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Business
Economics
1.
Assume that a consumer consumes two commodities X and Y and makes five
combinations for the two commodities:
TABLE GIVEN BELOW
|
Combination |
Units of X |
Units of Y |
|
A |
25 |
3 |
|
B |
20 |
5 |
|
C |
16 |
10 |
|
D |
13 |
18 |
|
E |
11 |
28 |
Calculate
Marginal rate of Substitution and explain the answer. (10 Marks)
Ans
:
The Marginal Rate of Substitution can
be defined as the rate where a customer is prepared to forget several suitable
X units for one more good Y at the same time.
2. With the help of the concept of
production function. Briefly explain the Law of Variable Proportions and Law of
Returns to Scale. Elaborate your answer by citing real world examples. (10 Marks)
Ans :
The
laws of production tell us about the technical ways that are possible and can
be used to increase the level of production. There are various ways in which output
can be increased. One way is changing all the factors
3.
a. Calculate the elasticity of demand for the following data: (5
Marks)
When the price is Rs 20 per unit,
demand for a commodity is 500 units. As the price falls to Rs15 per unit,
demand expands to 800 Units
Ans :
A
measure of the consumer response to a change in a product’s cost lies in price
elasticity of demand. The more general term demand elasticity tests the impact
of a shift in different variables, including the
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