can also produce 80 tonnes of
Wheat is
a) 100 kg of rice
b) 80 tonnes of wheat
c) Both a and b
d) None of these

Read the following and answer the questions from 4-6 on the basis of the same: -
A consumer is an economic agent who uses goods and services for the direct satisfaction of his / her
wants. Consumer consists of institution, individuals and groups of individuals or households. Consumer
behaviour refers to the way in which consumers spend their income. The consumer derives utility from
his expenditure. The consumer chooses his expenditures and maximums his utility with the given income
and given prices of goods and services. Consumption of goods and services leads to satisfaction of human
wants. This satisfaction is called "Utility". Utility may be defined as "satisfaction derived from the
consumption of a commodity" or it may be defined as "want-satisfying power of a commodity". Total
Utility (TU) It is the sum total of utility derived from the consumption of all the units of a commodity.

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Marginal Utility (MU) It refers to additional utility on account of the consumption of an additional unit of
a commodity.
4. Utility in economics means: -
(a) Want satisfying power of a commodity
(b) Happiness
(c) Pleasure
(d) Usefulness
5. Marginal utility is: -
(a) Total minus average utility
(b) Addition to total utility
(c) Total plus average utility
(d) Total utility divided by the number of units
6. When total utility increases marginal utility is: -
(a) Negative and increasing
(b) Negative and declining
(c) Zero
(d) Positive and declining
7. If Marginal Rate of Substitution is constant throughout, the indifference curve will be: -
(a) Parallel to the X-axis
(b) Downward sloping concave
(c) Downward sloping convex
(d) Downward sloping straight line
8. The consumer will be in equilibrium where there is tangency between price line and indifference
curve because at equilibrium point his MRS: -
(a) is equal to the price ratio.
(b) Is greater than the price ratio.
(c) is less than the price ratio
(d) is falling.
9. A consumer consumes only two goods X and Y both priced at Rs 4 per unit. If the consumer
chooses a combination of these two goods with MRS equal to 4, then consumer will
a) Buy more unit of X
b) Buy more unit of Y
c) Buy more unit of X and Y
d) Buy less unit of both X and Y

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10. Which of the following is an example of a positive economy?

a) India should take steps to control rising prices
b) There are inequalities of income in our economy
c) India should not be an overpopulated country
d) Income inequalities should be reduced
11. In which of the following situations, does scarcity arise?
a) Supply of resources > Demand for resources
(b) Supply of resources < Demand for resources
(c) Supply for resources = Demand for resources
(d) None of these
12. If the consumer is below his budget line, the consumer: -
(a) Is not spending all of his income.
(b) May or may not spending all of his income.
(c) Is spending all of his income.
(d) Is in equilibrium
13. If a consumer spends his entire income (M) on Y commodity and nothing on X commodity, he
will purchase what quantity of Y commodity?
(a) M /Py
(b) MRS>Px/Py
(c) 5>5/5
(d) None of the above
14. Which of the following is not a property of indifference curve?
a) Indifference curve slopes downward
b) Indifference curve is concave to the origin
c) Two ICs can never intersect each other
d) Higher indifference curve gives higher level of satisfaction
15. The total utility derived by Shyam by eating 6 apples is 300 utils. Marginal utility of the 7th apple
is 30 utils. The total utility for 7 apples will be______utils
a) 330
b) 300
c) 270
d) 30

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16. Choose the correct pair of statements:

Column I Column II
1) IC analysis of consumers a) Based on the concept of cardinal measurement of
equilibrium utility
2) Monotonic preference of a good b) more of a good always gives less satisfaction to the
consumer
3) Equilibrium condition c) MRS=Px/Py
4) IC is convex to the origin d) Because of the increasing MRS
17. MU of X is 60 and MU of Y is 30. If the price of Y is 5, then price of X at equilibrium will be

a) 10

b) 20

c) 12

d) 5

18. Assertion (A) Budget Line / Price Line is a line showing different combinations of two goods
which a consumer can attain when he spends his entire income on these goods, and the market
price of the goods are known.

Reason (R) Slope of Budget Line / Price Line shows the rate at which market price allows the
consumer to substitute Good-X for Good-Y. It is expressed as Px/P.

Alternatives

(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of
Assertion (A).

(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).

(c) Assertion (A) is true but Reason (R) is false.

(d) Assertion (A) is false but Reason (R) is true.

19. The problem of 'what to produce relates to:

(a) The choice of technique

(b) Distribution of income

(c) Market value of the goods and services

(d) The choice of goods and services

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20. Assertion (A): Lack of scarcity implies lack of economic problem.

Reason(R): Scarcity is the root cause of economic problem.
Alternatives:
(a) Both Assertion (A) and Reason (R) are true and Reason(R) is the correct explanation of
Assertion (A)
(b) Both Assertion (A) and Reason (R) are true and Reason(R) is not the correct explanation
of Assertion (A)
(c) Assertion (A) is true but Reason(R) is False
(d) Assertion (A) is False but Reason(R) is true
21. Identify which of the following is an economic activity? (Choose the correct alternative)
(a) Blood donation for a noble cause
(b) Household work done by mother
(c) Care of children by father
d) Service provided by a doctor in hospital
22. Rahul is working at a salary of ₹ 60,000 in HDFC bank. He receives two job offers: one for ₹
55,000 from ICICI Bank and other offer of ₹ 50,000 from IDBI Bank. In the given case, his
opportunity cost will be
a) 55000
(b) 5000
(c) 50000
(d) None of these
23. Read the following statements carefully and choose the correct alternatives given below:
Statement 1 Scarcity exists even when certain goods are available at zero prices.
Statement 2: A free medicine given to the patients in a hospital is not a scarce commodity.
Alternatives:
(a) Both the statements are true.
(b) Both the statements are false
(c) Statement 1 is true and Statement 2 is false
(d) Statement 2 is true and Statement 1 is false
24. Shifting of a demand curve show _______ and ______ in demand.
(Fill up the blank with correct alternative)
i) Increase in demand
ii) Contraction in demand
iii) Decrease in demand
(iv) Extension in demand

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Identify the correct alternatives from the following:

