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'Investment multiplier and Marginal Propensity to Consume are directly related to each other'. Explain with the help of numerical example.
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Explain the chain effects, if the prevailing market price is below the equilibrium price.
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Giving reason, state whether the following statement is true or false.
When equilibrium price of a good is less than its market price, there will be competition among the sellers.
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If the prevailing market price is above the equilibrium price, explain its chain of effects.
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Find national income and private income:
| (Rs crore) | ||
| (i) | Rent | 200 |
| (ii) | Net current transfer to abroad | 10 |
| (iii) | National debt interest | 60 |
| (iv) | Corporate tax | 100 |
| (v) | Composition of employees | 900 |
| (vi) | Current transfers from government | 150 |
| (vii) | Interest | 400 |
| (viii) | Interest | 50 |
| (ix) | Undistributed profits | 250 |
| (x) | Net factor income to abroad | (-)10 |
| (xi) | Income accruing to government | 120 |
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Explain the chain of effects of excess supply of a good on its equilibrium price
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X and Y are complementary goods. The price of Y falls. Explain the chain of effects of this change in the market of X.
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Explain the chain of an effect of excess demand of a good on it equilibrium price.
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Explain the meaning of excess demand and excess supply with the help of a schedule. Explain their effect on equilibrium price.
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Calculate National Income and Private Income :
| (Rs crores) | ||
| (i) | Net imports | 5 |
| (ii) | Net domestic capital formation | 15 |
| (iii) | Personal income | 90 |
| (iv) | National debt interest | 10 |
| (v) | Corporate tax | 25 |
| (vi) | Government final consumption expenditure | 20 |
| (vii) | Net factor income to abroad | (−) 5 |
| (viii) | Net indirect tax | 10 |
| (ix) | Undistributed profits | 0 |
| (x) | Private final consumption expenditure | 100 |
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Equilibrium price of an essential medicine is too high. Explain what possible steps can be taken to bring down the equilibrium price but only through the market forces. Also explain the series of changes that will occur in the market.
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Suppose the price at which the equilibrium is attained in exercise 5 is above the minimum average cost of the firms constituting the market. Now if we allow for free entry and exit of firms, how will the market price adjust to it?
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At what level of price do the firms in a perfectly competitive market supply when free entry and exit is allowed in the market? How is the equilibrium quantity determined in such a market?
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If the price of a substitute Y of good X increases, what impact does it have on the equilibrium price and quantity of good X?
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Suppose the demand and supply equations of a commodity X in a perfectly competitive market are given by :
Qd = 1700 – 2P
Qs = 1300 + 3P
Calculate the value of equilibrium price and equilibrium quantity of the commodity X.
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State whether the following statement is true or false. Give reasons for your answer :
When the equilibrium price is greater than the market price there will be excess supply in the market.
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Answer the following question:
The market for a good is in equilibrium. How would an increase in an input price affect the equilibrium price and equilibrium quantity, keeping other factors constant? Explain using a diagram.
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What is maximum price ceiling? Explain its implications.
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What is minimum price ceiling? Explain its implications.
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What is meant by price ceiling? Explain its implications.
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