Questions from LastFive Years Question Papers (3 Marks)

3 marks Questions

1. Distinguish between increase in demand and increase in quantity demanded
2. Explain the law of diminishing utility with the help of a schedule
3. Good x and good y are substitutes. Explain the effect of fall in price of good y on the demand for good x.
4. Explain the implication of free entry and exit of firms under Perfect Competition.
5. Given below is the cost schedule of a firm. Its average fixed cost of production is Rs20 when it produces 3 units.

Q	1	2	3
AVC	30	28	32

6. Calculate its marginal cost and average cost at all level of output.
7. Explain the effect of following on the demand of a good.

(1)     Number of substitute

(2)     Nature of the commodity.

8. Explain any two causes of increase in demand of a commodity.
9. Explain the inverse relationship between price and quantity demanded of a commodity.
10.  Given below is the cost schedule of a firm. Its average fixed cost of production is  Rs 30 when it produces 2 units.

Q	1	2	3
AVC	80	48	40

11. Why the number of firms is small in oligopoly.
12. Explain the problem of how to produce.
13.  Explain the central problem of choice of technique.
14. Price elasticity of demand of a good is (-) 1.At a given price the consumer buys 60 units of the good. how many units will the consumer buy if the price false by 10 percent
15. Given the market price of a good how a consumer does decides as to how many units of that good to buy? Explain
16. What is likely effect on the supply of a good if the prices of the inputs used in the production of that good fall? explain
17. Explain what happen to profits in the long run if the firms are free to enter the industry.
18. Explain what happen to losses in the long run if the firms are free to leave the industry.
19. State the law of demand and show it with the help of a schedule.
20. Explain the geometric method of measuring price elasticity of demand
21. Why do problems related to allocation of resources in an economy arise? Explain?
22. Explain the problem of for whom to produce.

23. Complete the following table.

Q	TR	MR	AR
1	--	--	8
2	--	4	--
3	12	--	4
4	8	--	2

24. Explain the effect of fall in prices of the other goods on the supply of a given good.
25. State three changes leading to the shift of demand curve of a consumer to the right?
26. What will be the price elasticity of supply curve is a positively sloped straight line?
27. Explain why a production possibility curve is concave.
28. OR
29. Explain the central pro0blem ‘for whom to produce’
30. With help of the table given below find producer’s equilibrium. Give reason for your answer.
31. Output (units)

Output (units)	TR (Rs.)	AC(Rs.)
1	20	20
2	40	15
3	60	12
4	80	10
5	100	12
6	120	15

32.   Define marginal revenue. State the relation between marginal revenue and average revenue  when a firm:

                                                               I.      Is able to sell more quantity of output at the same price.

                                                             II.      Is able to sell more quantity of output only by lowering the price.

33. From the following table calculate price elasticity of demand by the percentage method.

Price of x (per unit)	Total Expenditure
4	600
5	525

34. State any two features each of monopoly and monopolistic competition.
35. State four feature of perfectly competitive market.
36. Explain the effect of a fall in price of the other good on a commodities equilibrium price and equilibrium quantity. Use diagram.

37.   What is meant by consumer’s equilibrium? State its condition in case of a single commodity.

38.    State the ‘total expenditure method’ of measuring price elasticity of demand.

39.    What is meant by returns to a factor? State the law of diminishing returns to a factor.

40.    State any three causes of a rightward shift of supply curve.

41.   Define marginal utility. State the law of diminishing marginal utility.

42.    State any three factors that affect the price elasticity of demand of a commodity

43.   What is meant by returns to scale? State the reasons for increasing returns to scale.

44.    State any three causes of a leftward shift of supply curve.

45.   Draw and define production possibility curve. Why is it downward sloping from left to right?

46.   Explain the problem of ‘what to produce’.

47.   Define utility. Explain briefly the law of diminishing marginal utility.

48.    State clearly any three features of a perfectly competitive market.

49.   Explain ‘differentiated products’ characteristic of monopolistic competition.

50.   What is meant by returns to scale? Give one reason for increasing returns to scale.

51.   State clearly the three features of monopolistic competition.

52.   Draw Average Revenue and Marginal Revenue curves of a firm under

53. Perfect competition and monopoly.

54.   Distinguish between perfect competition and monopoly.

55.   How is price determined under perfect competition? Explain briefly.

56.   Explain the effect of increase in income of the consumer on the demand for a good.

57.   State three causes of increase in supply.

58.   Explain the relation between marginal cost and average cost.

59.   Explain producer’s equilibrium with the help of a diagram.

60.   Explain the meaning and conditions of producer’s equilibrium

61. Explain the effect of rise in the prices of related goods on the demand of a good.
62. State three causes of decrease in supply.
63. Explain the relation between marginal revenue and total revenue.
64. Draw straight line supply curves with price elasticity of supply equal to (i) one, (ii) less than one and (iii) more than one.
65. Distinguish between fixed cost and variable cost and give one example of each.

66.   Give meaning of (i) demand, (ii) normal good and (iii) inferior good.

67.   Explain the effect of ‘input price changes’ on the supply of a good.

68.   Explain the relation between marginal revenue and average revenue.

69.   Draw Average Total Cost, Average Variable Cost and Marginal Cost curves in a single diagram.

70. When is supply of a commodity said to be (i) elastic, (ii) inelastic and (iii) perfectly inelastic?

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.