Class 12 Micro Economics - Chapter Production and Costs NCERT Solutions | When does a production function satisfy

What is the total product of input?

Let the production function of a firm be Q=5L1/2K1/2Q=5L1/2K1/2 Find out the maximum possible output that the firm can produce with 100 units of LL and 100 units of KK.

When does a production function satisfy decreasing returns to scale? 

What do the long-run marginal cost and the average cost curves look like? 

Why does the SMC curve cut the AVC curve at the minimum point of the AVC curve? 

What does the average fixed cost curve look like? Why does it look so? 

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

Why is the short-run marginal cost curve 'U'-shaped? 

What is the law of variable proportions? 

What are the average fixed cost, average variable cost and average cost of a firm? How are they related? 

What would be the shape of the demand curve so that the total revenue curve is?

(a) A positively sloped straight line passing through the origin?

(b) A horizontal line?

Explain market equilibrium.

Discuss the central problems of an economy.

What are the characteristics of a perfectly competitive market?

What do you mean by the budget set of a consumer?

From the schedule provided below calculate the total revenue, demand curve and the price elasticity of demand:

When do we say that there is an excess demand for a commodity in the market?

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

How are the total revenue of a firm, market price, and the quantity sold by the firm related to each other?

What is budget line?

What do you mean by complements? Give examples of two goods which are complements of each other.

Consider a market where there are just two consumers and suppose their demands for the good are given as follows:

Calculate the market demand for the good.

If a consumer has monotonic preferences, can she be indifferent between the
bundles (10, 8) and (8, 6)?

Suppose there was a 4 % decrease in the price of a good, and as a result, the expenditure on the good increased by 2 %. What can you say about the elasticity of demand?

Compare the effect of shift in the demand curve on the equilibrium when the number of firms in the market is fixed with the situation when entry-exit is permitted.

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?

Considering the same demand curve as in exercise 22, now let us understand for free entry and exit of the firms producing commodity X. Also assume the market consists of identical firms producing commodity X. Let the supply curve of a single firm be explained?

q*= 8+3p for p ≥ 20

= 0 for 0 ≤ p ≤ Rs 20

(a) What is the significance of p =20?

(b) At what price will the market for X be in equilibrium? State the reason for your answer.

(c) Calculate the equilibrium quantity and number of firms. 

Suppose the price elasticity of demand for a good is – 0.2. If there is a 5 % increase in the price of the good, by what percentage will the demand for the good go down?

Explain price elasticity of demand.

How does the budget line change if the consumer’s income increases to Rs 40 but the prices remain unchanged?