4 Marks question from Microeconomics

1. Explain the meaning of what to produce.
2. Explain any two features of centrally planned economy .
3. Explain the effect of increase in income of buyers of normal commodity on its equilibrium price and equilibrium quantity.
4. Distinguish between microeconomics and macroeconomics. Give Examples.
5. How does the equilibrium price of a normal commodity changes when income of its buyers fall. Explain the chain of effect.
6. Explain producer’s equilibrium using a schedule. Use TC and TR Approach.
7. Distinguish between
1. Fixed cost and variable cost giving example and
2. Average cost and Marginal cost.
8. Draw supply curves with price elasticity of supply through out equal to

I. Zero

II. One

III. Infinity

IV. Less than one

9. Complete the following table

Price	Output	TR	MR
-	1	6	-
4	-	-	2
-	3	6	-
1	-	-	-2

10. Explain the effect of following on demand of a good

i, Rise in income

ii, Rise in price of related good.

11. The price elasticity of supply of good y is half the price elasticity of supply of good X.16 percent rise in the price of X results in 40 percent rise in its supply. If the price of Y falls by 8 Percent. Calculate the percentage fall in its supply.
12. Explain two points of difference between monopoly and monopolistic competition.
13. Explain any two main feature of perfect competition.
14. Given below is a cost and revenue schedule of a producer. At what level of output is the producer in equilibrium? Give reason for your answer.

Output	Price	Total Cost
1	10	13
2	10	22
3	10	30
4	10	38
5	10	47
6	10	57
7	10	71

15. With the help of a demand and supply schedule explain the meaning of excess demand and its effect on price of a commodity.
16. Define equilibrium price of a commodity. How is it determined? Explain with the help of a schedule.

17. The price elasticity of supply of a commodity is 2. When its price falls from Rs. 10 to Rs. 8 per unit, its quantity supplied falls by 500 units. Calculate the quantity supplied at the reduced price.

18. What change in total revenue will result in-:

I. A decrease in marginal revenue, and

II. An increase in marginal revenue?

19. Explain the problem of ‘what to produce’ with the help of an example.

20. Why does an economic problem arise? Explain the problem of ‘how to produce’.

21. Why is the average revenue curve of a firm under perfect competition parallel to x and negatively sloped under monopoly?

22. When the price of a commodity rises from Rs. 10 to Rs. 11 per unit, its quantity supplied rises by 100 units. Its price elasticity of supply is 2. Calculate its quantity supplied at the increased price.

23. What will be the effect of the following changes in total revenue on marginal revenue?

i) Total revenue increases at a decreasing rate.

ii) Total revenue increases at a constant rate.

24. Draw a production possibility curve. What does a point below this curve indicate? Explain.

25. Explain the problem of ‘what to produce’ with the help of an example.

26. Draw the average revenue curve of a firm under monopoly and Perfect competition. Explain the difference in these curves, if any.

27. Demand of a product is ‘elastic’. Its price falls. What will be its effect on total expenditure on the product? Give a numerical example.

28. A firm sells 1000 units of a product at a price of Rs. 10 per unit. Its price elasticity of supply is 3. How many units will the firm be able to sell if the price falls to Rs. 7.50 per unit?

29. Identify different phases of the law of variable proportions from the following schedule. Give reasons for your answer.

Variable Input (Units)	Total Physical Product (Units)
1 2 3 4 5	4 9 13 15 12

30. Explain the changes that take place when at a given price of a commodity there is excess supply of it. Use diagram.

31. A product market is in equilibrium. Suppose the demand for the product decreases. What changes will take place in the market? Use diagram.

32. At a given price of a commodity there is excess supply of it. Is this price an equilibrium price? If not, how is the equilibrium price reached, explain.

33. Explain the effects of an increase in demand of a commodity on its equilibrium price and equilibrium quantity.

34. Define and draw a production possibility curve. What does the movement along the curve show?

35. Explain the problem of ‘How to produce’.

36. Complete the following table:

Price (Rs. Per unit)	Output (units)	Marginal Cost (Rs.)	Total Revenue (Rs.)	Total Cost (Rs.)
5	1	4	---------	---------
4	2	3	---------	---------
3	3	2	---------	---------
2	4	1	---------	---------

37. A firm supplies 500 units of a good at a price of Rs. 5 per unit. The price elasticity of supply of the good is 2. At what price will the firm supply 700 units?

38. . Distinguish between ‘change in quantity supplied’ and ‘change in supply’. State two factors responsible for ‘change in supply’.

39. Distinguish between fixed cost and variable cost. Give two examples of each.

40. A consumer buys 40 units of a good at a price of Rs. 3 per unit. When price rises to Rs. 4 per unit he buys 30 units. Calculate price elasticity of demand by the total expenditure method.

41. A consumer buys 80 units of a good at a price of Rs. 5 per unit. Suppose price elasticity of demand is (-)2. At what price will he buy 64 units?

42. Give meaning of:

a) production function

b) Supply

c) revenue, and

d) cost

43. Calculate ‘total variable cost’ and ‘total cost’ from the following cost schedule of a firm whose fixed costs are Rs. 10.

Output (units) :	1	2	3	4
Marginal cost (Rs.) :	6	5	4	6

44. At a given price there is excess demand for a good. Explain how the equilibrium price will be reached. Use diagram.

45. What is meant by ‘excess demand’ for a good? Explain the changes which will bring about equilibrium price.

46. When price of a good falls by 10 percent, its quantity demanded rises from 40 units to 50 units. Calculate price elasticity of demand by the percentage method.
47. A consumer buys 50 units of a good at a price of Rs. 10 per unit. When price falls to Rs. 5 per unit he buys 100 units. Find out price elasticity of demand by the ‘Total Expenditure Method’.
48. Give meanings of (i) marginal physical product, (ii) marginal cost, (iii) marginal revenue and (iv) supply schedule.
49. Calculate Total Variable Cost and Marginal Cost from the following cost schedule of a firm whose Total Fixed Costs are Rs. 12 :

Output (Unit)	Total Cost (Rs.)
1	20
2	26
3	31
4	38

50. How is the equilibrium price of a commodity affected by a leftward shift of the demand curve? Explain with the help of a diagram.
51. How is the equilibrium price and quantity of a commodity affected by a decrease in its demand?

52. Price of a good rises from Rs. 10 per unit to Rs. 11 per unit. As a result quantity demanded of that good falls by 10 percent. Calculate its price elasticity of demand.

53. A consumer buys 70 units of a good at a price of Rs. 7 per unit. When price falls to Rs. 6 per unit, he buys 90 units. Use Total Expenditure Method to find whether the demand for the good is elastic or inelastic.

54. Give meanings of (i) marginal physical product, (ii) fixed cost, (iii) variable cost, and (iv) total revenue.

55. Calculate Marginal Cost and Total Cost from the following Cost Schedule of a firm whose
Total Fixed Costs are Rs. 15

Output (Unit)	Total Variable Cost (Rs.)
1	10
2	19
3	29
4	40

56. How is the equilibrium price of a good determined? Explain with the help of diagram a situation when both demand and supply curves shift to the right but equilibrium price remains the same.

57. Explain with the help of a schedule how equilibrium price of a good is determined.