MY INSTITUTE

Std.: 12th (Commerce) Economic Marks: 248

Date: 01-Dec-2024 Time: Xd
Chapter:

Q.1 Choose the correct option and write the statement: 91

1 Consumption beyond the point of satiety transforms satisfaction into:

a. dissatisfaction. b. Satisfaction c. Fulfilled d. None

Ans a. dissatisfaction

2 When supply curve is upward sloping, it’s slope is ..............

a) positive b) negative c) first positive then negative d) zero

Ans a) positive

3 Short period may be:

a. 3 weeks b. 6 months c. 9 months d. Both b and c

Ans d. Both b and c

4 The total expenditure incurred by a firm on the factors of production required for the production of goods and
services
a. Fixed cost b. Variable cost c. Total cost d. Marginal cost

Ans c. Total cost

5 Theory of Economic Welfare.

(a) Efficiency in production (b) Efficiency in consumption
(c) Overall economic efficiency (d) Efficiency in social activities
(i) c and d (ii) a, b and d (iii) a, b and c (iv) b, c and d

Ans Option (iii)

6 In the process of production inputs are converted into

a. output b. final goods c. Both a and b d. Only a

Ans c. Both a and b

7 After reaching the point of satiety, a rational consumer should stop his consumption since:
a. the maximum limit of satisfaction is reached
b. There is no addition to total utility by any further increase in the stock of a commodity.
c. The consumer can’t afford to purchase
d. Both a and b

Ans d. Both a and b

8 The law assumes that the commodity consumed by the consumer is divisible so that it can be acquired in:
a. small quantities b. large quantities
c. perfect quantities d. imperfect quantities

Ans a. small quantities

9 Economic efficiency involves:

(i) three efficiencies (ii) two efficiencies
(iii) four efficiencies (iv) no efficiency
Ans Option (i)

10 Supply is always expressed in relation to

a. Price b. time c. quantity d. All

Ans d. All

11 Efficiency in production means:

(i) producing maximum possible amount of goods and services from the maximum amount of resources.
(ii) producing maximum possible amount of goods and services from the given amount of resources.
(iii) producing minimum possible amount of goods and services from the given amount of resources.
(iv) producing minimum possible amount of goods and services from the minimum amount of resources.

Ans Option (ii)

12 Equilibrium is the balance between:

(i) two factors (ii) three factors (iii) four factors (iv) none

Ans Option (i)

13 When MU is falling, TU is……….

a) rising b) falling c) not changing d) maximum

Ans a) rising

14 Which of the following is not a type of imperfect competition:

a. Perfect b. Monopoly c. Monopolistic d. Oligopoly

Ans a. Perfect

15 Classification of markets on the basis of place

a) Local market, National market, International market
b) Very short period market, Local market, National market.
c) Short period market, National market, International market.
d) Local market, National market, Short period market.
Options :1) a, b and c 2) b, c and d 3) only a 4) a and d

Ans 3) only a

16 As per the law of diminishing marginal utility, measurement of utility is assumed to be ……….
a) ordinal b) cardinal
c) both ordinal and cardinal d) none of the above

Ans b) cardinal

17 The law assumes that utility can be expressed:

a. ordinal b. cardinally c. both d. none

Ans b. cardinally

18 The more of a thing you have, the less you want to have
a. Less of it b. Equal to it c. more of it d. all

Ans c. more of it

19 In case of exception to law of supply, the supply curve is

a. Upward sloping b. Downward sloping c. Horizontal d. Vertical

Ans b. Downward sloping

20 Single player market mechanism is:

 a. Monopolistic b. Perfect c. Monopoly d. All of the above

Ans c. Monopoly

21 In case of contraction of supply, the movement on the same supply curve is:
a. Downward b. Upward c. Right d. Left

Ans a. Downward

22 A sick person has utility in medicines hence, he demands

a. Grocery b. Water c. Medicines d. All

Ans c. Medicines

23 The relationship between total utility and marginal utility :

a. TU = € MU
b. TU = MU1 + MU2 + MU3 .......................... + MUn
c. Both
d. None

Ans c. Both

24 The capacity of a commodity to satisfy human wants is:

a. Utility b. Wants c. Need d. Satisfaction

Ans a. Utility

25 In oligopoly, the number of players may be:

a. Two b. hundred c. Six Hundred d. More than thousand

Ans a. Two

26 After a point of satiety, any additional consumption of commodity results into -

(a) negative MU (b) diminishing TU
(c) disutility (d) maximum TU
(i) a, b, d (ii) a, b, c (iii) a, c, d (iv) None of these

Ans Option (ii)

