# CBSE (Central Board of Secondary Education- Board Exam) Class-12 Economics: Questions 317 - 325 of 523

Get 1 year subscription: Access detailed explanations (illustrated with images and videos) to 523 questions. Access all new questions we will add tracking exam-pattern and syllabus changes. View Sample Explanation or View Features.

Rs. 900.00 or

## 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

Function of Commercial Banks

In this video Function of c

… (6 more words) …

## 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 + IL produce 100 units and 2K + 2L produce 250 units. Input

… (83 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 any profit or any losses.

If price is less than minimum of long run ave

… (29 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 neither earns profits nor losses. When price is greater than minium of long run average

… (35 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 and withdraw their funds more than one time.

(3) Sav

… (19 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.