Alternatives:
a) i and ii
b) iii and iv
c) i and iii
d) iv and i
25. ________ economic problem deals with technique of production?
(Fill up the blank with correct alternative)
a) What to produce
b) How to produce
c) For whom to produce
d) None of these
26. Read the following statements carefully and choose the correct alternatives given below:
Statement 1 Individual demand is a concept related to microeconomics, while market demand is
a concept related to macroeconomics.
Statement 2 Microeconomics studies the behaviour of individual units of an economy while
macroeconomics studies the behaviour of aggregates of the economy as a whole.
Alternatives:
a) Both the statements are true.
b) Both the statements are false.
c) Statement 1 is true and Statement 2 is false
d) Statement 2 is true and Statement 1 is false
27. Read the following statements carefully and choose the correct alternatives given below
Statement 1: A consumer buys a combination of two goods: X and Y with marginal utilities
equal to 40 utils and 35 utils respectively. Price of X is 8 per unit. The consumer will be in
equilibrium only when price of Y is 7 per unit.
Statement 2- If Mux/Px is greater than MUy/Py, then the consumer should buy more of
commodity Y and less of commodity X to reach the equilibrium position.
Alternatives:
a) Both the statements are true.
b) Both the statements are false.
c) Statement 1 is true and Statement 2 is false
d) Statement 2 is true and Statement 1 is false

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28. With increase in price of apples by 22%, its demand falls by 25%. This indicates that demand for
apples is:
a) Elastic
b) Inelastic
c) Unitary elastic
d) Perfectly elastic
29. __________ is not a feature of centrally planned economy? (Fill in the blank with correct
alternative)
a) Control of central authority
b) Ownership of resources by government
c) Consumer sovereignty
d) Dominance over economic activity by public sector
30. Price elasticity of demand of good X is -2 and of good Y is -3.__________is more price elastic.
(Fill up the blank with correct alternative)
a) Good X
b) Good Y
c) Both Good X and Y
d) None of these
31. Identify the goods, when as a result of rise in the price of good 1, Demand for good 2 increases.
a) Substitute goods
b) Complementary goods
c) Normal goods
d) Inferior good
32. Read the following statements - Assertion (A) and Reason (R):
Assertion (A) : Demand is said to be elastic in the long period.
Reason(R): A consumer has larger scope of altering his consumption habits over a long period of
time. From the given alternatives choose the correct one: Alternatives:
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of
Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R)is not the correct explanation
of Assertion(A)
c) Assertion (A) is true but Reason (R) is false.
d) Assertion (A) is false but Reason (R) is true.

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33. The demand curve of a good shifts from DD' to dd'.

This shift can be caused by:

a) Fall in the price of the good
b) Rise in the price of the good
c) Fall in the price of substitute goods
d) Rise in the price of complementary goods
34. Identify the goods, when as a result of rise in the price of good 1, demand for good 2 increases.
a) Substitute goods
b) Complementary goods
c) Normal goods
(d) Inferior goods
35. Read the following statements carefully and choose the correct alternatives given below:
Statement 1 Matchbox will have elastic demand Statement 2: Inexpensive goods have elastic
demand
Alternatives:
a) Both the statements are true.
b) Both the statements are false.
c) Statement 1 is true and Statement 2 is false
(d) Statement 2 is true and Statement 1 is false
36. If Tea and Coffee are substitutes, a fall in the prices of Tea leads to:
i) Rise in the demand for Tea
ii) Fall in the demand of Tea
iii) Fall in the demand for coffee
iv) Rise in the demand of coffee
Alternatives:
a) Both ii and iv
b) Both i and iii
c) Both ii and i
d) Both ili and iv

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37. Read the following statements: Assertion (A) and Reason (R):
Assertion (A): High taxes on cigarettes discourage smoking.
Reason (R) -Positive Statements are based upon facts and figures.
From the given alternatives choose the correct one:
Alternatives
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of
Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is false.
d) Assertion (A) is false but Reason (R) is true
38. Read the following statements Assertion (A) and Reason (R):
Assertion (A): An indifference curve is always convex to the origin.
Reason (R): MRS declines continuously because of law of diminishing marginal utility. From the
given alternatives choose the correct one:
Alternatives:
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of
Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is false.
d) Assertion (A) is false but Reason (R) is true.
39. Read the following statements Assertion (A) and Reason (R)
Assertion (A): Demand curve is negatively sloped. Reason (R): Law of demand states the
inverse relationship between price and quantity demanded, keeping other factors constant. From
the given alternatives choose the correct one!
Alternatives:
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of
Assertion (A).
b) Both Assertion (A) and Reason (R) are true Reason (R) is not the correct explanation of
Assertion (A).
c) Assertion (A) is true but Reason (R) is false
d) Assertion (A) is false but Reason (R) is true.

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40. The elasticity of demand for a product will not be higher:

a) When it is considered a necessity by its buyers
b) When more substitutes for the product are available
c) When it has several uses
d) When it is an expensive commodity
41. Suppose a consumer buys 18 units of a good at a price of ₹9 per unit. The price elasticity of
demand for the good is (-) 1. _________units the consumer will buy at a price of ₹ 10 per unit?
(Fill up the blank with correct alternative)
a) 20
b) 16
(c) 19
(d) 17
42. Read the following statements carefully and choose the correct alternatives given below:
Statement 1: Complementary goods are those goods which are used together to satisfy a
particular want.
Statement 2: An increase in the price of complementary good leads to increase in the demand for
given commodity and vice versa.
Alternatives:
a) Both the statements are true
b) Both the statements are false.
c) Statement 1 is true and Statement 2 is false
d) Statement 2 is true and Statement 1 is false
43. Match the situations given in Column-1 with their respective implications given in Column-II :
Column I Column II
A) Increase in demand i) Demand curve shifts rightwards
B) Increase in income of the consumer ii) More of a commodity is purchased at its
existing price.
C) Contraction of demand iii) horizontal summation of the individual demand
curves.
D) Market demand curve iv) Quantity demanded decreases due to rise in
own price of the commodity.
a) A-ii; B-iii; C-iv, D-i
b) A-iii, B-iv, C-1, D-ii
c) A-i, B-ii, C-iii, D-iv
d) A-ii; B-i, C-iv; D-iii

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(Read the following statement and Q44-49 are to be answered on the following)
Suppose the income of the consumer is M = 20 and the prices of bananas and mangoes are p1 = 5
and
p2 = 4 respectively. If the consumer wants to buy x, quantities of bananas, she will have to spend
p2x2 amount of money. Similarly, if the consumer wants to buy x2 quantities of mangoes, she
will have to spend p2x2 amount of money. Therefore, if the consumer wants to buy the bundle
consisting of x, quantities of bananas and x, quantities of mangoes, she will have to spend p1.x1+
P2X2 amount of money. She can buy this bundle only if she has at least p1.x1 + p2.x2 amount of
money. Given the prices of the goods and the income of a consumer, she can choose any bundle
as long as it costs less than or equal to the income she has .In other words, the consumer can buy
any bundle (x1, x2) such that p1.x1+ p2x2 ≤ M .This inequality is called the consumer's budget
constraint. The set of bundles available to the consumer is called the budget set. The budget set is
thus the collection of all bundles that the consumer can buy with her income at the prevailing
market prices. If both the goods are perfectly divisible, the consumer's budget set would consist of
all bundles (x1, x2) such that x1 and x2 are any numbers greater than or equal to 0 and
p1.x1+p2.x2 <M. All bundles in the positive quadrant which are on or below the line are included
in the budget set. The equation of the line is p1.x1 + P2X2 = M. The line consists of all bundles
which cost exactly equal to M. This line is called the budget line. The slope of the budget line is -
p1/p2

