Given that TC(Q) = 128 + 60Q + 8Q²
We know TC = Fixed cost + variable cost
MC (Q) =\(\frac { d(TC) }{ dQ } \)
= 0 + 60(1)Q^1-1 + 8(2)Q^2-1
= 0 + 60Q⁰ + 16Q¹(Since, Q⁰= 1)
MC = 60 + 16Q
Average Cost =\(\frac { TC }{ dQ } \)
=\(\frac { 128+60Q+8Q^{ 2 } }{ Q } \)
AC = \(\frac { 128 }{ Q } \) + 60 + 8Q
Constant value is known as fixed cost
Fixed cost = 128
FC = 128
Average Fixed cost = \(\frac { 128 }{ Q } \)
AFC = \(\frac { 128 }{ Q } \)
Average Variable cost = 60 + 8Q (total variable cost divided by Q)
∴ AVC = 60 + 8Q

The matrix form of the given equation is written as
\(\begin{bmatrix} 7 & -1 & -1 \\ 10 & -2 & +1 \\ 6 & 3 & -2 \end{bmatrix}\left[ \begin{matrix} { x }_{ 1 } \\ { x }_{ 2 } \\ { x }_{ 3 } \end{matrix} \right]\)\(=\begin{bmatrix} 0\\ 8\\ 7\\ \end{bmatrix}\)
\(\Delta\)=\(\begin{vmatrix} 7& -1& -1\\ 10& -2& +1\\ 6& 3& -2\\ \end{vmatrix}\)
=7(4-3)-(-1)(-20-6)+(-1)(30+12)
=7(1)+1(-26)-1(42)
=7 - 26 - 42 = - 61
\(\triangle \)x_{1 \(=\begin{bmatrix} 0 & -1 & -1 \\ 8 & -2 & +1 \\ 7 & 3 & -2 \end{bmatrix}\)}
=0(4-3)-(-1)(-16-7)+(-1)(24+14)
=0+1(-23)-1(38)
=-23-38 = - 61
\(\Delta x_2=\begin{vmatrix} 7& 0& -1\\ 10& 8& 1\\ 6& 7& -2\\ \end{vmatrix}\)
=7(-16 - 7) - (0)(-20 - 6)+(-1)(70 - 48)
=7(-23)+0 - 1 (22)
=-161 - 22 = -183
\(\triangle \)x_{3 \(=\begin{bmatrix} 7 & -1 & 0 \\ 10 & -2 & 8 \\ 6 &3 & 7 \end{bmatrix}\)}
=7(-14-24)-(-1)(70-48)+0(30+12)
=7(-38)+1(22)+0(42)
=-266+22+0
\(\triangle \)x₁ = - 244
\(x_{1}=\frac{\Delta x_{1}}{\Delta}=\frac{-61}{-61}=1\)
\(x_{2}=\frac{\Delta x_{2}}{\Delta}=\frac{-183}{-61}=3\)
\(x_{3}=\frac{\Delta x_{3}}{\Delta}=\frac{-244}{-61}=4\)

Introduction:
(i) The law of diminishing marginal utility was extended and is called Law of Equi marginal utility
(ii) Law of substitution or Law of consumer's Equilibrium or Gossen's II law or law of maximum satisfaction.
Definition:
Marshall, "If a person has a thing which he can put to several uses, he will distribute it among these uses in such a way that it has the same marginal utility in all. For, if it had a greater marginal utility in one use than another, he would gain by taking away some of it from the second use and applying it to first.
Assumption
(i) Consumer is rational and wants maximum satisfaction.
(ii) Utility is measurable in cardinal numbers.
(iii) Marginal utility of money is constant.
(iv) Income of the consumer is given.
(v) There is perfect competition.
(vi) Price is given.
(vii) Law of diminishing marginal utility operates
Explanation:
(i) The consumer has Rs. 11.
(ii) He wants to spend it on apple ( Rs 1 each) and orange (Rs. 1 each)
(iii) He will be in equilibrium only when he gets maximum satisfaction ie.
\(\mathrm{K}=\frac{\text { Marginal utility of apple }}{\text { Price of apple }}=\frac{\text { Marginal utility of orange }}{\text { Price of orange }}\)
If is \(\frac{\mathrm{MU_A}}{\mathrm{P_A}}\) less than \(\frac{\mathrm{MU_O}}{\mathrm{P_O}}\) he would transfer money from apple to orange till it is equal.
He should buy 6 units of apple & 5 units of oranges. He gets (92 + 58) = 150 units satisfaction.
\(\frac{\mathrm{MU_A}}{\mathrm{P_A}}=\frac{\mathrm{MU_O}}{\mathrm{P_O}}=\frac{4}{1}=\frac{4}{1}\)

