Answer twenty as directed ($1 \times 20 = 20$ Marks)
1. Define microeconomics.
Microeconomics is the branch of economics that studies the behavior of individual units, such as households and firms, in making decisions regarding the allocation of scarce resources.
3. Mention two basic problems of economics.
5. What do you mean by normative economics?
Normative economics is the study of "what ought to be," involving value judgments and ethical prescriptions rather than purely objective facts.
6. State the law of demand.
The Law of Demand states that, other things being equal (ceteris paribus), the quantity demanded of a commodity falls as its price rises and increases as its price falls.
9. Define the concept of market equilibrium.
Market equilibrium is a state where the quantity demanded by consumers equals the quantity supplied by producers at a specific price level.
12. Define Average Product (AP) and Marginal Product (MP) of an input.
19. What is an oligopoly market?
Oligopoly is a market structure characterized by a small number of large firms that dominate the industry, where each firm is conscious of the actions of its rivals.
22. Who is called the father of welfare economics?
Arthur Cecil Pigou (A.C. Pigou) is widely regarded as the father of welfare economics.
Answer five questions, selecting one from each Unit ($2 \times 5 = 10$ Marks)
28. Mention two exceptions to the law of demand.
31. Define fixed cost and variable cost with examples.
Answer five questions, selecting one from each Unit ($8 \times 5 = 40$ Marks)
38. Explain the law of supply with the help of schedule and diagram. Mention the factors that determine supply in the market.
Law of Supply: The Law of Supply states that other factors remaining constant, price and quantity supplied are directly related. As price increases, quantity supplied increases.
Supply Schedule:
| Price (Rs) | Quantity Supplied (Units) |
|---|---|
| 10 | 50 |
| 20 | 100 |
| 30 | 150 |
Determinants of Supply:
40. Explain the law of variable proportions with the help of diagram. Mention two limitations of the law.
The Law of Variable Proportions (Short-run Production Function) explains how output changes when one variable input is increased while others are fixed.
Stages:
Limitations:
44. Define Pareto optimality. Explain the concept of Pareto optimality with the help of suitable diagram.
Definition: Pareto Optimality (or Pareto Efficiency) is a state where resources are allocated in such a way that it is impossible to make any one individual better off without making at least one other individual worse off.
Explanation: This concept is used to measure economic efficiency and social welfare. In an Edge-worth Box diagram, Pareto optimal points are located on the contract curve where the marginal rates of substitution between two goods are equal for both consumers.