44. Identify the equation of budget line from the above data?
a) 4x + 5y= M
b) 5x+ 4y= M
c) 4x + 5y= 20
d) 5x + 4y= 20
45. How much of bananas can the consumer consume, if he spends his entire income on that good in
the question?
a) 5 units
b) 4 units
c) Zero
d) None of these
46. How much of mangoes can the consumer consume, if he spends his entire income on that good?
a) 5 units
b) 4 units
c) Zero
d) None of these

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47. What is the slope of budget line?

a) 0.8
c) 1.25
b) -0.8
d) -1.25
48. Budget set includes all those combinations that lie:
a) On the budget line
b) Inside the budget line
c) Both (a) and (b)
d) Outside the budget line
49. Read the following statements carefully and choose the correct alternatives given below:
Statement 1: A consumer who has ₹20, and suppose, both the goods(X,Y) are priced at ₹ 5. Then
equation of Budget Line will be 5x + 5y = 20
Statement 2: The consumer cannot afford to buy bundles like (3.3) and (45) because they cost
more than ₹20 at the prevailing prices.
Alternatives:
a) Both the statements are true.
b) Both the statements are false.
c) Statement 1 is true and Statement 2 is false
d) Statement 2 is true and Statement 1 is false
50. Which of the following is not a government organization to collect data?
a) National Sample Survey
b) Central Statistics Office
c) National Statistics Office
d) Registrar General of India
51. Which of the following is not a subject matter of positive economics?
a) What is?
b) What was?
d) What is likely to be?
e) What should be?
52. Which of the following is a subject matter of micro economics study?
a) Unemployment
b) Inflation
c) Price determination of a good
d) National income

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53. Central problems arise in: (choose the correct alternative

a) Capitalist economy
b) Mixed economy
c) Socialist economy
d) All of the above
54. Match the alternatives given in Column I with the respective terms in Column II.
Column I Column II
A) Marginal Utility i) Additional utility
B) Total utility ii) Utility measured in numbers
C) Cardinal utility iii) Utility arranged in preference
D) Ordinal Utility iv) Sum total of utilities derived from consumption of all units
Choose the correct alternative
a) A-iv, B-iii, C-ii, D-i
b) A-i, B-ii, C-iii, D-iv
c) A-i, B-iv, C-ii, D-iii
d) A-i, B-iii, C-ii, D-iv
55. The condition of Consumer's Equilibrium in case of one commodity is
(Choose the correct alternative)
(a) Mux = 1 /Px
(b) MUx. MUm = Px
(c) MUx. Px = MUm
(d) Mux / Px = Mum
56. Identify the incorrect statement from the following:
(a) Indifference curves are concave to the origin.
(b) Budget set of a consumer is a set of bundles which are affordable to her
(c) A rational consumer always tries to maximize her satisfaction.
(d) Budget line is also known as the price line of a consumer
57. When marginal rate of substitution is constant then indifference curve is
(Choose the correct alternative)
(a) Parallel to x-axis line
(b) Parallel to y-axis
(c) Downward sloping straight
(d) Upward sloping straight

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58. Read the following statements Statement (1) and Statement (2). Choose one of the correct
alternatives given below:
Statement (1): Inferior goods have a positive income effect.
Statement (2): When the income of a consumer rises, demand for inferior goods also increases.
Alternatives:
(a) Both Statement (1) and Statement (2) are true.
(b) Both Statement (1) and Statement (2) are false.
(c) Statement (1) is true but Statement (2) is false.
(d) Statement (1) is false but Statement (2) is true.
59. Find out marginal utility of the 4th unit from the given table:
Units consumed Total utility derived in units
1 10
2 8
3 5
4 2
a) 25 utils
b) 2 utils
c) 3 utils
d) -3 utils
60. Read the following statements Statement (1) and Statement (2). Choose one of the correct
alternatives given below: Statement (1) Economic activity generates income.
Statement (2): Donation is an economic activity.
Alternatives:
(a) Both Statement (1) and Statement (2) are true.
(b) Both Statement (1) and Statement (2) are false.
(c) Statement (1) is true but Statement (2) is false.
(d) Statement (1) is false but Statement (2) is true.
61. Read the following statements Statement (1) and Statement (2). Choose one of the correct
alternatives given below:
Statement (1) Capital intensive technique of production uses more of capital as compared to
Labour, for production of goods and services.
Statement (2): An economy like India should use capital intensive technique to produce goods
and services.

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Alternatives:
(a) Both Statement (1) and Statement (2) are true.
(b) Both Statement (1) and Statement (2) are false.
(c) Statement (1) is true but Statement (2) is false.
(d) Statement (1) is false but Statement (2) is true
62. Identify the incorrect statement
(a) An economic problem is a problem of choice
(b) Cost of the next best alternative is known as opportunity cost.
(c) Microeconomics studies about individual economic variables.
(d) The problem of 'whom to produce'? is a problem of deciding out the technique of
production.
63. Read the following statements - Assertion (A) and Reason (R). Choose one of the correct
alternatives given below:
Assertion (A): Resources are scarce only in developing economies.
Reason (R): Resources have alternative uses.
Alternatives:
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of
Assertion (A)
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A)
c) Assertion (A) is true but Reason (R) is false.
d) Assertion (A) is false but Reason (R) is true.
64. Identify the equation of the budget line from the following:
a) Px.Qx-Py.Qy=M
b) Px.Qx+ Py.Qy=M
c) Px/Qx+ Py/Qy=M
d) Px.Qy-Py.Qx = M
65. Which of the following is not an assumption of the law of demand?
(a) Price of the good does not change
(b) Price of related good does not change
(c) Income of the consumer remains constant
(d) Tastes and preferences of the consumer do not change

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66. The demand Curve is negatively sloped because (choose the correct alternative)
(a) Income of the consumer and demand for the good are inversely related
(b) Income of the consumer and demand for the goods are positively Related
(c) Price of the good and demand for the good are inversely related
(d) Price of the good and demand for the good are positively related
67. Calculate the price elasticity of demand for a commodity when its price Rises by 25% and
quantity demanded fails from 150 units to 120 units.
(Choose the correct alternative)
(a) -1
(b) -1.25
(c) -0.8
(d) -2
68. Study the diagram given and identify the consumer’s equilibrium.

