Production and cost — Economics STD 12 Humanities & Commerce — Question

Distinguish between a normal good and an inferior good. Give example in each case.

Name the broad categories of transactions recorded in the 'Capital account' of the Balance of Payments Accounts.

Define multiplier. What is the relation between marginal propensity to consume and multiplier? Calculate the marginal propensity to consume if the value of multiplier is 4.

Draw a diagram showing deflationary gap.

In a single day Raju, the barber, collects Rs 500 from haircuts; over this day, his equipment depreciates in value by Rs 50. Of the remaining Rs 450, Raju pays sales tax worth Rs 30, takes home Rs 200 and retains Rs 220 for improvement and buying of new equipment. He further pays Rs 20 as income tax from his income. Based on this information, complete Raju’s contribution to the following measures of income:

1. Gross Domestic Product.
2. NNP at market price.
3. NNP at factor cost.
4. Personal income.
5. Personal disposable income.

Distinguish between explicit cost and implicit cost and give examples.

Why are the firms said to be interdependent in an oligopoly market? Explain.

At what level of price do the firms in a perfectly competitive market supply when free entry and exit is allowed in the market? How is equilibrium quantity determined in such a market?

State briefly the effect of excess demand on output, employment and price.

Distinguish between devaluation and depreciation of domestic currency.