Consumer's Equilibrium and Demand-Consumer's Equilibrium (CBSE 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= 32000.1 =32000

(ii) saving at equilibrium level of national income

Y = C + I

32000 = C + 3000

C = 32000 – 3000

C… (2 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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