MICROECONOMICS CH : 2 CENTRAL PROBLEMS OF AN ECONOMY — Economics STD 11 Commerce — Question

What is the relation between Good-X and Good-Y in each case, if with fall in the price of Good-X demand for Good-Y (i) rises, and (ii) falls? Give reason.

Find out the Price Index of the year 2018, assuming 2016 as the base year of the following data by using Simple Average of Price Relatives Method:

Commodity	Price in the year, 2016 (₹) per Qtl.	Price in the year, 2018 (₹) per Qtl.
Wheat	800	900
Sugar	1100	1200
Rice	400	600
Potato	500	700
Salt	300	500

Read the following case study carefully and answer the questions 1-2 on the basis of the same:
The production function is a mathematical expression which relates the quantity of factor inputs to the quantity of outputs that result. The short run production function is defined in economics as a period of time where at least one factor of production is assumed to be fixed. The analysis of short run production sets the stage to better understand the supply-side of the market. How producers respond to price depends, in part, on their ability to combine inputs to produce output. This ability is guided by the law of diminishing marginal returns, which states that the productivity of a variable input declines as more is added to a fixed input. If productivity declines, then more of the variable input is needed as the quantity produced increases. This results in an increase in production cost, which means producers need to receive a higher price.
- Bashir, Furrukh and others, Estimation of Short Run Production Function:
A Case Study of Shakarganj Mills Limited, 2011
1. Spell out the basic difference between the 'law of variable proportions', and 'returns to scale'.
2.  (i) Increasing returns to a factor are indicated whenever there it true? is increase in total product. Is
     (ii) Diminishing returns to a factor must lead to a fall in marginal product as well as total product. Is it true?

The ranking of ten students in two subjects A and B are as below:

A	3	5	8	4	7	10	2	1	6	9
B	6	4	9	8	1	2	3	10	5	7

What is the coefficient of rank correlation?

How does change in the prices of related commodities affect the supply of a good?

Explain the utility of diagrammatic presentation by giving any four points.

Discuss the concept of opportunity cost with an example.

From the following information about a firm, find the firm's equilibrium output in terms of marginal cost and marginal revenue. Give reasons. Also find profit at this output.

Output (Units)	Total Revenue (₹)	Total Cost (₹)
1	6	7
2	12	13
3	18	17
4	24	23
5	30	31

Explain average cost with the help of a table and diagram.