27 A B
1) Time utility a) Transport
2) Place utility b) Blood Bank
3) Service utility c) Mobile phone
4) Knowledge utility d) Doctor
Options:
i) 1-d, 2-b, 3-a, 4-c ii) 1-b, 2-a, 3-d, 4-c
ii) 1-a, 2-b, 3-c, 4-d iv) 1-b, 2-c, 3-d, 4-a

Ans ii) 1-b, 2-a, 3-d, 4-c

28 An upward movement along the same supply curve shows ................

a) contraction of supply b) decrease in supply c) expansion of supply d) increase in supply

Ans c) expansion of supply

29 At any point of time, a market will exist if there are :

a. Close contact between buyers and sellers
b. A product or service to be bought and sold
c. Price of the product
d. All of the above
Ans d. All of the above

30 Macro economics helps to analyse

(i) The specific level of employment and output in an economy.
(ii) The general level of employment and output in an economy.
(iii) both
(iv) none

Ans Option (ii)

31 Method adopted in micro economic analysis.

(a) Lumping method (b) Aggregative method
(c) Slicing method (d) Inclusive method
(i) a, c and d (ii) a, b and d (iii) only c (iv) only a

Ans Option (ii)

32 Utility depends upon ...............

a. intensity of want
b. income of a consumer
c. quality of a product
d. cardinal measurement

Ans a. intensity of want

33 A rise in the quantity supplied due to a rise in the price of a commodity, other factors remaining constant is
known as
a. Increase in supply b. Decrease in supply
c. Expansion of supply d. Contraction of supply

Ans c. Expansion of supply

34 The net addition made to total cost by producing one more unit of output is
a. Fixed cost b. Variable cost c. Total cost d. Marginal cost

Ans d. Marginal cost

35 Blood bank is an example of____________.

a. Place utility
b. Knowledge utility
c. Service utility
d. Time utility
1. a, b, c
2. b, c, d
3. a, b, d
4. only d

Ans Blood bank is an example of Time utility.

hint: When the utility of a commodity increases with a change in its time of utilization, it is called time utility.
Time utility is also observed when goods are stored and used at a time of scarcity. For example, Blood bank.

36 Under Perfect competition, sellers are

a) Price makers b) Price takers c) Price discriminators d) None of these
Options :1) a, b and c 2) only b 3) only c 4) a and c

Ans 2) only b

37 ______________refers to the quantity of a commodity that a seller is willing and able to offer for sale at a given
price, during a certain period of time.
 a. Supply b. Stock c. Output d. Revenue

Ans a. Supply

38 Micro theory of distribution deals with the relative

(i) shares of rent (ii) wages (iii) interest and profit (iv) All

Ans Option (iv)

39 Features of Monopolistic Competition are:

i. Homogeneous product
ii. Selling cost
iii. Downward sloping demand curve
iv. Few buyers
(a) i and iii (b) i, ii and iv (c) iii and iv (d) i, ii, iii

Ans (a) i and iii

40 Types of imperfect market are:

(a) Monopoly
(b) Oligopoly
(c) Monopolistic Competition
(d) All of the above
(1) b and c (2) a, b and c (3) only d (4) all of these

Ans (2) a, b and c

41 In economic sense, market includes following activities

a) The place where goods are sold and purchased.
b) An arrangement through which buyers and sellers come in close contact with each other directly or
indirectly.
c) A shop where goods are sold.
d) All of the above.
Options :1) a and b 2) b and c 3) a, b and c 4) only d

Ans 1) a and b

42 In case of decrease in supply, the supply curve shifts to the

a. right of the original supply curve.
b. left of the original supply curve.
c. Does not move
d. Both a and c

Ans b. left of the original supply curve.

43 Net addition made to the total revenue by selling an extra unit of a commodity is ..................
a) total Revenue b) marginal Revenue
c) average Revenue d) marginal Cost

Ans b) marginal Revenue

44 Under perfect competition, sellers are:

a. Price deciders b. Price takers c. Price makers d. Price dominance

Ans b. Price takers

45 Chamberlin introduced the concept of:

a. Legal b. Monopoly c. Class d. Group
Ans d. Group

46 As per the law of diminishing marginal utility, all units of a commodity consumed are
a. exactly homogeneous b. identical c. heterogeneous d. both a and b

Ans d. both a and b

47 Perishable goods
a. Always follow the supply law
b. Sometimes follow the supply law
c. Always an exception to the supply law
d. None

Ans c. Always an exception to the supply law

48 Product differentiation is an important feature of:

a. Monopoly b. Monopolistic c. Oligopoly d. Perfect

Ans b. Monopolistic

49 Concepts studied under Micro economics.

(a) National income (b) General price level
(c) Factor pricing (d) Product pricing
(i) b and c (ii) b, c and d (iii) a, b and c (iv) c and d

Ans Option (iv)

50 The term ‘Mikros’ means

(i) Large (ii) Equal (iii) Small (iv) Both a and b

Ans Option (iii)

