Consumer's Equilibrium and Demand-Consumer's Equilibrium (CBSE (Central Board of Secondary Education- Board Exam) Class-12 Economics): Questions 15 - 17 of 17

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Question number: 15

» Consumer's Equilibrium and Demand » Consumer's Equilibrium

Essay Question▾

Describe in Detail

From the following information about economy, calculate (I) its equilibrium level of national income and (ii) saving at equilibrium level of national income.

Consumption function: C = 200 + 0.9 Y

(Where C = consumption expenditure and Y = national income)

Investment expenditure: I = 3000.

Explanation

(i) its equilibrium level of national income

Y = C + I

Y = 200 + 0.9Y + 3000

Y-0.9Y = 3200

Y= Equation =32000

(ii) saving at equilibrium level of national income

Y = C + I

32000 = C + 3000

C = 32000 – 3000

C =

… (1 more words) …

Question number: 16

» Consumer's Equilibrium and Demand » Consumer's Equilibrium

Essay Question▾

Describe in Detail

Explain producer’s equilibrium using a schedule. Use total cost and total revenue approach.

Explanation

In this approach a producer strikes his equilibrium when he maximizes his profit at the same cost. There is a big difference between Total Revenue and Total Cost. Schedule of Total Revenue and Total cost and how equilibrium is worked out is given below in example

Output

TR

TC

Profit

… (109 more words) …

Question number: 17

» Consumer's Equilibrium and Demand » Consumer's Equilibrium

Essay Question▾

Describe in Detail

A consumer buys 40 units of a good at a price of Rs. 3 per unit. When price rises to Rs. 4 per unit he buys 30 units. Calculate price elasticity of demand by the total expenditure method.

Explanation

Price, Quantity and Total Expenditure

Price, Quantity and Total Expenditure for Prices 2 and 4

Price

Quantity

Total expenditure = Price * Quantity

3

40

120

4

30

120

So, Total expenditure does not change with the change in price and thus price elastically of demand will be one.

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