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Define price elasticity of demand. Discuss the various types of price elasticity of demand with diagrams.
What is indifference curve? What are its properties? Explain.
What is perfect competition market? How price and output are determined under it?
Attempt any Eight questions
[8x5=40]Write short notes on scarcity and choice.
Consider the following table:
| Combination | A | B | C | D | E | F | G |
| Price (Rs.) | 7 | 6 | 5 | 4 | 3 | 2 | 1 |
| Quantity (Units) | 500 | 750 | 1250 | 2000 | 3250 | 4750 | 8000 |
b. Compute the price elasticity of demand at the mid way between A to C and C to A by arc method.
Consider the following cost schedule:
| Output | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 |
| Total Cost (TC) | 300 | 330 | 354 | 372 | 396 | 450 | 540 | 672 | 840 | 1080 |
b. Graph AC and MC and explain the relationship between AC and MC.
Let us suppose a consumer has fixed income of Rs.2000. He selects two goods X and Y for consumption having prices with Rs.400 and Rs.200 respectively.
a. Derive budget line.
b. Show his equilibrium point when he allocates entire budget equally on two goods.
Discuss the government intervention in market through price floor, price ceiling and tax effect.
What are the instruments of monetary policy?
Explain the condition for optimum employment of two variable inputs.
Explain the features of free market economy.
Calculate Gross Domestic Product (GDP) and National income from the following data:
| S.N. | Items | Rs. (in Millions) |
| 1 | Personal Consumption Expenditure | 6500 |
| 2 | Indirect tax less subsidies | 150 |
| 3 | Government consumption and investment expenditure | 2500 |
| 4 | Change in business inventories | 100 |
| 5 | Gross Private domestic fixed investment | 950 |
| 6 | Exports | 900 |
| 7 | Net factor payments to the rest of the world | -100 |
| 8 | Imports | 1200 |
| 9 | Depreciation | 200 |
| 10 | Foreign Investment | 250 |