MICROECONOMICS CH : 7 PRODUCTION FUNTION AND RETURNS TO A FACTOR — Economics STD 11 Commerce — Question

Read the following case study carefully and answer the questions 1-2 on the basis of the same:
The elasticity of demand is great for high prices, and great, or at least considerable, for medium prices; but it declines as the price falls; and gradually fades away if the fall goes so far that satiety level is reached. Water is one of the few things the consumption of which we are able to observe at all prices, from the very highest down to nothing at all. At moderate prices the demand for it is very elastic. But the uses to which it can be put are capable of being completely filled: and as its price sinks towards zero the demand for it loses its elasticity. Nearly the same may be said of salt. Its price in England is so low that the demand for it as an article of food is very inelastic: but in India the price is comparatively high and the demand is comparatively elastic.
1. From a point of intersection of the two demand curves, a flatter demand curve shows higher elasticity of demand. Do you agree?
2. Higher the price level, higher should be the elasticity of demand. Comment.

From the following schedule, find out the level of output at which the producer is in equilibrium. Give reasons for your answer

Output (Units)	1	2	3	4	5	6	7
Price (Rs.)	24	24	24	24	24	24	24
Total Cost	26	50	72	92	115	139	165

Differentiate between spatial and choronological classification with example.

Government imposes GST on production of a good. Explain its effect on supply of that good.

The Government and policy makers use statistical data to formulate suitable policies of economic development’. Illustrate with two examples.

From the data calculate:
(i) average fixed cost, (ii) average variable cost, (iii) marginal cost.

Output (kg)	0	1	2	3	4	5
Total Cost (₹)	40	100	120	130	150	190

Averge daily wage of 50 workers of a factory was ₹ 200 with a standard deviation of ₹ 40. Each worker is given a raise of ₹ 20. What is the new average daily wage and standard deviation? Have the wages become more or less uniform?

Construct Index of Industrial Production (IIP) from the following data:

Industry	Output		Weights
	Base year	Current Year
Manufacturing	122	300	85
Electrical Product	203	400	5
Mining and Quarrying	65	87	10