Economics 2019 All India - Set-1

General Instructions:

1. All questions in both the sections are compulsory.
2. Marks for questions are indicated against each question.
3. Question Nos. 1 - 4 and 13 - 16 are very short-answer questions carrying 1 mark each. They are required to be answered in one sentence each.
4. Question Nos. 5 - 6 and 17 - 18 are short-answer questions carrying 3 marks each. Answers to them should normally not exceed 60 words each.
5. Question Nos. 7 - 9 and 19 - 21 are also short-answer questions carrying 4 marks each. Answers to them should normally not exceed 70 words each.
6. Question Nos. 10 - 12 and 22 - 24 are long-answer questions carrying 6 marks each. Answers to them should normally not exceed 100 words each.
7. Answers should be brief and to the point and the above word limits should be adhered to as far as possible.

Question 1

The Total Revenue earned by selling 20 units is ₹ 700. Marginal Revenue earned by selling 21st unit is ₹ 70. The value of Total Revenue earned by selling total 21 units will be Choose the correct alternative)

1. ₹ 721
2. ₹ 630
3. ₹ 770
4. ₹ 720

SOLUTION:

The Total Revenue earned by selling 20 units is ₹ 700. Marginal Revenue earned by selling 21st unit is ₹ 70. The value of Total Revenue earned by selling total 21 units will be ₹ 770.

Hence, the correct answer is option (C).

Question 2

In the given figure <math>X_1Y_1</math> and <math>X_2Y_2</math> are Production Possibility Curves in two different periods T₁ and T₂ respectively for Good X and Good Y. A₁ and A₂ represent actual outputs and <math>P_1</math> and <math>P_2</math> represent potential outputs respectively in the two times periods.

Good Y

<math>Y_2</math>

<math>Y_1</math> A₂

• A₁ <math>\mathbf{X}_1</math> <math>{}_{1}^{1}X_{2}</math> 0 Good X

The change in actual output of Goods X and Y over the two periods would be represented by movement from _____. (Fill up the blank)

1. <math>A_2</math> to <math>P_2</math>
2. <math>A_1</math> to <math>P_2</math>
3. <math>P_1</math> to <math>A_2</math>
4. <math>A_1</math> to <math>A_2</math>

SOLUTION:

The change in actual output of Goods X and Y over the two periods would be represented by movement from A₁ to A₂.

Hence, the correct answer is option (D).

Question 3

Under imperfect competition, Average Revenue (AR) remains _____ Marginal Revenue (MR). (Fill up the blank)

OR

"For a firm to be in equilibrium, Marginal Revenue (MR) and Marginal Cost (MC) must be ______ and beyond that level of output Marginal Cost must be _____." (Fill up the blank)

SOLUTION:

Under imperfect competition, Average Revenue (AR) remains above Marginal Revenue (MR).

OR

"For a firm to be in equilibrium, Marginal Revenue (MR) and Marginal Cost (MC) must be equal and beyond that level of output Marginal Cost must be rising".

Question 4