Apple				orange
Units of Commodities	Total Utility	marginal Utility	Total Utility	marginal Utility
1	25	25	30	30
2	45	20	41	11
3	63	18	49	8
4	78	15	54	5
5	88	10	58	4
6	92	4	61	3

Explanation:
(i) X axis shows amount of money spent
(ii) Y axis shows marginal utility of apple and orange.
(iii) If consumer spends Rs.6 on apple and Rs.5 on orange MU will be equal.
(iv) ie. AA₁ = BB₁ = 4 = 4. So he gets maximum utility.
Criticisms:
(i) Utility cannot be measured.
(ii) No consumer compares the utility and disutility from each unit of the commodity while buying it.
(iii) This law cannot be applied to durable goods.
Conclusion:
(i) The law of equi marginal utility is an improvement over the law of diminishing marginal utility because it can be used for many commodities consumed at the same time.

For equilibrium P_d = P_s
\(1600-x^{2} =2 x^{2}+400  \)
\(1600-400 =2 x^{2}+x^{2}  \)
\(3 x^{2} =1200  \)
\(x^{2} =400  \)
\(x =\pm 20  \)
\(P_{\mathrm{d}} =1600-(20)^{2} \)
=1600-400 
=1200 
\(\mathrm{P}_{\mathrm{s}} =2(20)^{2}+400 \)
= 2(400) + 400 
= 800 + 400 
= 1200
Consumer's surplus:
\(\mathrm{C}_{\mathrm{s}}=\int_{0}^{20}\left(1600-x^{2}\right) \mathrm{d} x-(20 \times 1200) \)
\(=\left[1600 x-\frac{x^{3}}{3}\right]_{0}^{20}-(24000)=\left[1600(20)-\frac{20^{3}}{3}\right]-24000 \)
\(=32000-\frac{8000}{3}-24000=5,333.34\)
Producer's surplus:
\(\mathrm{P}_{\mathrm{s}} =(20 \times 1200)-\int_{0}^{20}\left(2 x^{2} +400\right) \mathrm{d} x  \)
\(=24000-\left[\frac{2 x^{3}}{3}+400 x\right]_{0}^{20}   \)
\(=24000-\left[\frac{2(20)^{3}}{3}+400(20)\right]=24000-\left[\frac{2 \times 8000}{3}+8000\right]\)
= 24000-5333.33 - 8000 = 10,666.67

i) zero
\(\mathrm{P} =60-0.2 \mathrm{Q}  \)
\(0 =60-0.2 \mathrm{Q}  \)
\(0.2 \mathrm{Q} =60  \)
\(\mathrm{Q} =\frac{60}{0.2}=\frac{600}{2}=300\)
ii) Rs. 20
\(\mathrm{P} =60-0.2 \mathrm{Q}  \)
\(20 =60-0.2 \mathrm{Q}  \)
\(0.2 \mathrm{Q} =60-20=40 ; \quad \mathrm{Q}=\frac{40}{0.2}=\frac{400}{2}=200\)
iii) Rs. 40
\(\mathrm{P} =60-0.2 \mathrm{Q}  \)
\(40 =60-0.2 \mathrm{Q}  \)
\(0.2 \mathrm{Q} =60-40  \)
\(\mathrm{Q} =\frac{20}{0.2}=\frac{200}{2}=100\)

Introduction:
(i) The main objective of economic planning was social welfare. Before Independence commercial banks were in the private sector.
(ii) These commercial banks failed in helping the government to achieve the objectives.
(iii) So the government nationalised 14 major commercial banks in 1969 and 6 more in 1980.
Objectives:
(i) The main objective was to attain social welfare.
(ii) Agriculture, small & village industries were in need of funds for their expansion.
(iii) Nationalisation of banks helped to curb private monopolies in order to ensure a smooth supply of credit to socially desirable sections.
(iv) In India 70% population live in villages.
(v) It was needed to encourage the banking habit among the rural population.
(vi) It was required to reduce the regional imbalances where the banking facilities were not available.
(vii) Before Independence the number of banks were less.
(viii) After nationalization, new bank branches were opened in rural and urban areas.
(ix) Banks created credit facilities to the agriculture sector and its allied activities.