51 General Equilibrium deals with the behaviour of:

(i) demand (ii) supply (iii) prices in the whole economy (iv) All

Ans Option (iv)

52 National market means:

a. Domestic market b. Own country market c. Both a and b d. Only b

Ans c. Both a and b

53 Micro Economic is based on certain assumptions.

(a) Perfect competition (b) Pure capitalism
(c) Full employment (d) Fluctuations in the national income
(i) b, c and d (ii) c and d (iii) a, b and c (iv) a, c and d

Ans Option (iii)

54 The net addition made to total revenue by selling an extra unit of the commodity is
a. Marginal cost b. Marginal supply
c. Marginal revenue d. Marginal output

Ans c. Marginal revenue

55 In perfect competition, the products sold are:

a. Homogenous b. Heterogeneous c. Un-identical d. None

Ans a. Homogenous

56 The focus of micro economics is mainly confined to:

 (i) price theory (ii) resource allocation (iii) Both (iv) None

Ans Option (iii)

57 Laissez- faire policy means there is absence of

a. Local intervention in economic activities.
b. Government intervention in economic activities.
c. Other players intervention in economic activities.
d. All of the above

Ans b. Government intervention in economic activities.

58 Supply is
a. a micro-economic concept. b. a macro-economic concept. c. Both a and b d. Only b

Ans a. micro-economic concept.

59 The two main branches of economics are:

(i) Micro economics (i) Macro economics
(iii) Both (iv) None

Ans Option (iii)

60 Statements indicating consumer equilibrium:

a) MU is greater than price b) MU is equal to price
c) MU is less than price d) Price is less than one
Options:i) a and b ii) a, b, c and d iii) a, b and c iv) only b

Ans iv) only b

61 Marginal utility can be:

a. Positive b. Negative c. Zero d. All

Ans d. All

62 When there is an increase in supply due to favourable changes other than price is
a. Increase in supply b. Decrease in supply c. Expansion of supply d. Contraction of supply

Ans a. Increase in supply

63 Marginal utility keeps on diminishing with:

a. Diminishing consumption b. increase in consumption
c. decrease in consumption d. equal consumption

Ans b. increase in consumption

64 When TU declines, MU ...............

a. is Zero
b. increases
c. remains constant
d. becomes negative

Ans a. becomes negative

65 Micro Economics is also called as_________.

1. Income theory
2. Price theory
3. Growth theory
4. Employment theory
Ans Micro Economics is also called as Price theory.
hint: Microeconomics is also known as the price theory. We know that in Microeconomics we study the
behaviour of individual economic units such as the producer and the consumer. Through the study of such
behaviour the main focus is the determination of prices (commodities and factor prices) in the market.

66 Homogeneous product is a feature of this market.

a) Monopoly b) Monopolistic competition c) Perfect competition d) Oligopoly
Options :1) c and d 2) a, b and c 3) a, c and d 4) only c

Ans 4) only c

67 The factors that contribute to the production process are:

(i) land, labour and entrepreneur (ii) land, capital and entrepreneur
(iii) land and entrepreneur (iv) land, labour, capital and entrepreneur
Ans Option (iv)

68 Point of Satiety means ……….

a) TU is rising and MU is falling b) TU is falling and MU is negative
c) TU is maximum and MU is zero d) MU is falling and TU is rising.

Ans c) TU is maximum and MU is zero

69 Marginal utility of money tends to increase with:

a. an increase in his stock of money
b. a decrease in his stock of money
c. equal stock of money
d. all

Ans a. an increase in his stock of money

70 Monopsony is the converse of

a. Monopolistic b. oligopoly c. monopoly d. none

Ans c. monopoly

71 Perfect competition is:

a. Actual concept b. Imaginary concept c. Real concept d. None

Ans b. Imaginary concept

72 In perfect competition, price of a commodity is determined by :

a. Demand only b. Supply only
c. Intersection of demand and supply d. All of the above

Ans c. Intersection of demand and supply

73 Utility analysis explains a consumer’s behaviour in relation to maximization of:

a. Demand b. Need c. Wants d. Satisfaction

Ans d. Satisfaction

74 MU of the commodity becomes negative when TU of a commodity is ………

a) rising b) constant c) falling d) zero

Ans c) falling

75 Other factors remaining constant, when less quantity is supplied only due to a fall in price, it shows ................
a) contraction of supply b) decrease in supply
c) expansion of supply d) increase in supply
Ans a) contraction of supply

76 Zero MU is described as:

(a) disutility (b) point of satiety (c) dis-satisfaction (d) maximum TU
(i) a, b (ii) b, d (iii) b, c, d (iv) a, b, c, d

Ans Option (ii)

