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Economics 3 Marks Question

Model Paper 4 · Rajasthan Board (RBSE) STD 11 Humanities & Commerce (Rajasthan - English Medium). 3 questions.

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3 Marks Question

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3 questions · self-marked practice — reveal the answer and mark yourself.

Question 13 Marks
What will happen if the price prevailing in the market is .
i. above the equilibrium price?
ii. below the equilibrium price?
Answer
i. If the market price is above the equilibrium price, there occurs the situation of excess supply (where market supply> market demand)
Image

In the given figure, the equilibrium price and quantity is demoted by Pe and qe . Let us assume that the market price (P1 ) is above the equilibrium price Pe . Now, according to the demand curve, the quantity demanded is qd . Whereas, according to the supply curve, the quantity supplied is qs . Thus, there exists a situation of excess supply equivalent to (qs - qd ). The pressure of excess supply reduces the price.
ii. If the market price is below the equilibrium price, there occurs the situation of excess demand (where market demand $>$ market supply)
Let us assume that the market price $P _2$ is below the equilibrium price $P ^{ e }$. According to the demand curve, the quantity demanded is q'd. Whereas, according to the supply curve, the quantity supplied is q's. So, it can be seen that there emerges the situation of excess demand equivalent to (q'd - q's).
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Question 23 Marks
Explain how scarcity and choice go together.
Answer
Scarcity refers to the basic economic problem, the gap between limited – that is, scarce resources and theoretically limitless wants. Resources are not only scarce but also have alternative uses i.e., land can be used for producing wheat or for constructing warehouses or factories. Hence, it leads to a problem of choice. However, if resources were not scarce one could have anything, anytime and then there would have been no problem of choice.
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Question 33 Marks
What will happen to the PPC of Bihar if the river Kosi cause a widespread flood?
Answer
PPC is a graph that shows the maximum number of possible units a company can produce if it only produces two products using all of its resources efficiently.
i. Widespread floods in the river will lead to the destruction of resources.
ii. It there is the destruction of resources the PPC will shift to the left.
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