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Section A What gives rise to an economic problem? Define ‘production function’. What happens to equilibrium price of a commodity if there is ‘decrease’ in its demand

(1) (1)

and ‘increase’ in its supply? What induces new firms to enter an industry? Define cost.

(1) (1)

State three changes leading to the shift of demand curve of a consumer to the right. (3)

What will be the price elasticity of supply if the supply curve is a positively sloped straight line?

(3)

Explain why a production possibilities curve is concave. OR Find the profit maximizing level of output from the following :

(3)

10.

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

(3)

For blind candidates in lieu of Q. No. 13

Explain the effects of ‘increase’ in supply of a good on its equilibrium price and equilibrium quantity with the help of a schedule.

(4)

Average Total Cost

is able to sell more quantity of output at the same price. is able to sell more quantity of output only by lowering the price.

(3)

A consumer buys 100 units of a good at a price of Rs. 5 per unit. When price changes he buys 140 units. What is the new price if price elasticity of demand is - 2 ?

(4)

State any two features each of monopoly and monopolistic competition. OR State four features of a perfectly competitive market.

Explain the effects of ‘increase’ in supply of a good on its equilibrium and equilibrium quantity. Use diagram.

(4)

Price

11.

12.

13.

(i) (ii)

8.

9.

Quantity s

old

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4. 5. 6. 7.

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