Distinguish between a centrally planned economy and a market economy.
S.No. | Points of Difference | Centrally Planned Economy | Market Economy |
---|---|---|---|
1 | Ownership of factors of production. | Factors of production are publicly owned; i.e., public ownership. | Factors of production are privately owned. |
2 | Production Motive | The motive of production is social welfare. Factors of production are publicly owned; i.e., public ownership. | The main motive is profit making. |
3 | Governing Factor | The production is governed by a planning mechanism; i.e. according to the government plans. | The production is governed by price mechanism; i.e., by demand and supply. |
4 | Income Distribution | The degree of inequality of income is low. | There exists unequal distribution of income. |
5 | Government’s Role | The main role is played by the government – from production to distribution. | The main role is played by private players. They decide what to produce, while the role of a government is limited to maintaining law and order in the nation. |
Distinguish between microeconomics and macroeconomics.
What do you mean by the production possibilities of an economy?
Discuss the subject matter of economics.
What is a production possibility frontier?
Discuss the central problems of an economy.
What do you understand by normative economic analysis?
What do you understand by positive economic analysis?
Explain the concept of a production function
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?
Explain market equilibrium.
What are the characteristics of a perfectly competitive market?
What do you mean by the budget set of a consumer?
What is the total product of input?
From the schedule provided below calculate the total revenue, demand curve and the price elasticity of demand:
Quantity |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
9 |
Marginal Revenue |
10 |
6 |
2 |
2 |
2 |
0 |
0 |
0 |
- |
When do we say that there is an excess demand for a commodity in the market?
How are the total revenue of a firm, market price, and the quantity sold by the firm related to each other?
What is budget line?
How does the budget line change if the consumer’s income increases to Rs 40 but the prices remain unchanged?
What do you mean by ‘monotonic preferences’?
Suppose a consumer wants to consume two goods which are available only in
integer units. The two goods are equally priced at Rs 10 and the consumer’s
income is Rs 40.
(i) Write down all the bundles that are available to the consumer.
(ii) Among the bundles that are available to the consumer, identify those which cost her exactly Rs 40.
Suppose a consumer’s preferences are monotonic. What can you say about her preference ranking over the bundles (10, 10), (10, 9) and (9, 9)?
If a consumer has monotonic preferences, can she be indifferent between the
bundles (10, 8) and (8, 6)?
Suppose there are two consumers in the market for a good and their demand functions are as follows:
d1(p) = 20 – p for any price less than or equal to 20, and d1(p) = 0 at any price greater than 20.
d2(p) = 30 – 2p for any price less than or equal to 15 and d1(p) = 0 at any price greater than 15.
Find out the market demand function.
Suppose the price elasticity of demand for a good is – 0.2. If there is a 5 % increase in the price of the good, by what percentage will the demand for the good go down?
What happens to the budget set if both the prices as well as the income double?
What do you mean by complements? Give examples of two goods which are complements of each other.
What do you mean by the budget set of a consumer?