Question 5

Distinguish between a centrally planned economy and a market economy.

Answer

S.No.	Points of Difference	Centrally Planned Economy	Market Economy
1	Ownership of factors of production.	Factors of production are publicly owned; i.e., public ownership.	Factors of production are privately owned.
2	Production Motive	The motive of production is social welfare. Factors of production are publicly owned; i.e., public ownership.	The main motive is profit making.
3	Governing Factor	The production is governed by a planning mechanism; i.e. according to the government plans.	The production is governed by price mechanism; i.e., by demand and supply.
4	Income Distribution	The degree of inequality of income is low.	There exists unequal distribution of income.
5	Government’s Role	The main role is played by the government – from production to distribution.	The main role is played by private players. They decide what to produce, while the role of a government is limited to maintaining law and order in the nation.

Popular Questions of Class 12 Micro Economics

Q:-
What is the supply curve of a firm in the long run?
Q:-
The market price of a good changes from Rs 5 to Rs 20. As a result, the quantity supplied by a firm increases by 15 units. The price elasticity of the firm’s supply curve is 0.5. Find the initial and final output levels of the firm.
Q:-
A firm earns a revenue of Rs 50 when the market price of a good is Rs 10. The market price increases to Rs 15 and the firm now earns a revenue of Rs 150. What is the price elasticity of the firm’s supply curve?
Q:-
How does the imposition of a unit tax affect the supply curve of a firm?
Q:-
A consumer wants to consume two goods. The prices of the two goods are Rs 4
and Rs 5 respectively. The consumer’s income is Rs 20.
(i) Write down the equation of the budget line.
(ii) How much of good 1 can the consumer consume if she spends her entire
income on that good?
(iii) How much of good 2 can she consume if she spends her entire income on
that good?
(iv) What is the slope of the budget line?
Questions 5, 6 and 7 are related to question 4.
Q:-
What is the relation between market price and average revenue of a price-taking firm?
Q:-
What is budget line?
Q:-
Suppose there are 20 consumers for a good and they have identical demand functions:

d(p)=10–3pd(p)=10–3p for any price less than or equal to 103103 and d1(p)=0d1(p)=0 at any price greater than 103.
Q:-
Suppose your friend is indifferent to the bundles (5, 6) and (6, 6). Are the preferences of your friend monotonic?
Q:-
Suppose a consumer’s preferences are monotonic. What can you say about her preference ranking over the bundles (10, 10), (10, 9) and (9, 9)?

Quantity	0	1	2	3	4	5	6	7	8
Price	52	44	37	31	26	22	19	16	13

Quantity	0	1	2	3	4	5	6	7	8
Price	10	60	90	100	102	105	109	115	125

Distinguish between a centrally planned economy and a market economy.

Popular Questions of Class 12 Micro Economics

Recently Viewed Questions of Class 12 Micro Economics

Write a Comment:

NCERT Solutions

Quick Links

Resources

Support