Economics 2019 Abroad - Set-2

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 coefficient of price elasticity of supply of a good is 3. It is known as _____

(Choose the correct alternative)

1. Unitary Elastic Supply
2. Perfectly Inelastic Supply
3. Elastic Supply
4. Inelastic Supply

SOLUTION:

The coefficient of price elasticity of supply of a good is 3. It is known as elastic supply. Hence, the correct answer is option (C).

Question 2

Shift from Point A on Production Possibility Curve X₁Y₁ to point B on X₂Y₂ in the given figure indicates: (Choose the correct alternative)

Good Y

<math>Y_2</math>

<math>Y_1</math>

<math>X_1</math> O Good X

(a) Decrease in resources

1. Increase in resources
2. Full and efficient utilisation of resources
3. Wastage of resources

OR

A Production Possibility Curve (PPC) would be convex to the origin if Marginal Rate of Transformation (MRT) is _____. (Fill up the blank)

SOLUTION:

Increase in Resources Hence, the correct answer is option (B).

OR

A Production Possibility Curve would be convex to origin if Marginal Rate of Transformation is decreasing.

Question 3

The shape of the average revenue curve under perfect competition would be _____. (Fill up the blank)

SOLUTION:

The shape of the average revenue curve under perfect competition would be a straight line parallel to the x-axis

Question 4

Mention any two examples of implicit cost incurred by a firm.

OR

Define variable cost.

SOLUTION:

The examples of the implicit cost incurred by a firm are given as follows:

1. Imputed value of the services of the owner of the firm
2. Imputed rent of the owner occupied building

OR

Variable Cost refers to those costs which are incurred by a firm on the variable inputs for production. The variable costs are positive function of output i.e. as output increases, variable costs also increases and vice-versa.

Question 5

Discuss briefly the central problem of "For whom to produce".