(a) Point A
(b) Point B
(c) Point C
(d) Point D
69. Factors affecting individual demand to not include
(a) Price of the good
(b) Price of related good
(c) Number of consumers in the market
(d) Income of the consumer
70. If good X and good Y are substitute goods, fall in price of good Y will lead to :
(Choose the correct alternative)
(a) Expansion in demand for good x
(b) Contraction in demand for good x
(c) Increase in demand for good x
(d) Decrease in demand for good x

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71. Read the following statements - Assertion (A) and Reason (R). Choose one of the correct
alternatives given below:
Assertion (A): Complementary goods are also known as goods with joint demand.
Reason (R): There is an inverse relation between price of the complementary good and demand
for the given good.
Alternatives:
(a) (Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of
Assertion (A)
(b) Both Assertion (A) and Reason (R) are false and Reason (R) is not the correct explanation
of Assertion (A)
(c) Assertion (A) is true but Reason (R) is false.
(d) Assertion (A) is false but Reason (R) is true.
Read the following passage carefully and answer question number 72 to 77 based on the
same.
E-commerce platforms, retail chains and kirana stores reported a sharp surge in sales of staples,
daily necessities and personal hygiene products in the past few days as panic buying took hold
across India amid the fear of closures as Covid-19 cases rise. Deliveries have been delayed and
some items such as sanitizers have gone off shelves or are unavailable online. Retailers and fast
moving consumer goods (FMCG) companies said there are no shortages and that they will speed
up supplies to shops besides seeking to curb hoarding. They said sales are up 15-45% depending
on the category.
72. Due to panic buying, the demand curve of necessities (choose the correct alternative)
(a) Upward sloping
(b) Shifted to the left
(c) Shifted to the right Became
(d) Became flatter
73. From the above article, what can be concluded about the elasticity of demand for sanitizers’?
(a) Highly elastic
(b) Highly inelastic
(c) Unitary elastic
(d) Perfectly elastic
74. Read the following statements - Assertion (A) and Reason (R). Choose one of the correct
alternatives given below:
Assertion (A): Panic of Covid has led to fall in demand for personal hygiene products.
Reason (R): Substitutes of sanitizer’s are not available in the market

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Alternatives:
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of
Assertion (A)
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A)
(c) Assertion (A) is true but Reason (R) is false.
(d) Assertion (A) is false but Reason (R) is true.
75. Relation between Sanitizers and soap is that they are (choose the correct alternative)
(a) Inferior goods
(b) Complementary goods
(c) Substitute goods
(d) Not related to each other
76. Which determinant of demand has led to the above change in the demand for staples?
(a) Price of the good
(b) Price of related goods
(c) Tastes and preferences
(d) Income of the consumer
77. If the price of sanitizer rises, what will be the impact on the budget set of the consumer, Income
remains unchanged? (choose the correct alternative)
(a) Expands
(b) Contracts
(c) Remains unchanged
(d) Cannot be determined
78. A statement in Economics which is suggestive in nature is called:
(a) Positive Economics
(b) Normative Economics
(c) Both (a) & (b)
(d) None of these
79. Give the equation of the budget line
80. Which of the following can be referred to as 'point of satiety"?
(a) Total Utility is falling
(b) Total Utility is rising
(c) Marginal utility is zero
(d) Marginal Utility is negative

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81. Define inferior goods.

82. If due to fall in price of good X, demand for good Y rises, the two goods are called:
(a) Substitutes
(c) Competitive
(b) Complements
(d) Not
83. State whether the given statement is True or False:
"Total product always increases whether there is increasing return or diminishing return to factor"
84. Which one of the following is the result of increase in price of factors of production?
(a) Rightward shift in supply curve
(b) Leftward shift in supply curve
(c) Expansion in supply
(d) Contraction in supply
85. The value of elasticity in case of a horizontal demand curve will be
(a) One
(b) Infinity
(c) Zero
(d) Greater than one
86. In which of the following situations, does scarcity arise?
(a) Supply of resources > Demand for resources
(b) Supply of resources < Demand for resources
(c) Demand Supply
(d) None of these
87. Two indifference curves can.........each other. (Never intersect/ Intersect)
88. Explain with the help of diagram the effect of the following changes on the demand of a
commodity:
(a) A fall in the price of a substitute good
(b) A favourable change in the taste of the buyer
89. Explain the central problem 'for whom to produce"?
90. Briefly explain "How to produce?" central problem of an economy.
91. Price of the commodity increases from 50 to 60 per unit. Quantity demanded initially was 200
units. What should be the new quantity so that elasticity of demand is to be unity?

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92. The following table gives the total cost schedule of a firm. It is also given that the Total Fixed
Cost for producing 2 units is 20. Calculate 'Total Variable Cost and Marginal Cost' at each level
of output.
Output (units) 1 2 3 4 5
Total cost (Rs) 50 65 75 95 130
93. Differentiate between Fixed cost and Variable cost.
94. What are the features of Perfect Competition?
(Any Four)
95. Define the following terms:
(1) Price Ceiling
(2) Price Floor
96. Explain the effects of Price Ceiling.
97. Explain the law of variable proportion. Which is the ideal stage of production for the rational
producer?
98. In the following table, identify the different phases of the law of variable proportions and explain
them with the help of the table and a diagram. Also explain the causes.
Variable input (units) 1 2 3 4 5 6 7
Total product (units) 2 6 12 17 20 20 18
99. A point inside the PPC indicates _______of resources.
(Fill up the blank with correct answer)
100. State whether the given statement is true or false:
“When the consumption of an additional unit of a commodity causes no change in total utility,
then the marginal utility is constant”
101. Which of this statement is not true about indifference curve? (Choose the correct alternative)
(a) All points on an Indifference curve show same level of satisfaction.
(b) Indifference curve is convex to the origin.
(c) A consumer remains indifferent among two Indifference curves.
(d) Indifference curve is not affected by change in price of commodity.
102. Write one factor which affects the market demand but not the individual demand
103. Average cost increase when marginal cost is ________(More than, less than, equal to) average
cost. (Fill up the blank with correct alternative)
104. 'Differentiated products’ in a feature of
(a) Only perfect competition
(b) Only impure/ imperfect oligopoly
(c) Only monopolistic competition
(d) Both (b) and (c)

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105. Increase in the price of a commodity leads to _______in supply.

