Question
Explain the central problem of 'for whom to produce'.

Answer

self

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The monthly expenditure (₹) of a family on some important items and the Goods and Services Tax (GST) rates applicable to these items is as follows:
Item Monthly Expense (₹) GST Rate %
Cereals 1500 0
Eggs 250 0
Fish, Meat 250 0
Medicines 50 5
Biogas 50 5
Transport 100 5
Butter 50 12
Babool 10 12
Tomato Ketchup 40 12
Biscuits 75 18
Cakes, Pastries 25 18
Branded Garments 100 18
Vacuum Cleaner, Car 1000 28
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What is the degree of elasticity of demand in case of the following demand curves:
(i) Straight line parallel to X-axis?
(ii) Straight line parallel to Y-axis?
(iii) A rectangular hyperbola curve?
Explain the difference between ‘change in demand’ and ‘change in quantity demanded’
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Output (units)12345
Total Revenue (Rs.)1020304050
Total Cost (Rs.)1222304052
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(ii) supply is perfectly inelastic and demand increases.
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Suppose, price of commodity-Y $\left( P _{ Y }\right)$ is ₹10 per unit. Also, assume that marginal utility of money $\left( MU _{ M }\right)$ is 8 (and constant). Using the following marginal utility schedule of the consumer, find out equilibrium level of consumption and total expenditure on commodity-Y.
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Age Group
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20-40
40-60
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350
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