Using supply and demand curves show how an increase in the price of shoes affects the price of a pair of socks and the number of pairs of socks bought and sold.

What is the supply curve of a firm in the long run?

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.

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?

Distinguish between a centrally planned economy and a market economy.

How does the imposition of a unit tax affect the supply curve of a firm?

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.

What is the relation between market price and average revenue of a price-taking firm?

What is budget line?

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.

Suppose your friend is indifferent to the bundles (5, 6) and (6, 6). Are the preferences of your friend monotonic?

What do you mean by ‘monotonic preferences’?

What is the reason for the long run equilibrium of a firm in monopolistic competition to be associated with zero profit?

Suppose the price elasticity of demand for a good is – 0.2. How will the expenditure on the good be affected if there is a 10 % increase in the price of the good?

How are the equilibrium price and quantity affected when?

(a) Both demand and supply curves shift in the same direction?

(b) Demand and supply curves shift in opposite directions?

What is the average product of an input? 

How are equilibrium price and quantity affected when income of the consumers

a) Increase

b) Decrease

What do you mean by the production possibilities of an economy?

Explain the relationship between the marginal products and the total product of an input. 

When does a production function satisfy increasing returns to scale? 

What is the value of the MR when the demand curve is elastic?