77 The upward sloping supply curve indicates:

a. Equal relation between price and quantity supplied
b. Direct relation between price and quantity supplied
c. Indirect relation between price and quantity supplied
d. Constant relation between price and quantity supplied

Ans b. Direct relation between price and quantity supplied

78 Symbolically the function of the supply is

a. Sx = f (Py) b. Sx = f (Cx) c. Sx = f (Px) d. Sx = f (Rx)

Ans c. Sx = f (Px)

79 Ragnar Anton Kittil Frisch (1895-1973), a Norwegian econometrician and economist was a joint winner with
Jan Tinbergen of the ............... Nobel Prize for Economics in 1969.
(i) first Nobel Prize (ii) second
(iii) fifth (iv) none

Ans Option (i)

80 A rightward shift in supply curve shows ................

a) contraction of supply b) decrease in supply
c) expansion of supply d) increase in supply

Ans d) increase in supply

81 In the law of diminishing marginal utility, Alfred Marshall assumes that marginal utility of money……….
a) increases b) remains constant c) decreases d) rises and then falls

Ans b) remains constant

82 Macro economics suggests suitable economic policies to promote:

(i) economic growth
(ii) generate employment
(iii) control of inflation, and depression
(iv) All

Ans Option (iv)

83 Concepts studied under Macro economics.

(a) Whole economy (b) Economic development
(c) Aggregate supply (d) Product pricing
(i) a, b and c (ii) b, c and d (iii) only d (iv) a, b, c and d

Ans Option (i)

84 Macro economics studies the concept of:

(i) national income and its different elements The general level of employment and output in an economy.
(ii) methods of measurement and social accounting.
(iii) Both
(iv) None
 Ans Option (iii)

85 Monopolistic market is a mix of:

a. Perfect and monopoly b. Perfect and oligopoly c. Oligopoly and monopoly d. All of the above

Ans a. Perfect and monopoly

86 Market where price can be discriminated -

(a) Perfect Competition
(b) Monopoly
(c) Monopolistic Competition
(d) Oligopoly
(1) only b (2) a and b (3) only c (4) only d

Ans (1) only b

87 The additional utility derived by a consumer from an additional unit of a commodity consumed is:
a. Marginal utility b. Total utility c. Differential utility d. Common utility

Ans a. Marginal utility

88 When the utility of a commodity increases with a change in its time of utilization, it is called:
a. Possession utility b. time utility c. Place utility d. Hour utility

Ans b. time utility

89 Macro economics is the study of:

(i) Individual (ii) Aggregates (iii) Both (iv) None

Ans Option (ii)

90 The branch of economics that deals with the allocation of resources.

(a) Micro economics (b) Macro economics
(c) Econometrics (d) None of these
(i) a, b and c (ii) a and b (iii) only a (iv) None of these

Ans Option (iii)

91 Business decisions are related to the determination of:

(i) Cost of production (ii) Maximization of output
(iii) Profit (iv) All
Ans Option (iv)

Q.2 Find the odd word out: 34

1 Legal monopoly : Patent, OPEC, Copyright, Trade mark.

Ans OPEC
hint: This monopoly emerges on account of legal provisions. The law forbids the potential competitors to
imitate the design or form of the product registered under given branded names. For example, Amul products.

2 Market structure on the basis of competition: Monopoly, Oligopoly, Very Short Period market, Perfect
competition.

Ans Very Short Period market

3 Demand, supply, product pricing, National income

Ans National Income

4 Government policy, state of technology, average revenue, infrastructural facilities

Ans average revenue

5 Features of monopoly : Price maker, Entry barriers, Many sellers, Lack of substitutes.

Ans Many sellers

6 General price level, whole economy, product pricing

Ans Product pricing

7 Form, time, place, marginal

Ans Marginal

8 Perfect, Local, National, International

Ans Perfect

9 Stock, output, supply, demand

Ans demand

10 Imperfect competition:
Price discrimination, Uniform price, Barriers to entry, Price maker.

Ans Uniform price

11 Scope of Micro Economics:

1. Theory of product pricing
2. Theory of factor pricing
3. Theory of Economic growth and Development
4. Theory of Economic welfare