Introduction:
(i) In 1601 the East India Company entered India.
(ii) In 1614 Sir Thomas Roe set up factories in India with permission from Jahangir.
(iii) Hundred years after Battle of Plassey, the rule of the East India Company came to an end in 1858.
(iv) Britain exploited India for two centuries.
Period of Merchant Capital:
(i) This period was from 1757 to 1813.
(ii) The only aim of the East India Company was profit. India's riches was used to develop industrial capitalism of Britain.
(iii) The officers of the company were unscrupulous and corrupt.
Period of Industrial Capital:
(i) This period was from 1813 to 1858. India became a market for British textiles.
(ii) Raw materials were exported to England at low price.
(iii) India's traditional handicrafts started declining.
Period of Finance Capital:
(i) This period was from the end of the 19th Century till Independence.
(ii) Britain invested in rail road, postal system and limited field of education in India by plundering Indian Capital.
(iii) Indian tax payers were compelled to finance for the construction of railways.
Decline of Indian handicrafts:
(i) Through discriminatory tariff policy the British Government purposefully destroyed the handicrafts.
(ii) With the disappearance of nawabs and kings, there was no one to protect the handicrafts.
(iii) Indian handicrafts could not compete with the machine made products.
(iv) The introduction of railways increased the domestic market for the British goods.
Conclusion:
(i) Before the advent of the British, India was self sufficient.
(ii) Under the British rule only industries were allowed to develop.
(iii) This brought down the economic condition of the Indians.

Introduction:
The loanable funds theory also called Neo-classical theory was developed by Swedish economists Wicksell, Bertil Ohlin, Viner, Gunnar Myrdal and others.
Theory:
Interest is the price paid for the use of loanable funds.
Demand for loanable funds:
Investment:
Business firms borrow money for buying capital goods.
Consumption:
Individuals borrow money for consumption.
Hoarding:
People hoard money because of people's preference for liquidity, idle cash balance. The demand for C, I and H varies inversely with rate of interest.
Supply of loanable funds:
(i) Savings is of 2 types savings planned by individuals are called ex-ante savings. (eg) LIC premium, EMI payment.
(ii) Unplanned savings is ex-post savings. It is saving left out after spending.
(iii) Bank credit commercial banks create credit and supply loanable funds to investors.
(iv) Dishoarding means bringing out the hoarded money into use. After 1991, public sector undertakings are being sold to private to mobilize funds.
(v) Disinvestment means not providing sufficient funds for depreciation of equipment.
(vi) The supply of loanable funds of S, BC, DH, DI vary directly with interest rate.
Equilibrium:
The rate of interest is determined by the equilibrium between the total demand for and the total supply of loanable funds.
Diagram Explanation:

x axis demand for and supply of loanable funds.
y axis rate of interest.
LS curve- total supply of loanable funds.
(S + BC + DH + DI)
LD curve - total demand for loanable funds
(I + C + H)
LD & LS curves intersect at E. OR = rate of interest OM = amount of loanable funds.
Criticism:
(i) Asymmetric information & moral hazard have not been included.
(ii) Some large firms due to their political powers get huge bank credit at lower interest rate.
(iii) But due to non-performing assets (NPAs) small firms & depositors lose their interest income.
(iv) The loanable funds theory is indeterminate unless the income level is already known.
(v) It is difficult to combine real factors like savings & investment with monetary factors like bank credit & liquidity preference
Conclusion:
Loanable fund theory is wider in scope compared to classical theory.

Introduction:
(i) Marginal productivity theory of distribution was developed by Clark, Wicksteed and Walras.
(ii) This theory explains how the prices of various factors of production are determined.
Assumptions
(i) All the factors of production are homogeneous, can be substituted for each other and are perfectly mobile.
(ii) There is perfect competition in the factor & product market.
(iii) There is full employment with no technological change.
(iv) The theory is applicable only in long run.
(vi) The entrepreneurs aim at profit maximisation.
(vii) There is no government intervention in fixing the price of a factor.
Explanation:
(i) The reward for any factor of production is equal to the marginal productivity of that factor.
(ii) The greater the productivity of a factor higher will be its reward.
(iii) The price of a factor of production depends upon its productivity.
(vi) The price will be equal to marginal revenue product of that factor.
(v) Under certain conditions, the price of a factor will be equal to both the average and marginal products of that factor.
Marginal productivity under perfect competition:

