SCHOLARS INSTITUTE. NOTHING IS IMPOSSIBLE 3207, 2nd Floor Fountain Chowk Mahindra Park Tele :
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1 The SCHOLARS INSTITUTE NOTHING IS IMPOSSIBLE 3207, 2nd Floor Fountain Chowk Mahindra Park Tele : M.M. 60 Q 1 A consumer buys 80 units of a good at a price of Rs. 4 per unit. When the price falls, he buys 100 units. If price elasticity of demand is (-) 1, find out the new price. (Page 97 P-1) Q 2 A 5 per cent fall in the price of X leads to a 10 per cent rise in demand for X. A 2 per cent risejn the price of Y leads to a 6 per cent fall in demand for, Y. Calculate the price elasticity of demand of X and Y. (Page 98 P -2) Q 3 Price of a good falls from Rs. 10 to Rs. 8. As a result its demand rises from 80 units.to 100 units. What can you say about price elasticity of demand by total expenditure method? (Page 98 P - 3) Q 4 A consumer buys 40 units of a commodity at a price of Rs. 5 per unit and his price elasticity of demand is (-) 1.5. Calculate the amount he will buy at the price of Rs. 4 per unit of the commodity. (Page 98 P - 4) Q 5 A household increases its demand for a commodity from 40 units to 50 units when its price falls by 10%. What is the price elasticity for the commodity? (Page 99 P - 5) Q 6 A consumer sperids Rs. 80 on a commodity when its price is Re. 1 per unit and spends Rs. 96 when the price is Rs. 2 per unit. What is the price elasticity of demand for the commodity? (Page 99 P - 6) Note: By dividing expenditure with the price we can get the quantity demanded. Q 7 Would the elasticity of demand in the following cases be unity, less than unity or greater than unity? (i) A rise in the price of a commodity increases the total household expenditure on it. (ii) A rise in the price of commodity reduces total household expenditure on it. (Page 99 P - 7) Solution: Application Question Q 1 Price of a good rises from Rs. 4 to Rs. 5 per unit. As a result its demand falls from 200 units to 100 units. Calculate Ep. (Page 102 Q - 1) Q 2 A consumerbuys 50 units of a good at Rs. 10 per unit. At a price of Rs. 8 per unit he buys 100 units. Find out Ep. (Page 102 Q - 2) Q 3 A 7% fall in the price of a good leads to 49% increase in demand of that good. Find out Ep. (Page 102 Q - 3) Q 4 Ep of a good is - 3. At a price of Rs. 8 per unit a consumer buys 160 units of the good. How many units of the good will the consumer buy when price falls to Rs. 6 per unit? (Page 102 Q - 4) Q 5 Ep of a good is - 5. At a price of Rs. 10 per unit consumer buys 200 units. At what price will he buy 100 units? (Page 102 Q - 5) Q 6 Ep of a good is - 4. When price of this good rises from Rs. 5 to Rs. 6 per unit, a consumer buys 40 units less. How many units did he buy at Rs. 5? (Page 102 Q - 6) Q 7 Given Ep = -1, complete the following table: (Page 103 Q - 7) Price Demand (Rs. per unit) (Units) Use percentage change method. Q 8 There are two goods A and B. The prices of both rise by 7 per cent. As a result, demand for A falls by 10.5 per cent, while there is no change in demand for B. Find out Ep of A and B.(Page 103 Q - 8) Q 9 Find out Ep by the percentage method : (Page 103 Q - 9)
2 Price. (Rs.) Total expenditure (Rs.) Q 10 Calculate Ep by comparing total expenditure : (Page 103 Q - 10) Price (Rs.) Demand (units) Q 11 There are two goods X and Y. As a result, increase in prices of both X and Y by the same percentage, total expenditure on X rises and that on, Y falls.what can you say about the Ep of X and Y? (Page 103 Q - 11) Q 12 Comment upon Ep by the total outlay method when price falls from (a) Rs. 6 to Rs. 5, (b) Rs. 5 to Rs. 4 and (c) Rs. 4 to Rs. 3. (Page 103 Q - 12) Price (Rs.) Demand Q 13 Draw a downward sloping straight line demand curve. Indicate the points on this demand curve, where Ep =0, Ep =1 and Ep = infinity. Q 14 From the data in question number 10, calculate Ep by the percentage change method. CBSE EXAMINATION QUESTION Q 1 Price elasticityof demandof a good is (-) 2.40 units of this good are bought at a price of Rs 10 per unit. How many units will be bought at a price of Rs. 11 per unit? Calculate. (Page 104 Q - 5) Q At a price of Rs 50 per unit the quantity demanded of a commodity is 1000 units. When its price falls by 10 per cent, its quantity demanded rises to 1080 units. Calculate its price elasticity of demand. Is its demand inelastic? Give reasons for your answer. (Page 104 Q - 10) Q 3 When price of a good rises from Rs. 5 per unit to Rs. 6 per unit, its demand falls from 20 units to 10 units. Compare expenditure on the good to