Ans Theory of Economic growth and Development

12 Doctor, teacher, lawyer, furniture

Ans Furniture

13 Rent, wages, interest, demand analysis

Ans Demand analysis

14 Monopoly, oligopoly, monopolistic, perfect

Ans Perfect

15 Increase in supply, Decrease in supply, Estension in supply, Market supply.

Ans Market supply

16 Single price, free entry and exit, product differentiation, large number of sellers

Ans product differentiation

17 Money, power, divisibility, miser

Ans divisibility

18 Price theory, Slicing method, Limited scope, Lumping method.

Ans Lumping method

19 Macros, individual, small, Microeconomics

Ans Macros

20 Constant cost of production, constant technique of production, no future expectation, fixed cost

Ans fixed cost

21 Product pricing, Investment function, Factor pricing, Economic welfare

Ans Investment function

22 Disutility, Negative utility, Maximum TU, Declining TU.

Ans Maximum TU

23 Interdependence, advertising, Lack of uniformity, concept of Group

Ans concept of Group

24 Selling cost : Free gifts, Advertisement hoardings, Window displays, Patents.

Ans Patents

25 Miser, Drunkard, Power, Rational consumer.

Ans Rational consumer

26 National income, National output, Economic fluctuations

Ans Economics fluctuations

27 Keynes, Malthus, Fisher, Marshall.

Ans Marshall

28 Total, marginal, cardinal, additional

Ans Cardinal

29 Marginal revenue, average revenue, additional revenue, incremental revenue

Ans Average revenue

30 Peculiarities of Perfect competition:

Many buyers, Few sellers, Price taker, No transport cost.

Ans Few sellers

31 Private monopoly, legal monopoly, monopsony, voluntary monopoly

Ans Monopsony

32 Addiction, Cardinal measurement, rationality, divisibility

Ans Addiction

33 Normal goods, Perishable goods, rare goods, agricultural goods

Ans normal goods

34 Revenue concepts:
1. Total Revenue
2. Average Revenue
3. Total Cost
4. Marginal Revenue
 Ans Total Cost

Q.3 Complete the correlation: 49

1 ______________: change in supply : other factors constant : variation of supply

Ans Price constant

2 Macro economic theory : Income and employment :: Micro economics :

Ans Price Theory

3 Cardinal : quantitative :: ordinal : ______________

Ans Qualitative

4 Theory of Income and Employment : Theory of Consumption Function :: Macro theory of distribution :
___________

Ans Rent, wages, interest and profit

5 Increase in supply : rightward shift of original demand curve :: Decrease in supply : ____________

Ans leftward shift of original demand curve

6 Mikros : ____________ :: Cetris Paribus : Keeping other things constant

Ans Small

7 Product differentiation : Monopolistic :: Interdependence : _____________

Ans Oligopoly

8 Land : Rent :: ............... : Wages

Ans Labour

9 Total cost : TFC + TVC :: Average cost :

Ans TC/ TQ

10 Supply : ______ :: Aggregate supply : macroeconomic

Ans microeconomic

11 _________ : TCn – TCn-1 :: MRn : TRn – TRn-1

Ans MCn

12 Expansion of supply : Price rises :: Contraction of supply :

Ans Price fall

13 Perfect competition : _____________ :: Monopoly : single Seller.

Ans Many Sellers

14 Point of satiety : ............... :: Beyond point of satiety : Dissatisfaction

Ans Point of satiety : Full satisfaction :: Beyond point of satiety : Dissatisfaction

15 General equilibrium : Macro economics :: : Mikro economics.

Ans Partial Equilibrium

16 Transport of goods : _________________ :: Storage of goods: Time Utility

Ans Transport of goods : Place Utility :: Storage of goods: Time Utility

17 Perfect competition : Homogeneous products :: _____________ : Differentiated products

Ans Imperfect competition

18 Theory of Product Pricing : Demand and Supply Analysis :: _________: Rent, wages, interest and profit

Ans Theory of factor pricing

19 Consumer : To obtain maximum satisfaction :: ............... : To frame various economic policies

Ans Consumer : To obtain maximum satisfaction :: Government : To frame various economic policies

20 Total utility : Aggregate :: marginal utility : ____________

Ans Additional

21 Capital : ............... :: Entrepreneur : Profit

Ans Interest

22 Micro economics : Tree :: Macro economics :

Ans Forest

23 Microeconomics : _________:: Macroeconomics : Aggregate

Ans Individual

24 Form utility : shape :: knowledge utility : ________________

Ans information

25 Increases at a diminishing rate : Total Utility :: Goes on diminishing : ...............

Ans Increases at a diminishing rate : Total Utility :: Goes on diminishing : Marginal Utility

26 Theory of Monopolistic competition : Prof. Chamberlin :: Perfect competition : _____________

Ans Mrs. Joan Robinson

27 Form utility: Furniture::______________ : Doctor.

Ans Service utility

28 Single price : Perfect competition :: Discriminated prices :

Ans Monopoly

29 Maximum TU : Zero MU :: TU Declines :_________________

Ans Maximum TU : Zero MU :: TU Declines : MU negative

30 TR : P × Q :: TC : _________

Ans FC + VC

31 Fan in summer : Time Utility :: Sweater in Shimla : _________________

Ans Fan in summer : Time Utility :: Sweater in Shimla : Place Utility

32 Very short period : few days :: _____________: Less than 5 years

Ans Long period

33 Hicks : Indifference method :: Marshall : _______________

Ans Cardinal method

34 Study of the whole economy : Lumping method :: Study of small individual unit : ...............

Ans Slicing method

35 Voluntary monopoly : OPEC :: _______________ : Indian Railways

Ans Public monopoly

36 Homogeneity : Assumption of the law of DMU :: Hobbies: _________________

Ans Homogeneity : Assumption of the law of DMU :: Hobbies: Exception of law of DMU

