30 Questions
What subject is the textbook welcoming students to in the preface?
Economics
Who is mentioned as the Chief Production Officer in the text?
Shri Liladhar Atram
According to the information provided, who are the members of the Economics Study Group?
Shri Subhash Rajdhar Patil and Mrs. Shobha Subhash Nagare
What is stated as the most important goal of education in the textbook?
'Constructivism'
Which city is mentioned as the location of the Maharashtra State Textbook Bureau?
Mumbai
Who is listed as the Publisher in the provided content?
Shri Vivek Uttam Gosavi
What is the formula to explain the relationship between total utility and marginal utility?
TU = Σ MU
What does the X-axis measure in the context of the graph presented?
Units of the commodity consumed
What does Fig. 2.7 illustrate about the shape of the total utility curve?
It slopes upwards
When does total utility reach its maximum and remain constant?
At a particular stage
What does the marginal utility curve show in terms of levels?
Zero and negative levels
According to Table 2.1, what is the relationship between total utility and marginal utility of the very first unit consumed?
They are equal
What is the Law of Diminishing Marginal Utility?
The marginal utility of a good decreases with consumption.
Which scenario does not adhere to the Law of Diminishing Marginal Utility?
A miser becoming happier with every additional rupee earned.
What happens to marginal utility as consumption increases in hobbies like collecting stamps and coins?
Marginal utility keeps increasing.
Why does the scenario of a miser experiencing increased satisfaction violate the assumption of rationality?
Because the miser should not derive more satisfaction from additional wealth.
What is an exception to the Law of Diminishing Marginal Utility according to the text?
Increasing marginal utility in hobbies like stamp collection.
How does the level of intoxication change for a drunkard as they consume more liquor according to the text?
It increases with every additional unit consumed.
What is the role of financial intermediaries in India's Capital Market?
Act as a link between the investor and the market
What does insider trading involve in the context of the Indian Capital Market?
Buying or selling securities with non-public information for personal benefit
What is the primary objective of price manipulation in the Indian Capital Market?
To raise share prices for personal gains
Which entities are involved in mobilizing long term savings within India's Capital Market?
Merchant banks, mutual funds, leasing companies
What effect do illegal practices like insider trading and price manipulation have on India's Capital Market?
Disrupt smooth functioning of the market
How do financial intermediaries contribute to the efficiency of India's Capital Market?
By facilitating transactions between investors and securities markets
What is the main function of the Reserve Bank of India (RBI) according to the text?
Issuing currency notes of all denominations
Which city in India serves as the main active money market centre?
Mumbai
According to Dr. M.H. de Kock, what is the central bank considered as?
The apex of the monetary and banking structure of the country
What is the minimum gold and foreign exchange reserve required to be maintained by RBI as per the 'Minimum Reserve System' of 1957?
115 crores in gold and 85 crores in foreign currency and government securities
What kind of banks does RBI serve as a banker, agent, and advisor to according to the text?
Both Central and State Governments
What type of financial intermediaries are considered unregulated according to the text?
Unregulated non-bank financial intermediaries
Study Notes
Maharashtra State Textbook Bureau
- The textbook bureau is responsible for publishing textbooks for Std.XII, which includes micro and macro approaches to the study of economics.
Formulae for Total Utility and Marginal Utility
- TU = Σ MU or TU = MU1 + MU2 + MU3 ………..+ MUn
- MUn = TUn – TU(n–1)
Total Utility Curve and Marginal Utility Curve
- The total utility curve slopes upwards, while the marginal utility curve slopes downwards.
- The marginal utility curve shows zero and negative levels of marginal utility.
- The total utility curve shows maximum and constant total utility levels.
Relationship between Total Utility and Marginal Utility
- Marginal utility derived from various units of a commodity and its total utility are interrelated.
- At a particular stage, total utility reaches its maximum and remains constant, while marginal utility becomes zero, which is called the point of satiety.
Law of Diminishing Marginal Utility
- The law assumes an experience of a single want that is completely satiable at a given point in time.
- As the consumption of a commodity increases, the marginal utility of each additional unit decreases.
Exceptions to the Law of Diminishing Marginal Utility
- Hobbies: Every additional increase in the stock gives more pleasure, increasing marginal utility.
- Miser: Every additional rupee gives more satisfaction, increasing marginal utility.
- Addictions: The level of intoxication increases with every additional unit of liquor consumed.
Money Market in India
- The money market in India is located in Mumbai, Delhi, and Kolkata, with Mumbai being the only active centre.
- The structure of the money market in India includes the Reserve Bank of India, commercial banks, and other financial institutions.
Central Bank and its Functions
- The Reserve Bank of India (RBI) is the central bank of India, controlling credit and regulating the banking system.
- The RBI has the sole right to issue currency notes of all denominations, except one rupee note and coins.
- The RBI acts as a banker, agent, and advisor to the Government, transacting the business of both the Central and State Governments.
- The RBI collects and compiles statistical information related to banking and other financial sectors of the economy.
Capital Market in India
- The capital market in India consists of financial intermediaries, including merchant banks, mutual funds, leasing companies, venture capital companies, and others.
- The capital market mobilizes long-term savings, meeting the financial objectives of both the investor and the borrower.
- Insider trading and price manipulation are illegal practices that can affect the smooth functioning of the capital market.
Test your knowledge on Alfred Marshall's Law of Diminishing Marginal Utility with questions related to single wants, negative utility, and the concept of diminishing marginal utility. Explore exceptions to this law with a detailed explanation of Table 2.2.
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