(Fill up the blank with correct answer)
106. Define marginal revenue
107. Which of these is not a feature of perfect competition market?
(Choose the correct alternative)
(a) Large number of firms
(b) Homogeneous product.
(c) Interdependence among firms
(d) Perfectly elastic demand curve.
108. State whether the given statement is true or false
Increase in the price of substitute goods decreases the equilibrium price of a commodity in the
market.
109. State whether the given statement is true or false: “Price ceiling refers to fixing the maximum
price of a commodity at a level upper than the equilibrium price.”
110. Explain 'How to produce' as central problem of an economy.
111. Explain the implication of feature 'Product Differentiation' in the monopolistic competition
market.
112. Write any three features of 'Monopoly.'
113. Increase in the price of a commodity by 20 percent leads to decrease in the quantity of demand of
that commodity from 150 units to 135 units, Find out the elasticity of demand and comment on
price elasticity of demand.
114. Explain the relationship between Average Product and Marginal Product.
115. Explain any two causes of increasing returns to a factor.'
116. Market of Onion is in equilibrium. There is a decrease in supply of onion due to hailstorm in
onion producing states. Explain the chain of effects for this change on equilibrium price in the
market.
117. A Consumer consumes two goods X and Y, whose prices are 5 and 4 respectively. The consumer
is at equilibrium. What should a rational consumer do if price of good X increase? Use
indifference curve analysis method.
118. Explain three properties of indifference curve.
119. A producer is at equilibrium in production of X commodity in a market where MR-AR. Price of
the commodity increases in the market. What should be producer do in this situation? Explain.
120. What do you meant by Marginal Rate of Transformation?
121. Why is budget line downward sloping?

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122. Increase in price of substitute goods leads to______

a) Expansion in demand
b) Increase in demand
c) Decrease in demand
d) Contraction in demand
123. A rise in income of the consumer of a good X leads to a fall in the demand for that good. What is
good X called as?
124. When a given good has perfectly elastic demand, the value of its price elasticity of demand will
be:
(a) 0
(b) More than 1
(c) Less than 1
(d) ∞
125. What do you mean by Marginal Utility?
126. When MP is Zero, TP will be:
(a) Increasing
(b) Falling
(c) Maximum
(d) None of these
127. Why AFC curve does not touch X-axis or Y-axis?
128. What is explicit cost?
129. What causes an upward movement along the supply curve of a commodity?
130. When is a firm called ‘Price Taker'?
131. Explain the features of PPC.
132. Explain the implications of Product Differentiation under Monopolistic competition.
133. Why demand curve under Monopoly market is downward sloping?
134. Explain any two properties of Indifference Curve.
135. Discuss the relationship between AC & MC.
136. Explain the reasons behind "Increasing Returns to Factor".
137. Explain the effect of increase in tax on the supply of a good
138. A consumer consumes two goods X&Y. Explain the conditions of consumer's equilibrium using
Utility analysis.
139. Explain the chain of effects of an increase in supply for a commodity on its equilibrium price &
quantity.
140. What is meant by Price Ceiling? Explain its Implications.

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141. Why is PPC concave to origin?

142. A consumer's satisfaction from a commodity is maximum when MU is :
(a) Equal to price
(b) Less than prices
(c) More than price
143. Total utility falls when Marginal Utility is:
(a) Zero
(b) Positive
(c) Negative
144. The effect of change in price of related goods on demand for a commodity is :
(a) Income effect
(b) Substitution effect
(c) cross-price effect
145. What causes a downward movement along a demand curve?
146. In which stage of short run production total production rises and marginal production falls?
147. Give two examples of implicit cost.
148. Give the meaning of returns to factor.
149. What will happen to TP when MP increases?
150. Which of the following is an inverse S-shaped curve":
(a) TC
(b) TVC
(c) TP
(d) Both (a) and (b)
151. There is no difference between a firm and an industry in :
(a) Perfect competition
(b) Monopoly
(c) Monopolistic competition
152. The state government has sanctioned a certain amount to increase production in rural areas.
Which technique of production will you suggest to the state government for this project and why?
153. Explain the chain effect on price equilibrium of a good if there is increase in tax rate on inputs.
154. Define 'price floor'. When is it used by government? Write any one effect of this policy on
market.
155. Explain two conditions for attaining consumer equilibrium using ordinal approach.

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156. Complete the following table

Output Average fixed cost Marginal cost Total cost
1 - - 72
2 - 10 -
3 20 8 -
4 - - 99
5 12 10 -
157. Explain the conditions of producer's equilibrium using marginal cost and marginal revenue
approach.

158. The price elasticity of supply of a commodity Y is half the price elasticity of supply of a
commodity X. 16% rise in price of X results in a 40% rise in its supply. If price of Y falls by 8%,
calculate fall in its supply.

159. Show that demand for a commodity is inversely related to its price, Explain with the help of
utility analysis using a schedule.

160. Describe the following features prevailing in various forms of markets:

(a) Product Differentiation

(b) Price Discrimination

(c) Price Taker

(d) Price War

161. Explain the implications of following features:

(a) Barriers to entry of new firms

(b) A few big sellers

(c) Large number of buyers and sellers in competitive market

162. Explain the relationship between marginal cost and average variable cost, with the help of
diagrams.

163. When does shift in the supply curve takes place?

164. A producer borrows money to run a business but manages the business himself. Identify implicit
cost.

165. Give the meaning of 'return to a factor’

166. What do you mean by market supply of a product?

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167. Complete the following table:

Output FC AVC MC TC
1 120 40 - -
2 60 56 - 232
3 - 54 - -
4 30 - 54 -
5 - - - -
168. Distinguish between decrease in supply and contraction in supply.
169. From the following table, find out the level of output at which producer will be in equilibrium
(Use MC & MR approach). Give reason also.
Output TR TC
1 16 14
2 30 27
3 42 39
4 52 49
5 60 61
170. State the different phases in the behaviour of marginal product in the law of variable proportion.
(Also show the same in schedule and diagram)
171. A 15 percent rise in the price of a commodity raises its supply from 300 units to 345 units.
Calculates its price elasticity.
172. Resources of every economy are
a) Limited
b) Sufficient
c) Unlimited
d) Unutilized
173. What is budget line?
174. Total utility is maximum, when marginal utility is
a) Zero
b) Minimum
c) Maximum
d) Equal
175. Change in the demand of apples due to increase in its price is ____________ of demand.
a) Contraction
b) Extension
c) Increase
d) Decrease

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176. What do you mean by opportunity cost?

