CBSE Class-12 Economics: Questions 317 - 325 of 523

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Question number: 317

Write in Short

Define ‘Marginal Rate of Transformation’.

Question number: 318

Essay Question▾

Describe in Detail

Explain the lending function of commercial banks.

Explanation

Lending function of commercial bank means they act as financial intermediaries and accept deposits from more money than they want to spend and lend it with more money and they have at hand.

It means money from lenders to borrowers.

Lenders - > Banks - > Borrowers

Question number: 319

» Consumer's Equilibrium and Demand » Demand » Elasticity of Demand

Write in Short

Price elasticity of demand for 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?

Question number: 320

Essay Question▾

Describe in Detail

Explain, with the help of numerical examples, the effect on total output of a good when all the inputs used in production of that good are increased simultaneously and in the same proportion.

Explanation

The behavior of Total Product (TP) is technically Returns to Scale. There are three possibilities:

(1) TP rises in greater proportion than the rise in inputs it is known as Increasing Returns to Scale. For example: Suppose there are only two inputs labor (L) and Capital (K). Suppose 1K +… (112 more words) …

Question number: 321

» Consumer's Equilibrium and Demand » Demand » Elasticity of Demand

Essay Question▾

Describe in Detail

When price of a good falls from Rs. 10 per unit to Rs. 9 per unit, its demand rises from 9 units to 10 units. Compare expenditures on the good to find price elasticity of demand.

Explanation

 Price (Rs) Quantity demanded (units) Total Expenditure (Rs) 10 9 90 9 10 90

So, price elasticity of demand is equal to unity.

Question number: 322

Essay Question▾

Describe in Detail

Explain what happens to losses in the long run if the firms are free to leave the industry.

Explanation

In the long run if the firms are free to leave the industry than that individual firm earns only normal profits and zero profits for economicy. When a firm exits it operates at the point where minimum of long run average cost curve is contiguous price line. Firms don’t earn… (43 more words) …

Question number: 323

Essay Question▾

Describe in Detail

Explain what happens to the profits in the long run if the firms are free to enter the industry.

Explanation

In the long run if the firms are free to enter the industry it will earn some profit but it will be zero profits in economiy. Entry of individual firm is operated at point where minimum of long run average cost curve is as a priceline.

In such situation firm… (50 more words) …

Question number: 324

Essay Question▾

Describe in Detail

Explain the acceptance of deposits function of commercial banks.

Explanation

A bank is accepting deposits from the public. People can deposit their money of following accounts:

(1) Fixed or Time deposit account: - Cash is deposited in his account for limited time. This is not payable on demand.

(2) Current or demand deposit Account: - In this depositor can deposit… (29 more words) …

Question number: 325

Essay Question▾

Describe in Detail

If marginal propensity to save is 0.2. How much new investment is required to make the national income rise by Rs. 600 crores? Calculate.

Explanation

K= = = 1.25

K= = =480

So, desired increase in investment = Rs. 480 crore.