Micro & Macro Economics

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Questions and Answers

Which factor is NOT typically considered a determinant of individual demand in consumer theory?

  • Prices of related goods
  • Income levels
  • Production costs (correct)
  • Consumer preferences

What does the Law of Variable Proportions primarily explain in the context of production theory?

  • The distribution of income among different factors of production.
  • The effect of technological advancements on production efficiency.
  • The changes in output when one input is varied while others are held constant. (correct)
  • The relationship between the cost of production and the scale of output.

In economics, what distinguishes monopolistic competition from perfect competition?

  • The degree of product differentiation. (correct)
  • The presence of barriers to entry.
  • The mobility of resources.
  • The number of firms in the market.

Which of the following market structures is characterized by a few interdependent firms?

<p>Oligopoly (D)</p> Signup and view all the answers

What is a key characteristic of 'Revealed Preference' in consumer theory?

<p>It infers preferences from actual consumer choices. (A)</p> Signup and view all the answers

What is the primary focus of 'welfare economics'?

<p>Evaluating the social desirability of economic outcomes (A)</p> Signup and view all the answers

Which concept is closely associated with the study of externalities?

<p>Social Cost (D)</p> Signup and view all the answers

In the context of 'general equilibrium', what condition must typically be met for Pareto efficiency?

<p>Simultaneous equilibrium in all markets (D)</p> Signup and view all the answers

What is the key implication of the 'indifference curve' in consumer theory?

<p>It represents combinations of goods that provide equal utility to a consumer. (C)</p> Signup and view all the answers

What best describes 'price discrimination' as a strategy used by firms?

<p>Charging different prices to different consumers for the same product. (B)</p> Signup and view all the answers

Flashcards

Microeconomics

The study of economic behavior of individual units like consumers, firms, and markets.

Indifference Curve

A curve showing combinations of goods that give the consumer the same level of satisfaction.

Utility

Extra satisfaction from consuming one more unit of a good or service.

Production Function

A graph showing what an economy can efficiently produce given available resources and technology.

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Law of Variable Proportions

As one input variable is increased, there will be a point when marginal product will start to decrease.

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Cost Function

The cost a business takes on when producing items.

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Economic Efficiency

The degree to which resources are used efficiently in production and allocation.

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Monopoly

Market structure with a single seller dominating the market

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Oligopoly

Market structure with a few large sellers.

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General Equilibrium

Occurs when the marginal cost of production equals the marginal benefit to consumers.

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Study Notes

  • The question paper contains 75 questions.
  • All questions are compulsory and will be based on subject-specific knowledge.
  • The questions will be bilingual (English/Hindi).

Micro Economics

  • Consumer Theory or Behaviour: covers demand, utility, the indifference curve, and revealed preference theory, consumer surplus.
  • Production Theory: covers production function, law of variable proportions, returns to scale, cost function, types, and concepts.
  • Price and Output determination in Market: Focuses on perfect and imperfect competition (Monopoly, price discrimination, monopolistic, duopoly, and oligopoly models).
  • General Equilibrium, Efficiency and Welfare: Describes equilibrium and efficiency under pure exchange and production. Covers overall efficiency and welfare economics, and externality.

Macro Economics

  • Not enough provided in image

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