MICROECONOMICS CH : 2 CENTRAL PROBLEMS OF AN ECONOMY — Economics STD 11 Commerce — Question

"Discovery of natural gas in the international market leads to a cut in the petrol and diesel prices." Explain the economic theory to analyse the impact of the statement on the cost of production of the transport firms in India. Also analyse its impact on the cost of transportation.

Utility Analysis studies consumer's equilibrium on the assumption that utility can be expressed in terms of units like 2, 4, 6. Indifference Curve Analysis, on the other hand, assumes that utility cannot be expressed in terms of units; it can at best be compared. Does it mean that consumer's equilibrium (in terms of the consumption of goods X and Y) should be different, using different assumptions?

What should the firm's fixed cost of production, when average variable cost is ₹50 per unit, total cost of production is ₹ 500, and only 2 units of output are produced?

Explain how scarcity and choice go together.

How is market equilibrium restored when there is excess demand in the market?

A firm is facing a downward sloping price line (AR curve). Why should it produce more when it must lead to fall in price of the commodity?

Ice creams sell for ₹ 30. Lakshmi who loves ice cream, has already eaten 3. Her MU from eating 3 ice creams is 90. Suppose further that, for her, the MU of one rupee is 3. Should she eat more ice cream or should she stop?

Comment on the shape of the MR curve in case the TR curve is
(i) a positively sloped straight line.
(ii) a horizontal line.

How does the imposition of a unit tax affect the supply curve of a firm?

What are the total fixed cost, total variable cost and total cost of a firm? How are they related?