(i) fig (a) x axis represents factor units.
(ii) y axis shows factor price & revenue.
MRP = Marginal revenue product curve.
ARP = Average revenue product curve.
AFC = Average factor cost curve.
MFC = Marginal factor cost curve.
(iii) AFC is horizontal & MFC coincides with it.
(iv) The firm is in equilibrium (maximum profit) when MFC = MRP at Q by employing ON units of factors & paying (OP price or NQ) where MFC = MRP = ARP.
(v) The price paid to the factor NQ is equal to MRP (NQ) and ARP (NQ) beyond Q no employer will employ factors because after that point, the price paid to the factor is more than MRP and ARP.
Marginal productivity under Imperfect competition:

(i) fig(b) AFC represents the price paid to the factors. It increases as the number of factors demanded by the employer increases.
(ii) As AFC rises, MFC lies above AFC. It represents the MC paid to the factors.
(iii) At the point Q, MFC = MRP, where the employer attains his maximum profit and so he stops employment of the factors at the point.
(iv) But the AC paid is NRSO and AR is NQ or OP
(v) Total revenue is NQPO.
(vi) Exploitation per unit of factor is RQQ
(vii) But the total number of factors is ON. Thus the total exploitation of factor by the employer is RQ XSR = PQRS (shaded area).
Criticisms:
(i) Factors of production are not homogeneous.
(ii) They cannot be substituted for each other.
(iii) It cannot be applied in the short run.
Conclusion:
This theory is also called "General Theory of Distribution" or "National Dividend Theory of distribution".

People related problems:
The problems related to individuals and their standard of living consist of illiteracy, lack of technical know how, low level of confidence, dependence on sentiments, and beliefs.
Agriculture related:
1. Lack of expected awareness, knowledge, skill and attitude.
2. Unavailability of inputs
3. Poor marketing facility.
4. Insufficient extension staff and services.
5. Multidimensional tasks to extension personnel.
6. Small size of land holding.
7. Sub-division and fragmentation of landholdings.
8. Absence of infrastructure to work and stay in rural areas.
9. Primitive technology and low adoption of modern technologies
10. Reduced public investment and absence of role for farmers in fixing price for their products.
Infrastructure related:
Poor infrastructure facilities like water, electricity, transport, educational institutions, communication, health, employment, storage facility, banking and insurance are found in rural areas.
Economics related:
(i) There is inability to adopt high cost technology, high cost of inputs, under privileged rural industries, low income, indebtedness and existence of inequality in land holdings and assets.
(ii) Infertile areas, a few absentee landlords own large area and they do not show any interest in improving the performance of agriculture.
Leadership related:
Leadership is in the hands of inactive and incompetent people, self-interest leaders, biased political will, less bargaining power and dominance of political leaders.
Administrative Problems:
There is political interference, lack of motivation, low wages in villages, improper utilization of budget, absence of monitoring and implementation of rural development programmes.
Conclusion: The problems found in rural economy are endless.

Introduction:
Rural economy refers to villages and rural community refers to people living in villages.
Features of rural economy:
Village is an institution:
(i) Village is a primary institution and it satisfies almost all the needs of the rural community.
(ii) The rural people have a feeling of belongingness and a sense of unity towards each other.
Dependence on agriculture:
The rural economy depends on nature and agricultural activities.
Life of rural people:
(i) Life style in village is very simple. Education, housing, health and sanitation, transport and communication, banking, roads and markets are limited and unavailable.
(ii) Rural people rely on faith, superstitions and traditional cultural practices.
(iii) The methods of production, social organization, political mobilization, rural sector is extremely weak and backward.
(iv) The incidence of alcohol drinking has gone up.
Population density:
Population density is very low. Houses are scattered in the entire village.
Employment:
There is unemployment, seasonal unemployment and underemployment.
Poverty:
(i) Basic needs of the people like food, clothing and shelter are not met
(ii) About 22 crores of people in rural areas are poor and live below poverty line.
Indebtedness:
(i) People in rural areas are highly indebted owing to poverty, under employment, lack of farm and non-farm employment opportunities, low wage employment, seasonality in production, poor marketing network.
(ii) Since formal loan facilities are not available to the villagers, they depend on local money lenders who squeeze the villagers.
Rural income
Large proportion of labourers are underemployed and the scope for increasing their income is limited.
Dependency:
Rural households are largely dependent on social grants and remittances from family members working in urban areas.
Dualism:
The co-existence of features of organised and unorganised, traditional and modern, regulated and unregulated, poor and rich, skilled and unskilled is very common in rural areas.
Inequality:
There is inequality in distribution of income, wealth and assets. Land, livestock are owned by a few people. Landlords dominate the rural activities.
Migration:
Rural people migrate from villages to urban areas for gainful employment. Lack of basic amenities in rural areas also push the people to urban areas.