177. What is the Marginal product of an output?
178. If total revenue is divided by the units sold, we shall get _____________
a) Total profit
b) Total revenue
c) Average revenue
d) Marginal revenue
179. If a farmer grows rice and wheat, how will an increase in price of wheat affect Supply curve of
rice?
a) Downward movement along supply curve.
b) Upward movement-along supply curve.
c) Rightward shift of supply curve.
d) Leftward shift of supply curve.
180. In which type of market transportation costs are assumed to be zero?
a) Perfect competition
b) Monopoly
c) Monopolistic
d) Oligopoly
181. Which type of a firm has no control over price?
a) Monopoly firm
b) Competitive firm
c) Oligopoly firm
d) None of the above.
182. What is perfect oligopoly?
183. Define production possibility curve and state its properties.
184. Explain the central problem of what to produce with examples.
185. Explain the following:
a) Price discrimination:
b) Product differentiation
186. The market demand for a good at Rs.40/- per unit is 100 units. The price rises and as a result its
market demand falls to 75 units. Find out the new price when the elasticity of demand of that
good is (-) 1.
187. What is producer's equilibrium? Explain the conditions of producer's Equilibrium through the
"Marginal cost and Marginal Revenue" approach in a competitive firm. (Use Diagram)
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188. Define oligopoly. Explain the following features:

a) Few firms
b) Interdependence
c) Non-price competition
189. Explain the term market equilibrium. Explain the series of changes that will take place if market
price is higher than the equilibrium price.
190. Explain the condition of consumer equilibrium with the help of the indifference curve analysis?
191. Explain how do the following influence demands for a good.
(i) Rise in income of the consumer.
(ii) Fall in the prices of related goods.
(iii) Taste & preferences changes.
192. Explain the law of variable proportion through the behaviour of both Total product and Marginal
product, Use diagram.
193. A production possibility curve would be curve if all the available resources in an economy are
equally efficient to produce both the goods.
(a) A straight line
(b) Convex to origin
(c) Upward sloping
(d) Concave to origin
194. Define Marginal Physical Product
195. Study of economy as a whole is called ____________ economics. (micro/macro)
196. Fill in the blank
Slope of P.P curve shows____________ (marginal opportunity cost/ total cost).
197. Fill in the blank:
Total utility__________ when marginal utility is decreasing but positive. (increase/ decrease)
198. In which analysis can utility be measured in definite numbers such as 1, 2, 3, etc.?
(a) Cardinal Utility analysis
(b) Ordinal Utility analysis
(c) Both (a) and (b)
(d) None of these
199. The slope of indifference curve is measured by
(a) Marginal rate of transformation
(b) Marginal rate of substitution
(c) Marginal rate of technical substitution
(d) None of these

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200. Demand curve is upward sloping for

(a) Normal goods
(b) Giffen goods
(c) Inferior goods
(d) None of these
201. Fill in the blanks:
Demand for medicines is __________(elastic/ inelastic).
202. Define opportunity cost.
203. State and discuss any two factors that will shift the Production Possibility Frontier (PPF) to the
right.
204. Draw a hypothetical schedule for a concave PPC.
205. Explain the central problem of what is produced and in what qualities
206. Giving reason, state the impact of each of following on demand curve of a normal good 'x' if:
(i) Price of its complementary good falls.
(ii) News reports claims that consumption of product X has harmful effect on human health.
(iii) Income of a consumer increases.
207. What is the basis of economic Problem? Why do central problems arise?
208. Differentiate between positive and Normative economics
209. Calculate and comment on nature of price elasticity of demand, if, with a rise in price of Good X
from 10 to 12 the Quantity demanded falls by 40%.
210. Fall in price of a commodity always leads to expansion of its demand. Comment.
211. Complete the following production schedule.
Units of Variable Total physical Average physical Marginal physical product
inputs product unit product (unit) (units)
1 10 10
2 - 11 12
3 - - 8
4 35 - -
5 - - -5

212. A consumer consumes only two goods X and Y. Explain the conditions of consumer's equilibrium
using utility Analysis.
213. Explain with the help of hypothetical numerical example the assumption of diminishing marginal
rate of substitution under the ordinal approach of theory of Consumer's behaviour.
214. Why should marginal rate of substitution diminish for a stable consumer's equilibrium?

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215. State the Phases of the law of variable proportions in terms of total physical product. Use
diagram.
216. In which situation, can PPC be is straight line?
(a) When marginal rate of transformation is decreasing.
(b) When marginal rate of transformation is increasing.
(c) When marginal rate of transformation is constant (d) When marginal opportunity cost is
decreasing.
217. Which of the following is an example of micro-economics?
(a) National Income
(b) Income and Employment
(c) General price level
(d) Price of a Commodity
218. Positive economics deals with:
(a) Facts
(b) Suggestions
(c) Opinions
(d) Value Judgment’s
219. Economy is a system which provides people with the means to work and earn a living
(True/False)
220. When total utility is maximum, the marginal utility is.__________.
221. Increase in price of substitute goods leads to change in demand of original good:
(a) Expansion in demand
(b) Increase in demand
(c) Contraction in demand
(d) Decrease in demand
222. Which of the following factor does not influence price elasticity of demand?
(a) Nature of the commodity
(b) Availability of substitutes goods
(c) Price of complementary goods
(d) Time period.
223. Those factors which can be changed in short run, is called______________
224. What is the value of MP? When TP is maximum?

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225. When average product is maximum, marginal product is equal to:

(a) Total product
(b) Average product
(c) One
(d) Zero
226. Production function is the technical relation between physical input and output of a good.
(True/False).
227. Distinguish between variable factors and fixed factors.
228. Explain the central problem 'what to produce'
229. Distinguish between micro economics' and 'macro economics'.
230. Explain the distinction between ‘budget set' and 'budget line'
231. A consumer buys 40 units of a good at a price of 5 per unit. Suppose the price elasticity of
demand is -2. At what price will he buy 32 units?
232. Explain the conditions of consumer's equilibrium under indifference curve approach.
233. Explain how the following influence demand for a good.
(a) Fall in prices of the related goods.
(b) Rise in income of the consumer.
234. Explain the law of variable proportion with the help of a numerical example.
235. Define Average Revenue (AR). Explain the shape of the AR curve under perfect competition.
236. Explain the shape of the Average Variable Cost (AVC) curve.
237. 'MP increases when TP increases', do you agree? Give reasons for your answer.
238. Construct consumer price index for the following data.
Articles Weight (in %) Price in base year (Po) Price in current year (P1)
Rice 30 24 30
Wheat 20 10 20
Oil 10 30 60
Rent 40 50 60
239. Differentiate between Consumer Price Index and Wholesale Price Index.
240. Write formula to calculate co-efficient of variation. Write two merits of coefficient of variation.
Study the table below and answer questions 241 and 242:
Units sold MR TR AR=P
1 10 - -
2 6 16 -
3 - 18 6
4 0 - 4.5
5 - 15 3

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241. Complete the table given below.