37 _____________ : single seller :: Oligopoly : Few sellers

Ans Monopoly

38 Demand curve : :: Supply curve : Upward

Ans downward

39 Place : National :: ___________ : Long period

Ans Time

40 The period in which all factors of production are variable.

Ans Long run period

41 Makros : Macro economics :: Mikros :

Ans Microeconomics

42 Price taker : :: Price maker :: monopoly

Ans Perfect competition

43 Perfect competition : Free entry and exit :: : Barriers to entry.

Ans Monopoly

44 Macro Economics: __________:: Micro Economics: Price theory.

Ans Macro Economics: Income theory :: Micro Economics: Price theory.

45 Micro economics : Slicing method :: Macro economics :

Ans Lumping Method

46 Total revenue : :: Average revenue : TR/TQ

Ans P × Q

47 Want satisfying Power: :_________________ : : Use value of a commodity : usefulness

Ans Want satisfying Power: Utility : : Use value of a commodity : usefulness

48 Intra-marginal units : MUx>Px :: _________________: MUx<Px

 Ans Extra- marginal units

49 ______________ : upward movement :: contraction of supply : downward movement

Ans Expansion of supply

Q.4 Suggest an economic term for the given statement: 46

1 Net addition made to total cost of production.

Ans Marginal cost

2 Very realistic competition in nature.

Ans Monopolistic competition

3 The point where demand and supply curve intersect.

Ans Equilibrium price

4 A vegetable vendor selling vegetables to his customers.

Ans Possession utility

5 Very realisitic competition in nature.

Ans Monopolistic Competition.

6 TFC + TVC

Ans Total cost

7 Aggregate of utilities derived from all units.

Ans Total Utility

8 Graphical presentation of the market supply schedule

Ans Market supply curve

9 Rise in supply due to fall in taxes.

Ans Increase in Supply

10 It is also a part and parcel of the Theory of Income and Employment.

Ans Theory of Business Cycles

11 Mathematical operations are easily possible to know and compare the utility derived from each unit of a
commodity.

Ans Cardinal utility

12 Equilibrium position of whole economy.

Ans General Equilibrium Analysis

13 The law assumes keeping other things constant.

Ans Cetris paribus

14 A production time that is so long that all inputs are variable.

Ans Very long period

15 A market in which sellers sell and customers buy a product in the region or area in which it is produced.
Ans Local market

16 Period in which all factors of production are variable.

Ans Very Long Period

17 The cost incurred by the firm to promote sales.

Ans Selling cost

18 Minimum price below which a seller will not sell a single unit.

Ans Reservation Price

19 Number of firms producing identical product.

Ans Perfect competition

20 It is the addition made by the last unit of a commodity consumed.

Ans Marginal utility

21 Cost incurred on fixed factor.

Ans Total fixed cost

22 Welfare oriented monopoly.

Ans Public monopoly.

23 Net addition to the total revenue

Ans Marginal revenue

24 Fall in supply due to a factor other than price

Ans Decrease in supply

25 Sum total of individual supply.

Ans Market supply.

26 Charging different prices to different consumers for the same product or services.

Ans Price discrimination

27 Monopoly emerges on account of legal provisions

Ans Legal monopoly

28 Production of most desired goods and services.

Ans Overall Economic Efficiency

29 Increase in supply due to rise in prices of a commodity

Ans Expansion of supply

30 Utility of commodity increases with a change in its time of utilization.

Ans Time

31 A doctor giving medical treatment to a patient.

Ans Service utility

32 The market where there are few sellers.

Ans Oligopoly

33 Revenue per unit of output sold.

Ans Average revenue

34 Cost incurred per unit of output.

Ans Average Cost

35 It exists when there are many sellers but only one buyer.

Ans Monopsony

36 A market in which a firm and industry are same.

Ans Monopoly

37 Utility created due to change in the structure of given material.

Ans Form Utility

38 It is the average of all prices of goods and services currently being produced in the economy.

Ans General price level

39 Additional utility derived by a consumer from an additional unit consumed.

Ans Marginal Utility

40 According to a theory, “Micro economics helps in determining the factor rewards for land, labour, capital, and
entrepreneur in the form of rent, wages, interest, and profit respectively”.

