Theory of consumer behaviour — Economics STD 12 Humanities & Commerce — Question

Give the behaviour of marginal product and total product as more and more units of only one input are employed while keeping other inputs as constant.

Distinguish between:

1. Capital receipts and revenue receipts.
2. Direct tax and indirect tax.

We suppose that C = 70 + 0.70Y D, I = 90, G = 100, T = 0.10Y.

1. Find the equilibrium income.
2. What are tax revenues at equilibrium income?

Does the government have a balanced budget?

From the following data calculate: (a) Private income, and (b) Personal disposable income:

S.No.		Rs. (in crores)
1	Income from domestic product accuring to the private sector.	4,000
2	Saving of non-departmental public entreprises.	200
3	Current transfers from government administrative departments.	150
4	Saving of private corporate sector.	400
5	Current transfers from rest of the world.	50
6	Net factor income from abroad.	-40
7	Corporation tax.	60
8	Direct personal taxes.	140

An economy is in equilibrium. Calculate national Income from the following:
Autonomous consumption = 100
Marginal propensity to save = 0.2.
Investment expenditure = 200.

What is ‘change in supply’? Explain the effect of tax imposed on a good on the supply of the good.

Find out average variable cost in:

Total Output (Units)	Total Cost (Rs)
0	120
1	180
2	200
3	210
4	230
5	270
6	360

Read the passage given below and answer the following questions from 1 to 4.
In the Government of India's budget for the year 2013 - 14, the Finance Minister proposed to raise the Goods and Services Tax (GST) on cigarettes. He also proposed to increase income tax on individual earning more than rupee one crore per annum.

1. Identify the taxes proposed to be increased by the Budget 2013 - 14. The taxes proposed are:

1. Goods and Services tax on cigarettes.
2. Income tax on individuals earning Rs. 1 crore or above.
3. Both [a] and [b]
4. None of the above

2. What was the objective(s) behind the proposals put forth in the Budget 2013 - 14?

1. Revenue generation
2. Social welfare
3. Both [a] and [b]
4. None of these

3. What welfare objective the government wishes to achieve by increasing GST on cigarettes?

1. This will discourage their cigarettes
2. This will encourage their cigarettes
3. Both [a] and [b]
4. None of the above

4. What would be the effect of increase in direct tax on the rich?

1. It will reduce the gap between rich and the poor, thereby reducing inequalities in income
2. It will increase the gap between rich and the poor
3. Both [a] and [b]
4. None of the above

Define utility. Explain the Law of Diminishing Marginal Utility.

An economy is in equilibrium. Find Marginal Propensity to Consume from the following:
National income = 2000
Autonomous consumption = 400
Investment expenditure = 200