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

When does a demand curve take the shape of a rectangular hyperbola?

Why is the equality between marginal cost and marginal revenue necessary for a firm to be in equilibrium? Is it sufficient to ensure equilibrium? Explain.

OR

Explain why will a producer not be in equilibrium if the conditions of equilibrium are not met.

OR

Explain the rationale behind the conditions of equilibrium of a producer.

Calculate net national disposable income from the following data:

	(Rs. in Crores)
Gross domestic product at market price	2000
Net current transfers to rest of the world	(-)200
Net indirect taxes	150
Net factor income to abroad	60
National debt interest	70
Consumption of fixed capital	200
Current transfers from Government	150

How are the following treated while estimating expenditure on gross domestic product? Give reasons in support of your answer.

1. Expenditure incurred on purchase of second hand goods.
2. Expenditure incurred on purchase of new shares of a company.
3. Expenditure incurred by a shopkeeper on purchase of garments from a garment manufacturer.

Explain briefly the determination of equilibrium level of income. Use diagram.

OR

Explain with the help of a diagram how equilibrium level of income is determined by aggregate demand and aggregate supply.

Explain the conditions of producer’s equilibrium with the help of a numerical example. Use marginal cost and marginal revenue approach.

If an additional investment of ₹ 100 crore increases the income by ₹ 100 crore in the first round of the multiplier process, by ₹ 50 crore in the second round, by ₹ 25 crore in the third round and so on. Determine the total increase in income.

Calculate:

1. Gross domestic product at market price.
2. National income.

		(₹ in crores)
(i)	Government final consumption expenditure	4,000
(ii)	Private final consumption expenditure	3,500
(iii)	Gross domestic capital formation	1,100
(iv)	Net exports	500
(v)	Net factor income from abroad	100
(vi)	Net indirect taxes	300
(vii)	Subsidies	40
(viii)	Change in stock	80
(ix)	Consumption of fixed capital	120

Explain with the help of saving and investment curves, the equilibrium level of income in an economy. Is equality between saving and investment necessary for full employment?

OR

Explain with the help of saving and investment curve the equilibrium level of income. Does equilibrium level of income always indicate full employment in the economy ? Explain.

Will the following be included in domestic income of India? Give reasons for your answer.

1. Profits earned by a foreign bank from its branches in India.
2. Scholarships given by Government of India.
3. Profits earned by a resident of India from his company in Singapore.
4. Salaries received by Indians working in American Embassy in India.