Ans Theory of Factor Pricing

41 This term is derived from the Greek word, which means large.

Ans Macro

42 It means producing maximum possible amount of goods and services from the given amount of resources.

Ans Efficiency in production

43 Net addition made to the total cost by producing one more unit of output.

Ans Marginal Cost (MC)

hint: Marginal cost is the change in total cost that arises when the quantity produced increases by one unit.
It's crucial for determining the optimal level of production, where it's often used to decide whether to increase
or decrease production levels.

44 Economic decisions are taken at individual levels without intervention of government.

Ans Free Market economy.

45 All the buyers and sellers are engaged in buying and selling a homogeneous product without any restrictions
backed with the perfect market knowledge.

Ans Perfectly competitive market

46 Swati purchased raincoat for her father in rainy season.

Ans Time Utility

Q.5 Distinguish between: 16

1 Natural Monopoly and Legal Monopoly.

Ans
Natural Monopoly Legal Monopoly

(i) The monopoly power acquired by a

It arises due to legal protection
firm due to natural advantages such as
given to the producers by the
good location, control over scarce
government authorities.
resources or natural skill, etc.

(ii) The main objective of a natural The objective is to prevent the

monopolist is to maximise profits. competitors from producing
identical products.

(iii) Monopoly due to location or may be Monopoly due to legal rights is

old establishment like the TATA conferred by the government
products or Godrej Locks, Cupboards, such as patent right, copy right,
etc., or an actor like Amir Khan. trade marks, etc.

2 Extension of Supply and Contraction of Supply.

Ans
Extension of Supply Contraction of Supply

(i) When the supply of a commodity When supply of a commodity falls

rises only due to increase in the price only due to fall in the price of that
of that commodity, then it is said to commodity, then it is said to be
be extension of supply. contraction of supply.

(ii) Extension in supply is shown by an Contraction is shown by the

upward movement to right on the downward movement to left on the
same supply curve. same supply curve.

(iii)

(iv) When price rises from 0P to 0P1, When prices falls from 0P to 0P1,
Supply extends from 0Q to 0Q1. Supply contracts from 0Q to 0Q2.

3 Total revenue and marginal revenue

Ans Total Revenue Marginal Revenue

Total revenue is the total sales Marginal revenue is the net addition made
proceeds of a firm by selling a to total revenue by selling an extra unit of
commodity at a given price. the commodity.
Formula: TR = P x Q Formula:
 Total revenue = Price Quantity MRn = TRn - TRn-1
4 Slicing Method and Lumping Method.

Ans
Slicing Method Lumping Method

(a) In slicing method the entire

economy is cut into individual (a) In lumping method, we study the
slices and each unit is studied economy as a whole without slicing it.
in depth.

(b) Micro Economics uses the (b) Macro Economies uses the Lumping
slicing method. Method.

(c) In slicing method, in depth (c) In lumping method, it deals with the
study of the behaviour of an behaviour of large aggregates like
individual unit like a household, National Income, aggregate demand,
a firm, a product, a factor is aggregate supply, employment and their
done. functional relationship is studied.

(d) It relates to the in-depth

(d) It relates to the study of the forest as
study of a tree and not the
a whole and not a particular tree.
study of forest as a whole.

(e) Here we achieve a worm's (e) It gives a bird's eye view of the whole
eye view. economy.

5 Contraction of Supply and Decrease in Supply.

Ans
Contraction of Supply Decrease in Supply

Contraction of supply refers Decrease in supply refers to a fall in

to a fall in the quantity the supply of a given commodity due
supplied, due to fall in the to unfavourable changes in other
price of a commodity, other factors such as increase in the
(1) factors remaining constant. prices of inputs, increase in tax rate,
In case of contraction of outdated technology, strikes by
supply, there is a downward worker, while price remains
movement on the same constant. The supply curve shifts to
supply curve. the left of the original supply curve

6 Average cost and marginal cost

Ans
Average Cost (AC) Marginal cost (MC)

Average cost refers to cost of Marginal cost is the net

production per unit. It is calculated addition made to total cost
(1)
by dividing total cost by total quantity by producing one more unit
of production. of output.

(2) AC = TC / TQ MCn = TCn – TCn-1

7 Stock and Supply.

Ans
Stock Supply

1 Stock is the total quantity of Supply refers to the relation

 commodity available for sale with a between market prices and
seller at a particular point of time. It the amount of goods that
is the source of supply. It is potential producers are willing to
supply. supply.
2 Stock is the outcome of production. Supply is derived out of stock.
Stock can be increased if production is Supply can be increased if stock
3
increased. is increased.
Supply can be less than or equal
4 Stock is generally more than supply to stock. However, it cannot
exceed stock.
Supply is a flow concept and is
Stock is a static concept and is not
5 always expressed in relation to
expressed in relation to price and time.
price and time.
8 Total utility and marginal utility.

