Exercise : Solutions of Questions on Page Number : 99 Q1 :What would be the shape of the demand curve so that the total revenue curve is (a) a positively sloped straight line passing through the origin? (b) a horizontal line? Answer : (a) If the total revenue curve is a positively sloped straight line … Read more
Exercise : Solutions of Questions on Page Number : 84 Q1 :Explain market equilibrium. Answer : Market equilibrium is defined as the state of rest that is determined by the rational objectives of the consumers and the producers (i.e. maximisation of satisfaction and profit respectively). It is a state where the aggregate quantity that all … Read more
Exercise : Solutions of Questions on Page Number : 66 Q1 :What are the characteristics of a perfectly competitive market? Answer : Perfect Competition This type of market structure refers to the market that consists of a large number of buyers and also a large number of sellers. No individual seller is able to influence … Read more
Exercise : Solutions of Questions on Page Number : 49 Q1 :Explain the concept of a production function. Answer : The production function of a firm depicts the relationship between the inputs used in the production process and the final output. It specifies how many units of different inputs are needed in order to produce … Read more
Exercise : Solutions of Questions on Page Number : 34 Q1 :What do you mean by the budget set of a consumer? Answer : It refers to the set of consumption bundles that are available to or affordable by the consumer; while being aware of his/her income-level and the existing market prices. Q2 :What is … Read more
Exercise : Solutions of Questions on Page Number : 7 Q1 :Discuss the central problems of an economy. Answer : Every economy faces three central problems due to scarce availability of resources. This scarcity challenges the best possible usage of these available resources to fulfil the unlimited demands. The three central problems of an economy … Read more
Exercise : Solutions of Questions on Page Number : 96 Q1 :Differentiate between balance of trade and current account balance. Answer : Points of difference Balance of trade Current account balance Definition It is the difference between the values of exports and imports of goods of a country. It is the difference between the values … Read more
Exercise : Solutions of Questions on Page Number : 74 Q1 :Explain why public goods must be provided by the government. Answer : A good that is non-rival and non-excludable is referred to as public good. Non-rival means that consumption by one individual does not affect the consumption of another individual. Whereas, non-excludable implies that … Read more
Exercise : Solutions of Questions on Page Number : 59 Q1 :What is marginal propensity to consume? How is it related to marginal propensity to save? Answer : Marginal propensity to consume refers to the ratio of change in the consumer’s expenditure due to the change in disposable income (income after deducting taxes). In other … Read more
Exercise : Solutions of Questions on Page Number : 46 Q1 :What is a barter system? What are its drawbacks? Answer : Barter system is a system that was used in ancient times to exchange goods. In other words, this system was used to exchange one commodity for another before the monetary system came into … Read more