determine whether demand is elastic or inelastic. (Page 104 Q -11) Q 4 A consumer buys 40 units of a good at a price of Rs. 3 per unit. When price rises to Rs. 4 per unit he buys 30 units. Calculate price elasticity of demand by the total expenditure method. (Page 104 Q - 12) Q 5 When price of a good falls by 10 percent, its quantity demanded rises from 40 units to 50 units. Calculate price. elasticity of demand by the percentage method. (Page 104 Q - 13) Q 6 A consumer buys 70 units of a good at a price of Rs. 7 per unit. When price falls to Rs. 6 per unit, he buys 90 units. Use Total Expenditure Method to find whether the demand for good is elastic or inelastic. (Page 104 Q - 14) Q 7 The quantity demanded of a commodity rises from 800 units to 850 units when its price falls from Rs. 20 per unit to Rs. 19 per uriit. Calculate its elasticity of demand. (Page 104 Q - 15) Q 8 Price elasticity of demand of a good is (-) 1. At a given price the consumer buys 60 units of the good. How many units will the consumer buy if the price falls by 10 percent? (Page 104 Q - 16) Q 9 Price elasticity of demand of a good is (-) 2. The consumer buys a certain quantity of this good at a price of Rs. 8 per unit. When the price falls he buys 50 percent more quantity. What is the new Price? (Page 104 Q - 17) 9 NUMERICAL ILLUSTRATIONS Q 1 Identify the three phases in the law of variable proportions from the following: (Page 117 P - 1) Units of Factor Total Product (units) 1 20
3 Q 2 Indentify the different output levels which mark the different phases of the operation of the law of variable proportions from the following data : (Page 117 P - 2) Units of Variable Input Total Product (Units) NUMERICAL QUESTIONS Q 1 4 units of a factor of production produce 100 units of output, and 5 units produce 120 units of output. Calculate MP of that factor. (Page 120 Q - 1) Q 2 Complete the following table : (Page 120 Q - 2) Units of input TP (units) AP (units) MP (units) Q 3 Identify the three phases of the Law of Variable Proportions from the data in question number 2. (Page 120 Q - 3) Q 4 Complete the following table assuming that there are increasing returns to a factor throughout : (Page 120 Q - 4) Units of Variable Input TP (units) Q 5 Complete the following table. Assume that the law of diminishing returns is operating throughout : (Page 121 Q - 5) Variable Input (units) MP (units) Q 6 Prepare a schedule showing variable input and TP on the basis of the Law of Variable Proportions. (Page 121 Q - 6) Q 7 Prepare a schedule showing variable input and MP on the basis of the Law of Variable Proportions. (Page 121 Q - 7) Q 8 Complete the following table : Variable input (units) TP (units) AP (units) MP (units)
4 Q 9 Identify different phases of the law of variable proportions from the /following schedule. Give reason for your answer. (Page 121 Q - 6) Variable Input (Units) Total Product (Units) NUMERICAL ILLUSTRATIONS Q 1 Total Fixed Cost is Rs. 90,corriplete the following table : (Page 131 P - 1) Output (units) Marginal Cost (Rs.) Total Cost (Rs.) Average Total Cost Rs Q 2 Given that the total fixed cost is Rs. 60, complete the following table: (Page 131 P - 2) Output (units) Average Variable Total Cost Maginal Cost Cost (Rs.) (Rs.) (Rs.) Q 3 Assuming that total fixed cost is Rs. 24, complete the following table: (Page 132 P - 3) Output (units) Average Variable Total Variable Maginal Cost Cost (Rs.) Cost (Rs.) (Rs.) Q 4 The following table shows the total cost of production of a firm at different levels of output. Find out the average variable cost and the marginal cost at each level of output: (Page 132 P - 4) Output (Units) : Total cost (Rs.) : Q 5 The following table shows the marginal cost at different levels of output by a firm. Its total fixed costs is Rs Find its average total cost and average variable cost at each level of output: (Page 132 P - 5) Output (Units) : Marginal cost (Rs.) : Q 6 The followhtg table shows the cost function of a firm. Calculate its average variable cost and marginal cost as each level of output. (Page 133 P - 6) Output (Units) : Total cost (Rs.) : Q 7 Fromthe data given below, calculate (i) average fixed cost, and (ii) average variable cost and (iii) marginal cost. (Page 133 P - 7) Output (Units) : Total cost (Rs.) : Q 8 Following information is given about a firm : Output (Units) : Total cost (Rs.) : From this information find out :
