Lesson Archives

  1. Page No 59: Question 1: What is marginal propensity to consume? How is it related to marginal propensity to save? Answer: Marginal propensity to consume refers to the ratio of change in the consumer’s expenditure due to the change in disposable income (income after deducting taxes). In other words, MPC measures how consumption will vary […]
  2. Page No 46: Question 1: What is a barter system? What are its drawbacks? Answer: Barter system is a system that was used in ancient times to exchange goods. In other words, this system was used to exchange one commodity for another before the monetary system came into existence. For example, if a person having […]
  3. Page No 30: Question 1: What are the four factors of production and what are the remunerations to each of these called? Answer: The four factors of production are: 1. Land − It denotes the natural resources like air, water, soil, etc. The payment that is paid by the firms to acquire these services is […]
  4. Page No 7: Question 1: What is the difference between microeconomics and macroeconomics? Answer: Points of Difference Microeconomics Macroeconomics 1. Definition It is a branch of economics that studies the economic variables at an individual level like the households, the firms, the consumers etc. It is a branch of economics that studies the economic variables […]
  5. Page No 99: Question 1: What would be the shape of the demand curve so that the total revenue curve is (a) a positively sloped straight line passing through the origin? (b) a horizontal line? Answer: (a) If the total revenue curve is a positively sloped straight line passing through the origin, then the slope […]
  6. Page No 84: Question 1: Explain market equilibrium. Answer: Market equilibrium is defined as the state of rest that is determined by the rational objectives of the consumers and the producers (i.e. maximisation of satisfaction and profit respectively). It is a state where the aggregate quantity that all the firms want to sell are purchased […]
  7. Page No 66: Question 1: What are the characteristics of a perfectly competitive market? Answer: Perfect Competition This type of market structure refers to the market that consists of a large number of buyers and also a large number of sellers. No individual seller is able to influence the price of an existing product in […]
  8. Page No 49: Question 1: Explain the concept of a production function. Answer: The production function of a firm depicts the relationship between the inputs used in the production process and the final output. It specifies how many units of different inputs are needed in order to produce the maximum possible output. Production function is […]
  9. Page No 34: Question 1: What do you mean by the budget set of a consumer? Answer: It refers to the set of consumption bundles that are available to or affordable by the consumer; while being aware of his/her income-level and the existing market prices. Question 2: What is a budget line? Answer: A budget […]
  10. Page No 7: Question 1: Discuss the central problems of an economy. Answer: Every economy faces three central problems due to scarce availability of resources. This scarcity challenges the best possible usage of these available resources to fulfil the unlimited demands. The three central problems of an economy are as follows: What to produce and […]