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

Calculate National Income and Personal Disposable Income:

		(Rs. Crores)
	Personal Tax	80
	Private final consumption expenditure	600
	Undistributed profits	30
	Private income	650
	Government final consumption expenditure	100
	Corporate Tax	50
	Net domestic fixed capital formation	70
	Net indirect tax	60
	Depreciation	14
	Change in stocks	(-) 10
	Net imports	20
	Net factor income to abroad	10

With the help of a diagram explain the effect of “decrease” in demand of a commodity on its equilibrium price and quantity.

Distinguish between:

1. Fixed Costs and Variable Costs.
2. Average Cost and Marginal Cost.

How will you treat the following while estimating domestic factor income of India? Give reasons for your answer.

1. Remittances from non-resident Indians to their families in India.
2. Rent paid by the embassy of Japan in India to a resident Indian.
3. Profits earned by branches of foreign bank in India.

Find Gross Domestic Product at Factor Cost and Personal Disposable Income:

		(₹ crore)
(i)	Personal tax	100
(ii)	Net National Disposable Income	800
(iii)	Corporation tax	50
(iv)	Net factor income to abroad	(–) 10
(v)	Retained income	20
(vi)	Indirect tax	170
(vii)	Private income	600
(viii)	Subsidy	30
(ix)	Consumption of fixed capital	60
(x)	Net current transfer from abroad	10

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

Explain briefly the three features of perfect competition.

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 (₹)	Total Cost (₹)
1	7	8
2	14	15
3	21	21
4	28	28
5	35	36

What are monotonic preferences? Explain why is an indifference curve:

1. Downward sloping from left to right and
2. Convex to the origin.