# IEcoS (Economic Services) Economics Paper-1: Questions 48 - 54 of 85

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## Question number: 48

» Theory of Consumer's Demand » Marginal Utility and Demand

### Describe in Detail

What is law of diminishing marginal utility?

### Explanation

Before analysis, the law of diminishing marginal utility we have to understand the term utility and marginal utility. Utility is the want satisfying power of a commodity. Utility measures in the term of ‘until’ that was given by Fisher.

Marginal utility (MU) is the change in total utility by the consumpti

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## Question number: 49

» Theory of Value » Pricing under Different Market Structures » Public Sector Pricing

Appeared in Year: 2015

### Describe in Detail

What is meant by excess capacity? Why is it bad? Are there any benefits of the excess capacity associated with the monopolistic competition?

### Explanation

Meaning:

Theories of Chamberlin’s monopolistic competition and Joan Robinson’s imperfect competition have revealed that a firm under monopolistic competition or imperfect competition in long-run equilibrium produces an output, which is less than socially optimum or ideal output.

This means that firms operate at the point on the falling portion of lon

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## Question number: 50

» Theory of Production » Factors of Production and Production Function

### Describe in Detail

What is industrial policy? Why it is needed and analyzes the pros and cons of it.

### Explanation

India was endowed with great economy since ancient times but the colonial exploitation has ruined the economy with global industrial output of just and after the independence the struggle start to get the economy indian sed and favorable for the people of india because the economy was going through inequa

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## Question number: 51

» Quantitative Methods in Economics » Statistical and Econometric Methods » Testing of Hypothesis, Simple Non-Parametric Tests

Appeared in Year: 2015

### Describe in Detail

Explain the distinction between the parametric and non-parametric tests.

### Explanation

To make the generalization about the population from the sample, statistical tests are used. A statistical test is a formal technique that relies on the probability distribution for reaching the conclusion concerning the reasonableness of the hypothesis. These hypothetical testing related to differences are classified as parametric and non-parametr

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## Question number: 52

» Theory of Consumer's Demand » Cardinal Utility Analysis

### Describe in Detail

How can you measure the price electricity of demand at any point on a straight-line demand curve?

### Explanation

- The price electricity of demand is defined as the degree of responsiveness of quantity demand of a commodity to change in its price. We can measure the price electricity of demand at any point on a straight-line demand curve through
__POINT METHOD__which was developed by prey Marshall.

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## Question number: 53

» Theory of Production » Forms of Production Functions

Appeared in Year: 2015

### Describe in Detail

Define Linear homogenous production function and give an example. Show that in the case of the linear homogenous production function the expansion path must be a straight line passing through the origin.

### Explanation

The *Linear Homogeneous Production Function* implies that with the proportionate change in all the factors of *production*, the *output* also increases in the same proportion.

Such as, if the input factors are doubled the

*output*also gets doubled. This is also known as constant returns to a scale.The production function is said to be homogeneous when the

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## Question number: 54

» Theory of Distribution » Euler's Theorem, Pricing of Factors

Appeared in Year: 2017

### Describe in Detail

State, prove and give an economic interpretation of Euler’s theorem. Show that at the minimum point of the long-run average cost, the total product is exhausted.

### Explanation

When F (L, K) is a production function then Euler’s Theorem says that if factors of production are paid according to their marginal productivities the total factor payment is equal to the degree of homogeneity of the production function times output.

If each factor is rewarded equal to its marginal product, the total product should be disposed of wi

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