Introduction:
In the long run there is no difference between fixed factor and variable factor.
Meaning:
The laws of returns to scale explain the relationship between output and the scale of inputs in the long run when all the inputs are increased in the same proportion.
Assumptions:
1. All the factors of production are variable except organisation.
2. There is no change in technology.
3. There is perfect competition.
4. Output is measured in physical quantities.
Increasing returns to scale:
If all inputs are increased by 1 %, output increases by more than 1 %.
Constant returns to scale:
lf all inputs are increased by 1%, output increases exactly by 1 %.
Diminishing returns to scale:
If all inputs are increased by 1 %, output increases by less than 1 %.
Explanation:
a) The movement from point a to b shows increasing returns to scale. When 2 units labour and capital are used the output has increased from IQ₁ to IQ₃.
b) The movement from b to c shows constant returns. When 4 units of labour and capital are used (i.e. double) the output also has doubled from IQ₃ to IQ₆.
c) The movement from c to d shows decreasing returns. The doubling of the factors from 4 units to 8 units has produced less increase in output i.e. from IQ₆ to only IQ₈
Stages input Output returns to Scale a to b 100% ↑ 200% ↑ increasing b to c 100% ↑ 100% ↑ Constant c to d 100% ↑ 33.33% ↑ decreasing

Tamil Nadu has a well established transportation system that connects all parts of the state. Tamil Nadu has an extensive road network in terms of its spread and quality, providing links between urban centres, agricultural market places & rural habitations in the countryside.
Roadways:
There are 28 national highways. The state has a total road length of 167,000 km of which 60,628 km are maintained by Highways Department. It ranks 2nd in India with 20% in total road projects under public-private partnership model.
Railways:
(i) Tamil Nadu has a well-developed rail network under Southern Railway (HQ at Chennai).
(ii) The Southern Railway covers Tamil Nadu, Kerala, Puducherry, parts of Karnataka and Andhra Pradesh.
(iii) The total railway track length is 6,693 km.
(iv) There are 690 railway stations. It is connected to most major cities.
(v) The main rail junctions are Chennai, Coimbatore, Erode, Madurai, Salem, Tiruchirapalli, Tirunelveli, Chennai has a well established suburban railway network, a Mass Rapid Transport system and a Metro system the direct underground stretch operational since May 2017.
Airways:
Tamil Nadu has 4 major international airports (Chennai, Coimbatore, Madurai, Trichy). Chennai International airport is the III largest airport in India. Domestic airports are at Tuticorin, Salem and Madurai. Increased industrial activity has given rise to an increase in passenger traffic & freight movement.
Ports:
(i) Chennai, Ennore & Tuticorin have major ports. Nagapattinam has an intermediate port.
(ii) There are 23 minor ports.
(iii) The ports handle 73 million metric tonnes of cargo.
(iv) All the minor ports are managed by the Tamil Nadu Maritime Board.
(v) Chennai port is an artificial harbour & the second principal port in India for handling containers.
(vi) It is currently being upgraded to have a dedicated terminal for cars capable of handling 4,00,000 vehicles.
(vii) Ennore port was recently converted from an intermediate port to a major port.
(viii) It handles all the coal and ore traffic in Tamil Nadu.

Introduction:
(i) Tamil Nadu stands 6th in population (7.21 crores).
(ii) It is higher than the population of U.K, France, Italy, South Africa, Spain, Sri Lanka. 36158871 males & 35980087 females.
Density:
(i) According to 2011 census it is 555.
(ii) Tamil Nadu ranks 12th in density (India 382).
(iii) The districts with highest population are Chennai, Kancheepuram, Vellore & Thiruvallur.
(iv) The districts with lowest population are Perambalur, the Nilgiris, Ariyalur & Theni.
Urbanisation:
(i) Tamil Nadu is the most urbanized state with 48.4% of urban population.
(ii) The state accounts for 9.61% of total urbanites in India against 6% share of total population.
Sex ratio:
(i) The sex ratio is nearing balance (995).
(ii) Tamil Nadu stands next to Kerala & Puducherry.
(iii) The districts with highest sex ratio are the Nilgiris, Thanjavur & Nagapattinam. The districts with lowest sex ratio are Theni & Dharmapuri.
Infant Mortality rate IMR:
The IMR is 17 (per 1000) compared to the national average of 34.
Maternal Mortality Rate MMR:
(i) Tamil Nadu has a good record of controlling MMR.
(ii) It ranks third 79 next to Kerala & Maharashtra against the national average of 159.
Life expectancy at birth:
The life expectancy for males is 68.6 (India 66.4) and for females it is 72.7(India 69.6).
Literacy:
(i) The literacy rate is higher than many states.
(ii) For males it is 86.81% & females 73.86%.
(iii) Districts with highest literacy are Kanyakumari & Chennai.
(iv) Districts with lowest literacy are Dharmapuri & Ariyalur.