242. Explain the relationship between Total Revenue and Marginal Revenue from the above table.
243. A producer supplies 200 units of a good at Rs. 10 per unit, Price elasticity of supply is 2. How
many units of that good the producer will supply if price rises by 10%?
244. Calculate the Karl Pearson's coefficient of correlation from the following data.
X 4 6 10 15 20
Y 10 15 25 35 45
245. Market of a commodity is in equilibrium. Briefly explain the impact of:
(a) An increase in the number of consumers in the market.
(b) An increase in tax imposed by government on producers.
246. What is price ceiling? Explain the any two consequences of price ceiling.
247. Explain the following properties of perfectly competitive market?
a) Free entry and exit of firms
b) Homogeneous product
248. What is normative economic analysis?
249. What will happen to PPF if there is technological upgradation in case of both goods?
(a) Rightward shift in PPF
(b) Leftward shift in PPF
(c) Rotation of PPF
(d) None of these.
250. Write the equation of budget line.
251. If the demand for good X increases with the rise in price of good Y, how are they related?
252. If both income of the consumer and prices of two goods get doubled, then how will it affect the
budget line?
253. What is monotonic preference?
254. When will be upward movement along the demand curve?
255. The price elasticity of necessity goods is,
(a) Elastic
(b) Inelastic
(c) Unitary elastic
(d) Perfect elastic
256. What is the degree of Elasticity of demand when percentage change in price is same as percentage
change in quantity demanded?
(a) Elastic
(b) Inelastic
(c) Unitary elastic
(d) None of these
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257. What is law of diminishing marginal utility?

258. Explain the central problem of "What to produce" with the help of PPC.
259. Explain the Central problem of "Choice of Technique".
260. The price elasticity of demand of a commodity is (-) 1.5. When its price falls by Rs. 1 per unit its
quantity demanded rises by 3 units. If the Quantity demanded before the price change was 30
units, what was the price at that demand? Calculate
261. Explain any three factors that affect the price elasticity of demand.
262. Explain any two properties of Indifference curve.
263. How change in income of the consumer affects demand for a commodity? Explain.
264. How change in price of related goods affects demand for a commodity? Explain
265. What is the impact of MNREGA on PPC if economy is facing situation of unemployment?
266. Differentiate between "change in demand" and "change in quantity demanded"
267. Explain Consumer's equilibrium using Indifference curve analysis for two commodities.
268. Explain Consumer's equilibrium using utility analysis for two commodities
269. Which of the following is a statement- of normative nature in economics?
a) Economics is study of choice/alternative
b) The government should be concerned with how to reduce employment
c) India is the fastest growing economy in the world
d) Prices of pulses and oil seeds are rising due to fall in output.
270. PP curve shifts rightward, when:
a) Population of a country decrease
b) Technology becomes obsolete
c) There is massive unemployment
d) Resources increases
271. If MRS is constant throughout, the indifference curve will be:
a) Parallel to x-axis
b) Downward sloping concave
c) Downward sloping convex
d) Downward sloping straight line
272. If consumption of an additional unit of a commodity causes no change in TU, then MU is:
a) Positive
b) Negative
c) constant
d) Zero

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273. If due to fall in price of good X, demand for good y rises, the two goods are:
a) Substitutes
b) Complements
c) Not related
d) Competitive
274. Define Price Elasticity of demand.
275. "Cardinality" means utility can be:
a) Measured
b) Ranked
c) Not measured
d) None of these
276. A set of indifference curves is called:
a) Indifference curve
b) Budget set
c) Budget line
d) Indifference map
277. When income of a consumer falls, the impact on price- demand curve of an inferior good is:
a) Shifts to the right
b) Shift to the left
c) There is upward movement along the curve.
d) There is downward movement along the curve
278. A consumer who consumes two commodities A and B is at equilibrium. The prices of A and B are
Rs. 10 and Rs. 20 respectively and marginal utility of product B is 50. What will be the marginal
utility of product A?
(a) 100
(b) 25
(c) 250
(d) 4
279. Distinction between micro economics and macro- economics.
280. Explain the central problem of "How to produce".
281. The price of the commodity is Rs. 20 per unit and quantity demanded is 50 units. With the fall in
its price to Rs. 18 per unit, quantity demanded increase by 20%. Calculate its price elasticity of
demand.
282. What is marginal opportunity cost? Explain the shape of PPC when MRT is constant. Use
schedule

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283. Distinguish between "Increase in quantity demand" and" Decrease in demand".

284. Difference between substitute goods and complementary good with examples.
285. A consumer consumes only two goods X and Y whose prices are RS 4 and Rs 5 per unit
respectively .If the consumer choose a combination of two goods with marginal utility of X equal
to 5 and that of Y equal to 4 is the consumer in equilibrium? Give reason. What will a consumer
do in this situation? Use utility analysis.
286. Differentiate between budget set and budget line.
287. Explain any three properties of indifference curve.
288. Define budget line. In which condition budget line will shift?
289. Explain how the following influence the demand for a good:
(1) Increase in price of complementary good.
(2) Increase in income of consumer
290. A production possibility curve would be curve if all the available resources in an economy are
equally efficient to produce both the goods.
(a) A straight line
(b) Convex to origin
(c) Concave to origin
(d) Upward sloping
291. Define Marginal Physical Product.
292. Study of economy as a whole is called__________economics. (micro/macro)
293. Fill in the blank
Slope of P.P curve shows __________(marginal opportunity cost/ total cost)
294. In which analysis can utility be measured in definite numbers such as 1, 2, 3, 4
(a) Cardinal Utility analysis
(b) Ordinal Utility analysis
(c) Both (a) and (b)
(d) None of these
295. Fill in the blank:
Total utility________when marginal utility is decreasing but positive. (increase/decrease)
296. The slope of indifference curve is measured by
(a) Marginal rate of transformation
(b) Marginal rate of substitution
(c) Marginal rate of technical substitution
(d) None of these
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297. Demand curve is upward sloping for

(a) Normal goods
(c) Giffen goods
(b) Inferior goods
(d) None of these
298. Demand for medicines is ________(elastic/inelastic)
299. Define opportunity cost.
300. State and discuss any two factors that will shift the Production possibility Frontier (PPF) to the
right.
301. Draw a hypothetical schedule for a concave PPC.
302. Explain the central problem of what is produced and in what qualities.
303. Giving reason, state the impact of each of following on demand curve of a normal good 'x' if:
(i) Price of its complementary good falls.
(ii) News reports claims that consumption of product X has harmful effect on human health.
(iii) Income of a consumer increases.
304. In case resources of an economy are reduced, the PPC will:
(a) Shift rightwards
(b) Shift leftwards
(c) Rotate along X-axis
(d) Rotate along Y-axis
305. Px/Py indicates the slope of:
(a) Budget line.
(b) Budget set.
(c) Price line.
(d) Both (a) and (c)
306. In case of Ed< 1, demand for a commodity is:
(a) Inelastic
(b) Elastic
(c) Perfectly inelastic
(d) Perfectly elastic.
307. Elasticity of supply of perishable vegetables brought to the market by the small farmer is unitary
elastic. (true/false)
308. Under perfect competition, MR is a _______
(Downward sloping line/ horizontal line parallel to X-axis)
309. The............cost is incurred before production actually starts. (Fixed cost/variable cost.)