Ans
Total Utility Marginal Utility

Total Utility (TU) refers to the Marginal Utility (MU) is the additional
aggregate of utility derived by the utility derived by the consumer on
consumer from all units of a consumption of an additional unit of
commodity consumed. the commodity.

TUn= MU₁ + MU2 + MU3+ .... + MUn

MUn = TUn - TU(n-1)
TUn = Σ ΜUn

TU initially increases at diminishing

MUgoes on diminishing continuously.
rate

At the point of satiety, TU is

At the point of satiety, MU is zero.
maximum

MU becomes negative if
TU declines if consumption
consumption continues after the
continues after the point of satiety.
point of satiety.

TU is always positive. MU can be positive, negative or zero.

Q.6 Read the following passage and answer the question given below: 12

1 In common language the term market means a specific place where buyers and sellers of a commodity meet
and exchange their goods. But in Economics it is not necessarily a place but it is an arrangement through
which buyers and sellers come in contact with each other directly or indirectly and exchange of goods takes
place among them.
Market can be classified on the basis of place, time and competition. Market on the basis of competition is
perfect competition and imperfect competition. Perfect competition is an imaginary concept of market and in
reality, we observe various types of imperfect competition like monopoly, duopoly, oligopoly and monopolistic
competition.
In practice monopolistic competition is used. In this market there are some features of perfect competition
and monopoly acting together. The uniqueness of this market lies in the fact that a difference is made
between cost of production and selling cost. Selling cost refers to the cost incurred by the firm to create more
demand for its product and increase the volume of sale. It includes expenditure on advertisement, hoardings,
window display etc.
Questions:
 1. Explain the concept of Market from Economic sense.
2. Write the classification of Market.
3. Write your own opinion about selling cost.

Ans 1. It is an arrangement through which buyers and sellers come in contact with each other directly or indirectly
and exchange of goods takes place among them.
2. Market can be classified on the basis of place, time and competition. Market on the basis of competition is
perfect competition and imperfect competition. Various types of imperfect competition like monopoly,
duopoly, oligopoly and monopolistic competition.
3. In my opinion, selling costs are a vital aspect of a firm's strategy to differentiate its product and stimulate
demand. These costs, which encompass advertising and promotional activities, are essential in competitive
markets to inform potential customers and persuade them to choose one product over another.

2 The census of 1991 was the fifth census of independent India and conducted as usual from 9th to 28th February,
2001 to present census data as on sunrise of 1st March 2001, the reference date. The two phases were
continued in the same way like previous two censuses.
In the first phase a house list was canvassed to collect the information on housing data and also amenities
available to the households. The scope of house list was enlarged and for the first time a question regarding type
of fuel used for cooking was canvassed. In 1981 the question on availability of toilet facility was canvassed for
urban areas only. However, in 1991, it was canvassed for rural area also.
During 2nd phase following two schedules were canvassed. (a) Household schedule and (b) Individual slip
a.Between which dates the census for 2001 was conducted.
b.What information was collected in the first phase of census?
c. Which question was canvassed in 1991?
d. Which two schedule were canvassed in IInd phase?

Ans a. The census for 2001 was conducted between 9th to 28th February, 2001.
b.In the first phase of census a house list was canvassed for collecting information about housing data and
amenities available.
c. In 1991 question on availability of toilet facility was canvassed for rural area.
d.During IInd phase below two schedules were canvassed -
(a) Household schedule and
(b) Individual slip.

3 Microeconomics studies the economic actions and behaviour of individual units such as an individual consumer,
individual producer or a firm, the price of a particular commodity or a factor etc.
Micro economic theory shows under what conditions the efficiencies are achieved. Thus, the focus of micro
economics is mainly confined to price theory and resource allocation. It does not study the aggregates relating to
the whole economy. Maynard Keynes published his famous book the "General Theory of Employment, Interest
and Money" in 1936. Keynes used macro-economic approach to analyse economic problems. The credit for the
development of macro-economic approach goes to Lord Keynes. Besides Keynes, Malthus, Wicksell, Walras,
Irving Fisher are other economists who have contributed to the development of macro economics.
This approach does not study national economic problems such as unemployment, poverty, inequality of income
etc. Theory of growth, theory of business cycles, monetary and fiscal policies etc. are beyond the limits of micro
economics.
1. What are the two main branches of economics?
2. Enlist the types of efficiencies microeconomics talk about.
3. Who used macro-economic approach to analyse economic problems.
4. Give two examples of areas which are not a part of the study of microeconomics.

Ans 1. Microeconomics and macroeconomics

2. Efficiency in production
Efficiency in consumption
Overall efficiencies
3. Keynes used macro-economic approach to analyse economic problems.
4. National income
Theory of business cycle.