Introduction:
The law states that if all other factors are fixed and one input is varied in the short run, the total output will increase at an increasing rate at first, then be constant and finally increase at a declining rate.
Definition:
"As equal increments of one input are added, the inputs of other productive services being held constant, beyond a certain point, the resulting increments of product will decrease (i.e) the MP will diminish". - G. Stigler
Assumptions:
1. Only one factor is variable.
2. All units of the variable factor are homogeneous.
3. The product is measured in physical units.
4. No change in technology.
5. No change in price of the product.

Units of variable factor	Total Product (TPL)	Marginal Product (MPL)	Average Product (APL)	Stages
1 2 3	2 6 12	2 4 6	2 3 4	I
4 5	16 18	4 2	4 3.6	II
6 7	18 16	0 -2	3 2.28	III

x-axis represents labourers. y-axis represents TP_L, MP_L, AP_L

Stages	Total Product (TP)	Marginal Product (MP)	Average Product(AP)
Stage I	It increases at an increasing rate. Then it increases at a decreasing rate. This is the point of inflection.	It increases, reaches maximum and starts to decrease.	It increases, reaches maximum.
Stage II	It continues to increase at a diminishing rate and reaches maximum	lt continues to diminish and becomes zero.	It is equal to MP then begins to diminish.
Stage III	It diminishes.	It becomes negative	It diminishes but always is positive.

Conclusion:
The law of variable proportion helps the producer to decide on the amount of factors to be employed.

Introduction:
The government of India, Ministry of Commerce and Industry announced New Foreign Trade Policy on 1st April 2015 for a period 2015 - 2020.
Salient Features:
(i) Reduce export obligations by 25% and give boost to domestic manufacturing supporting the 'Make in India' concept.
(ii) As a step to Digital India concept, online procedure to upload digitally signed document by CA/CS/Cost Accountant are developed and further mobile app for filing tax, stamp duty has been developed.
(iii) Repeated submission of physical copies of documents available on Exporter Importer Profile is not required.
(iv) Export obligation period for export items related to defence, military store, aerospace and nuclear energy to be 24 months.
Conclusion: EXIM Policy 2015 - 2020 is expected to double the share of India in World Trade from present level of 3% by 2020. This is too ambitious.

Introduction:
(i) The Prime Minister of India announced the new Industrial Policy in 1991.
(ii) The policy has brought changes in the following aspects.
Industrial delicensing policy:
(i) Under the industrial licensing policies, private sector firms had to secure licenses to start an industry.
(ii) The new industrial policy brought an end to industrial licensing or the license raj or red tapism.
Dereservation of the industrial sector:
(i) Previously the public sector was given reservation in capital goods and key industries.
(ii) Under industrial deregulation most of the industrial sectors were opened to the private sector as well.
(iii) Only 3 sectors ie., atomic energy, mining and railways will continue as reserved for public sector.
Reforms related to the public sector enterprises:
(i) Reforms in the public sector aimed at enhancing efficiency and competitiveness of the sector.
(ii) The government identified strategic and priority areas for the public sector to concentrate.
(iii) Loss making PSUs were sold to the private sector.
Abolition of MRTP Act:
(i) The Monopoly and Restrictive Trade Practices Act, 1969 was abolished.
(ii) In 2010, the Competition Commission monitored the competitive practices in the economy.
(iii) A strong and competitive private sector and a number of foreign companies were started in India.
Foreign Investment Policy:
(i) Foreign Investment including FDI and FPI were allowed.
(ii) In 1991, the government announced a specified list of high-technology and high-investment priority industries wherein automatic permission was granted for foreign direct investment (FDI) up to 51% foreign equity.
(iii) Later it was raised to 74% then 100%.
(iv) Foreign Investment Promotion Board was set up to negotiate with international firms and approve foreign direct investment in select areas.

