| State the relation between marginal revenue and average revenue. |
| Or |
| State the relation between total cost and marginal cost. |
| A consumer consumes only two goods. Explain consumer's equilibrium with the help of utility analysis. |
| Or |
| A consumer consumes only two goods A and B and is in equilibrium. Show that when price of good B falls demand for B rises. Answer this question with the help of utility analysis. |
| Explain the conditions of consumer's equilibrium with the help of the indifference curve analysis. |
| Or |
| Explain the three properties of the indifference curves. |
| From the following information about a firm, find the firms equilibrium output in terms of marginal cost and marginal revenue. Give reasons. Also find profit at this output. | ||
| Output (units) | Total Revenue (Rs.) | Total Cost (Rs.) |
| 1 | 7 | 8 |
| 2 | 14 | 15 |
| 3 | 21 | 21 |
| 4 | 28 | 28 |
| 5 | 35 | 36 |
| Is the following revenue expenditure or capital expenditure in the context of government budget? Give reasons. |
| (i) Expenditure on collection of taxes. |
| (ii) Expenditure on purchasing computers. |
| Define money supply and explain its components. |
| Or |
| Explain the 'lender of last resort" function of central bank. |
| Calculate investment expenditure from the following data about an economy which is in equilibrium: |
| National income = 1000 |
| Marginal propensity to save = 0.25 |
| Autonomous consumption expenditure = 200 |
| Calculate national income from the following: | ||
| (Rs. Arab) | ||
| (i) | Net current transfers to abroad | (-) 15 |
| (ii) | Private final consumption expenditure | 600 |
| (iii) | Subsidies | 20 |
| (iv) | Government final consumption of fixed capital | 100 |
| (v) | Indirect tax | 120 |
| (vi) | Net imports | 20 |
| (vii) | Consumption of fixed capital | 35 |
| (viii) | Net change in stocks | (-) 10 |
| (ix) | Net factor income to abroad | 5 |
| (x) | Net domestic capital formation | 110 |
| Giving reason explain how should the following be treated in estimating gross domestic product at market price? |
| (i) Fees to a mechanic paid by a firm. |
| (ii) Interest paid by an individual on a car loan taken from a bank. |
| (iii) Expenditure on purchasing a car for use by a firm. |
| Explain national income equilibrium through aggregate demand and aggregate supply. Use diagram. Also explain the changes that take place in an economy when the economy is not in equilibrium. |
| Or |
| Outline the steps required to be taken in deriving saving curve from the given consumption curve. Use diagram. |
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