5 (i) the average fixed cost of producing 4 units. (ii) the average variable cost of producing 5 units. (iii) the least average cost level of output. (iv) the marginal cost of producing the 3rd unit. (v) the total variable cost of producing 6 units. NUMERICAL QUESTIONS Q 1 Calculate TFC, TVC, AFC, AVC and ATC from the following: (Page 137 Q - 1) Output (units) Total Cost (Rs.) Q 2 Assuming that TFC is Rs. 12, calculate TC, TVC, ATC and AVC from the following: (Page 137 Q -2) Output (units) Marginal Cost (Rs.) Q 3 A firm produces 100 units good X. Actual money expenditure incurred on producing this good is Rs The owner supplies inputs worth Rs. 500 for which he.does not receive any payment. The economic cost turned out to be Rs How do you account the difference? (Page 137 Q - 3) Q 4 Calculate economic cost. (Page 137 Q - 4) (Rs.) (i) Purchases of raw materials 200 (ii) Payment of wages and salaries 500 (iii) Payment of rent 50 (iv) Donations 100 (v) Estimated value of services of owner 300 (vi) Expected minimum profit 40 (vii) Estimated super normal profit 240 Q 5 Identify fixed costs and variable costs: (Page 137 Q - 5) (i) Salary of pennanent staff (ii) Interest payment (iii) Wages to daily wage workers (iv) Expenditure on raw materials (v) Depreciation (vi) License fee (vii) Excise duty (viii) Sales tax Q 6 From the following table, calculate average variable cost of each given level of output : (Page 138 Q - 6) Output (units) : Marginal Cost Rs : Q 7 From the following table, calculate average variable cost of each given level of output. (Page 137 Q - 7)
6 Output (units) : Marginal Cost (Rs) : Q 9 Given below is the cost schedule of a firm. Its total fixed cost is Rs 100. Calculate average variable cost and marginal cost at each given level of output. (Page 139 Q - 10) Output (units) : Total Cost (Rs) : Q 10 Given below is the cost schedule of a firm. Its fixed cost is Rs 50. Calculate average total cost and marginal cost at each given level of output. (Page 139 Q - 11) Output (units) : Total Variable Cost (Rs) : Q 11 Calculate total variable cost and marginal cost at each given level of output from the following table. (Page 139 Q - 12) Output (units) : Total Cost (Rs) : Q 12 Complete the following table : (Page 140 Q - 13) Output Total cost Average variable Marginal cost (units) (Rs.) cost (Rs) (Rs) Q 13 The total fixed cost of a firm is Rs 12. Given below is its marginal cost schedule. Calculate total cost and average variable cost for each given level of output. (Page 140 Q - 14) Output (units) : Marginal cost (Rs) : Q 14 Calculate TVC and TC from the following cost schedule of a firm whose fixed costs are Rs. 10. (Page 140 Q - 15) Output (urfits) : Marginal cost (Rs) : Q 15 Calculate total cost and average variable cost of a firm at each given level of output from its cost schedule given below. (Page 141 Q - 16) Output (units) AFC (Rs) MC (Rs) NUMERICAL ILLUSTRATIONS Q 1 From the table given below, calculate total revenue, average revenue, and marginal revenue : (Page 167 P - 1) Units Sold : Price (Rs) : Q 2 From the tablegiyen below, calculate total revenue, average revenue and marginal revenue. (Page 168 P - 2) Price (Rs) : Units Sold : Q 3 Complete the following table :
7 Units of Total Revenue Average Revenue Marginal Revenue Output (Rs.) (Rs.) (Rs.) Q 4 Identify the market forms of the two sellers of goods A and B, given the following information. Give reasons for your answer : (Page 168 P - 4) Output sold Price of A Price of B (units) (Rs.) (Rs) NUMERICAL QUESTIONS Q 1 Calculate Price, AR and MR from the following: (Page 170 Q - 1) Output (Units) TR (Rs.) Q 2 Find Price, TR and MR from the following : (Page 171 Q - 2) Output (Units) AR (Rs.) Q 3 Find Price, AR and TR from the following : (Page 171 Q -3) Output (Units) MR (Rs.) Q 4 Calculate AR, MR and TR from the following : (Page 171 Q - 4) Output (Units) Price (Rs.) Q 5 Complete the following table : (Page 171 Q - 5) Price (Rs.) Ouput (Units) TR (Rs.) AR (Rs.) MR (Rs.) Q 6 Complete the following table : (Page 172 Q - 7) Ouput (Units) Price (Rs.) Total Revenue (Rs.) Marginal Revenue (Rs.)
8 Q 8 Complete the following table : (Page 172 Q - 8) Ouput (Units) Price (Rs.) Total Revenue (Rs.) Marginal Revenue (Rs.) Q 9 Complete the following table : (Page 172 Q - 9) Ouput Marginal Revenue Total Revenue Average Revenue (Units) (Rs.) (Rs.) (Rs.) Q 10 Complete the following table : (Page 173 Q - 13) Ouput Average Revenue Marginal Revenue Total Revenue (Units) (Rs.) (Rs.) (Rs.) Q 11 Complete the following table : (Page 173 Q - 14) Price Ouput Total Revenue Marginal Revenue (Rs.) (Units) (Rs.) (Rs.) (-) 2
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