Production and cost — Economics STD 11 Commerce — Question

Explain the effect of change in income of a consumer on demand of a good.

Explain the effects of change in income on demand for a good.

How does the equilibrium price of a ‘normal’ commodity change when income of its buyers falls? Explain the chain of effects.

Complete the following table:

Output (Units)	Average Variable Cost (Rs.)	Total Cost (Rs.)	Marginal Cost (Rs.)
1	-	60	20
2	18	-	-
3	-	-	18
4	20	120	-
5	22	-	-

A consumer spends continues to spend ₹ 1000 on a good priced at ₹ 8 per unit. When price rises by 25 percent, the consumer ₹ 1000 on the good. Calculate price elasticity of demand by percentage method.

Given the price of a good, how does a consumer decide as to how much of that good to buy.
Or
Explain the condition of determining how many units of a good consumer will buy at a given price.
OR
Explain why the price a consumer is willing to pay for a good equals the marginal utility of X when in equilibrium.
OR
Explain why consumer's equilibrium is attained when the utility of a product in terms of money is equal to its price.

A producer can sell more of a good only by lowering the price. Prepare a TR and MR schedule. Take four output levels.

1. When more sale is possible only at a lower price.
2. When more sale is possible at a given price.

There are no barriers in the way of firms leaving or joining industry in a perfectly competitive market. Explain the significance of this feature.

Explain the conditions of consumer’s equilibrium under indifference curve approach.

Explain the conditions leading to maximisation of profits by a producer. Use total cost and total revenue approach.