Nature of Economics:
(i) Nature of a subject refers to its contents, how and why they find a place in the subject.
(ii) The nature is understood by studying the various definitions given by economists.
Wealth definition:
(i) Adam Smith in his book "An inquiry into nature and causes of wealth of nations" defines Economics as a science of wealth.
Welfare definition:
(i) Alfred Marshall in his book "Principles of Economics", defines Economics as a study of mankind in the ordinary business of life;
(ii) It examines that part of individual and social action which is most closely connected with the attainment and with the use of the material requisites of well being.
(iii) It is a study of man and wealth.
Scarcity definition:
(i) Lionel Robbins in his book "An Essay on the nature and significance of economic science" defines Economics as a science which studies human behaviour as a relationship between ends and scarce means which have alternative uses.
Growth definition:
(i) Paul Samuelson defines economics as the study of how men and society choose, with or without the use of money, to employ scarce productive resources which could have alternative uses, to produce various commodities over time and distribute them for consumption now and in the future among various people and groups of society.

(ii) Since there are many definitions Keynes observed that "Political Economy has strangled itself with definitions."
Scope of Economics:
(i) It refers to the subject matter of Economics, whether it is an art or a science.
Subject matter:
(i) Economics studies the ways in which people use the available scarce resources to satisfy their unlimited wants.
(ii) It deals with consumption, production of goods and distribution of income to the factors of production.
(iii) All human activities related to wealth is the subject matter of Economics.
Arts:
(i) Since Economics provides guidance to the solution to all the economic problems it is an Art.
Science:
(i) Economics is a science since it has similar characteristics of a science.
(ii) Economics examines the causes and effects of problems. So it is considered both an art and a science.
Positive Science:
(i) Economics is a positive science since it deals with what it is, it analyses a problem on the basis of facts and examines its causes.
Normative Science:
(i) Economics is normative science because it responds to what ought to be;

Wealth	Welfare	Scarcity	Growth
Adam Smith classical era.	Alfred Marshall-  neo classical era.	Lionel Robbins new age.	Paul Samuelson modern age.
An Inquiry into nature and causes of Wealth of Nations (1776).	Principles of Economics - (1890)	An Essay on the nature and Significance of Economic Science (1932).	Economics studies how men and society choose with or without the use of money, to employ scarce productive resources which could have alternative uses, to produce various commodities over time and distribute them for consumption now and in the future among various people and groups of society.
Economics is the science of wealth.	Economics is a study of mankind in the ordinary business of life, it examines that part of individual and social action which is most closely connected with the attainment and with the use of material requisites of well being. It studies wealth and man.	Economics is a science which studies human behaviour as a relationship between ends and scarce means which have alternative uses.	Economics deals with how the society uses the limited resources for alternative uses.
Deals with only the goods which are scarce and have money value	wealth and welfare of man is important.	Human behaviour  regarding choice is important.	It covers production, distribution and consumption.
Deals with consumption, production, exchange, distribution of wealth.	Only material welfare is considered, differentiates between material and immaterial things.	Economic problem arises  because of scarcity of resources.	Economics is a social science.
	By introducing welfare,  economics  becomes inexact.	Ethical aspects are not  considered so Economics is exact
	Welfare definition makes Economics classificatory.	Economics is a positive science.
		Economics is a science of individual behaviour.
		Both material and immaterial activities are considered.

(i) A monopoly is a one firm industry.
(ii) It has a downward sloping demand or AR curve.
(iii) More units of output are sold at less price.
(iv) MR lies below AR.
(v) The monopolist will continue to sell his product as MR > MC. Equilibrium is when MC = MR.
(vi) Beyond this point the producer has loss.

At OM output MC = MR. Beyond OM he will stop production since MC > MR.
At equilibrium average revenue = QM
Average cost = RM
Profit per unit = RQ
Total profit = PQRS

Short run equilibrium:

In diagram (a) the demand and supply of all firms interact and price OP is fixed.
(i) In diagram (b) the AC is less than the price.
(ii) At equilibrium MC = MR, AR = QM, AC = RM. Profit per unit is RQ
(iii) Total profit is PQRS.
(iv) In diagram (c) AC is greater than AR.
(v) At equilibrium AR = QM, AC = RM, loss per unit is RQ.
(vi) Total loss is PQRS.
(vii) When there is abnormal profit, new firms will enter the industry
(viii) Supply increases, price falls, profits become normal.
Long run equilibrium:

(i) All factors are variable. Firms earn normal profit.
(ii) There is no tendency for new firms to enter or leave the industry.
(iii) Equilibrium is at minimum point of LAC.
(iv) At point E, LMC = MR = AR = LAC.
(v) AC = QM, AR = QM.
(vi) Profit is normal.
(vii) Long run equilibrium price is lower than short run equilibrium price.
(viii) Long run equilibrium quantity is larger than short run equilibrium quantity.

