Explain the concept of a production function
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 the maximum possible output. Production function is written as:
Qx = f ( L,K )
Where, Qx represents units of output x produced.
L represents units of labour employed.
K represents units of capital employed.
The above equation explains that Qx units of output x are produced by employing L and K units of labour and capital respectively and by a given technology. As the given level of technology appreciates, the output will increase with the same level of capital and labour units.
What is the total product of input?
When does a production function satisfy decreasing returns to scale?
Let the production function of a firm be Q=5L1/2K1/2Q=5L1/2K1/2 Find out the maximum possible output that the firm can produce with 100 units of LL and 100 units of KK.
Why does the SMC curve cut the AVC curve at the minimum point of the AVC curve?
What do the long-run marginal cost and the average cost curves look like?
What does the average fixed cost curve look like? Why does it look so?
What are the average fixed cost, average variable cost and average cost of a firm? How are they related?
Explain the relationship between the marginal products and the total product of an input.
The following table gives the total product schedule of labour. Find the corresponding average product and marginal product schedules of labour.
What is the law of variable proportions?
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.
Discuss the central problems of an economy.
What are the characteristics of a perfectly competitive market?
What do you mean by the budget set of a consumer?
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?
What do you mean by the production possibilities of an economy?
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?
What happens to the budget set if both the prices as well as the income double?
When do we say that there is an excess demand for a commodity in the market?
Suppose your friend is indifferent to the bundles (5, 6) and (6, 6). Are the preferences of your friend monotonic?
What do you mean by substitutes? Give examples of two goods which are substitutes of each other.
Compute the total revenue, marginal revenue and average revenue schedules in the following table. Market price of each unit of the good is Rs 10.
Quantity Sold | TR | MR | AR |
---|---|---|---|
0 1 2 3 4 5 6 |
What is meant by prices being rigid? How can oligopoly behavior lead to such an outcome?
How is the optimal amount of labor determined in a perfectly competitive market?
What do you mean by the production possibilities of an economy?
How will a change in the price of coffee affect the equilibrium price of tea? Explain the effect on equilibrium quantity also through a diagram.
What do you mean by a normal good?