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310. What is meant by opportunity cost?

311. Categorization of market in to different forms depends upon:
(a) Direction of competition
(b) Degree of competition
(c) Number of firms
(d) Both (b) and (c)
312. Define implicit cost.
313. Explain how change in income of a consumer affects the demand for a commodity?
314. What is maximum price ceiling? On what type of goods it normally imposed? Why?
315. When the price of a commodity falls by 2 per unit its quantity demanded increases by 10 units. Its
price elasticity of demand is (-) 2. Calculate its quantity demanded at the price at the price before
change which was Rs 10 per unit.
316. Explain the conditions of consumer's equilibrium, with the help of indifference curve analysis.
317. What is meant by producer’s equilibrium? Explain the conditions leading to maximization of
profit by a producer. Use marginal revenue and marginal cost approach.
318. Explain how the following factors affect price elasticity of demand:
(a) Availability of substitutes.
(b) Proportion of income spent.
319. Differentiate between the following:
(a) Collusive and non-collusive oligopoly.
(b) Price discrimination and product differentiation.
320. Given market equilibrium of a good. What is the effect of simultaneous decrease in both demand
and supply of that good on its equilibrium price and quantity?
321. Explain the different phases of change in TP and MP in the law of variable proportion. Give
reasons for the changes in different stages. Show diagram
322. Differentiate between "change in supply" and "change in quantity supplied"
323. Which of the following are 2 features of monopoly?
a) Availability of close substitutes and high barriers to entry.
b) An inelastic demand and the firm is the price maker.
c) Earning of normal profit in the long run and price discrimination
d) Product differentiation and several producers.
324. What is meant by 'Price discrimination?

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325. A consumer consumes only two goods. If price of one good rises, the indifference curve:
a) Shifts upwards.
c) Shifts downwards.
b) Can shift upwards or downwards.
d) Does not shift.
326. The total cost of production of a firm increases by 620 when output increases from 15 units to 20
units. Calculate the MC of the firm.
327. The price elasticity is 0.5. The percentage change in quantity demanded is 8%. The percentage
change in price is____________
328. If as a result of 15% increase in price of the good, its supply rises by 20% then elasticity of supply
will be __________than unity.
329. Match the statements in Column 1 with those in Column 2
Column 1 Column 2
A. Highly elastic demand curve i. Perfectly competition
B. Perfectly elastic demand curve ii. Oligopoly
C. Inelastic demand curve iii. Monopoly
D. Indeterminate demand curve iv. Monopolistic competition
330. Law of supply explains the effect of change in supply on price. (True/False). Give reason.
331. At the breakeven point, a firm just covers _______ (AC/AVC).
332. Production possibility curve shifts upwards to the right, when the economy makes an
improvement in technology used in good X.
(True/False) Give reason
333. From the set of statements given in column I and column II choose the correct pair of the
statements.
Column I Column II
A. Market equilibrium i. Demand and supply curves do not
intersect each other.
B. At price above the equilibrium price ii. Market demand=Market Supply
C. At price below the equilibrium price iii. Excess demand
D. Perfectly competitive industry iv. Excess supply
334. What does the point of inflexion indicate?
335. Can non-attainable combinations ever be converted into attainable combinations? Do all
attainable combinations point to the same level of output?
336. Why marginal opportunity cost must rise as resources are shifted from use-1 to use-2, even when
given resources are fully and efficiently utilized.

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337. A good is an inferior good for one consumer and at the same time normal good for another
consumer Do you agree? Explain.
338. A monopoly firm can influence both price and output in the market' Comment.
339. Analyze the impact of the following, on the equilibrium price and quantity in the market. Use
diagrams.
(i) An increase in the number of firms and
(ii) A decrease in the number of the consumers.
340. Explain the effect of the following on the supply curve (Draw diagrams):
a) Subsidy given on the production of a commodity and
b) A decrease in input prices.
341. A consumer consumes 2 goods X and Y both priced at 4 per unit. If the consumer chooses a
combination of these two goods with marginal rate if substitution equal to 4, is the consumer in
equilibrium? Give reasons. What will a rational consumer do in this situation? Explain.
342. Given below is the cost schedule of a firm. Its total fixed cost is Rs.60. Calculate its marginal and
average total cost at each given output.
Output (units) 1 2 3
Average Variable cost (Rs.) 20 25 24
343. Comment on the following:
i.) TC is an inverse S-shaped curve,
ii.) AC falls only when MC falls.
iii.) Relationship between MC and AVC.
344. Suppose demand for jeans increases. At the same time because of an increase in price of cotton,
the supply of jeans falls. How will it affect the price and quantity sold of jeans?
345. Explain the free entry and exit feature across perfect and imperfect markets? b. A firm under
perfect competition is a price taker and not a price maker. Comment.
346. Normative economics deals with
(a) Facts
(b) Opinions
(c) Both a and b
(d) None of these
347. Slope of PPC is
(a) Convex
(b) Concave
(c) Straight
(d) None of these

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348. When TU is maximum, MU becomes

(a) Zero
(b) Unity
(c) Positive
(d) Negative
349. Explain the relationship between TU and MU with the help of diagram.
350. State two properties of PPC.
351. Budget line indicated
(a) Price ratio
(b) Income ratio
(c) Cost ratio
(d) None of these
352. What happens When Mux/Px > MUy/Py
353. Define Law of DMU. (With assumption)
354. Define consumer equilibrium. Explain the consumer equilibrium with the help of difference curve
analysis.
355. What do you mean by production possibilities of an Economy?
356. What do you understand by positive and normative economic analysis?
357. Distinguish between Micro economics and Macro- economics.
358. Define the following term:
Budget set monotonic preference and indifference curve.
359. What do you mean by normal goods, substitute goods and complementary goods?
360. Explain the law of diminishing marginal utility with the help of utility schedule and diagram.
361. Explain in brief the consumer's equilibrium with the help of indifference curve approach.

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