Q	Price Rs	TR	AR	MR
1	5	5	5	5
2	5	10	5	5
3	5	15	5	5
4	5	20	5	5
5	5	25	5	5
6	5	30	5	5

\(A R=\frac{T R}{Q}\)

\( M R=T R_{n}-T R_{n-1}\)

Constant AR & MR (fixed price)
When price remains constant, MR is also constant and AR / MR curves coincide.
Declining AR and MR
When a firm sells large quantities at lower prices both AR & MR will fall but the fall in MR will be steeper than the fall in AR.

Q	AR	TR	MR
1	10	10	10
2	9	18	8
3	8	24	6
4	7	28	4
5	6	30	2
6	5	30	0
7	4	28	-2

(i) MR is lower than AR.
(ii) Both AR and MR slope downwards.
(iii) MR divides the distance between AR curve and axis into 2 equal parts.
(iv) The decline in AR need not be a straight line or linear.
(v) If the prices are declining with the increase in quantity sold, the AR can be nonlinear, taking a shape of concave or convex to the origin.

\(\text { TC }=10+Q^{3}  \)
\(A C=\frac{10}{Q}+\frac{Q^{3}}{Q}=\frac{10}{Q}+Q^{2}=\frac{10}{5}+5^{2}=2+25=27  \)
\(\text {AVC }=\frac{Q^{3}}{Q}=Q^{2}=5^{2}=25  \)
\(\text {TFC }=10  \)
\(\text {AFC }=\frac{10}{\mathrm{Q}}=\frac{10}{5}=2 \)
\(Ans; \mathrm{AC}=27 ; \quad \mathrm{AVC}=25 ; \quad \mathrm{TFC}=10 ; \quad \mathrm{AFC}=2.\)

Introduction:
(i) Jawaharlal Nehru one of the chief builders of modern India was the first Prime Minister of Independent India.
(ii) He was a great patriot, thinker and statesman.
Democracy and secularism:
(i) Nehru believed in democracy, free speech, civil liberty, adult franchise, the Rule of law and Parliamentary democracy.
(ii) He favoured secularism.
(iii) Secularism means equal respect for all religions. In our country we have Hinduism, Islam, Christianity, Buddhism, Jainism, Sikhism and so on.
(iv) But there is no domination by religious majority.
Planning:
(i) Nehru introduced planning in our country.
(ii) Planning was linked with industrialisation and self-reliance.
(iii) Nehru contributed to the advancement of science, research, technology and industrial development.
(iv) Many IITs and Research Institutions were established.
Democratic socialism:
(i) Nehru wanted a socialistic pattern of society.
(ii) His socialism is democratic socialism.
Conclusion:
(i) Nehru's views on economics and social problems are found in his innumerable speeches and in the books he wrote.

Introduction:
Indian economy is the seventh largest economy of the world. Its features are:
Mixed economy:
(i) In India private and public sectors co-exist.
(ii) Some fundamental and heavy industries are under public sector.
(iii) Due to liberalization private sector's importance has increased.
Agriculture:
(i) 60 % of Indians depend on agriculture for their livelihood.
(ii) 17 % of GDP is got from agricultural sector.
(iii) Green revolution and inventions in biotechnology have made agriculture self sufficient.
(iv) The export of fruits, vegetables, spices, tobacco, animal skin, vegetable oils also add to foreign exchange earning.
An emerging market:
(i) India has emerged as a vibrant economy sustaining stable GDP growth rate even when there was global downtrend.
(ii) This has attracted foreign capital through FDI and FII.
(iii) India is in the 7^th position in terms of nominal GDP and 3^rd in terms of purchasing power parity.
(iv) India is one among the G20 countries.
Fast growing economy:
(i) With a growth rate of 7.1% in GDP India is the world's fastest growing economy in 2016-17 next to China.
Fast growing service sector:
(i) There has been growth in technical sectors like Information Technology, BPO.
(ii) These emerging services have helped the country to go global.
Large domestic consumption:
(i) The standard of living has improved a lot. There is rapid increase in domestic consumption.
Rapid growth of urban areas:
(i) There has been a rapid growth of urban areas in India after Independence. Improved connectivity in transport and communication, education and health have speeded up urbanization.
Stable macroeconomy:
(i) India is one of the most stable economies of the world.
(ii) The current year's economic survey represents the Indian economy to be a "heaven of macroeconomic stability, resilience and optimism".
Demographic dividend:
(i) The human capital is young.
(ii) They are young, skilled and trained enough to maximize growth.
(iii) This has invited foreign investments and outsourcing opportunities.