11th Standard Syllabus & Materials
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Published on: 13/05/2022
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Questions + Answers key
Take MCQ Economics Test1.
If the demand function is P = 35 - 2x - x2 and the demand Xo is 3, what will be the consumer's surplus?
2.
3.
The demand and supply functions are Pd= 1600 - x2 and Ps = 2x2 + 400 respectively. Find the consumer's surplus and producer's Surplus at equilibrium point.
4.
Calculate the elasticity of demand for the demand schedule by using differential calculus method P = 60 - 0.2Q where price is (i) zero, (ii) Rs.20, (iii) Rs.40
5.
A Research scholar researching the market for fresh cow milk assumes that Qt = f(Pt, Y, A, N, Pc) where Qt is the quantity of milk demanded, Pt is the price of fresh cow milk, Y is average household income, A is advertising expenditure on processed pocket milk, N is population and Pc is the price of processed pocket milk.
(a) What does Qt = f (Pt, Y, A, N, Pc) mean in words?
(b) Identify the independent variables.
(c) Make up a specific form for this function.
(Use your knowledge of Economics to deduce whether the coefficients of the different independent variables should be positive or negative.)
1.
Given demand function
P = 35 - 2x - x2
for x = 3
P = 35 - 2(3) - 32
= 35 - 6 - 9
P = 20
Therefore,
CS = (Area of the curve below the demand curve from 0 to 3) - Area of the rectangle (20 x 3 = 60)
\(CS=\int_0^3(35-2x-x^2)dx=(20\times 3)\)
\(=\left[35x-2{x^2\over 2}-{x^3\over 3}\right]_0^3-60\)
\(=35(3)-2\left ( \frac{3^{2}}{2} \right )-\frac{3^{3}}{3}-60\)
= 105 - 9 - 9 - 60
= 27 Units
2.
3.
For equilibrium Pd = Ps
\(1600-x^{2} =2 x^{2}+400
\)
\(1600-400 =2 x^{2}+x^{2}
\)
\(3 x^{2} =1200
\)
\(x^{2} =400
\)
\(x =\pm 20
\)
\(P_{\mathrm{d}} =1600-(20)^{2} \)
=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
4.
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
\(\mathrm{P} =60-0.2 \mathrm{Q}
\)
\(40 =60-0.2 \mathrm{Q}
\)
\(0.2 \mathrm{Q} =60-40
\)
\(\mathrm{Q} =\frac{20}{0.2}=\frac{200}{2}=100\)
5.
a) Qt = f(Pt, Y, A, N, Pc) it means the quantity of milk demand depends on the price of fresh cow milk, the average income, advertising expenditure on processed packet milk, the price of that packet milk and the populations. These are the factors which influence the demand for fresh cow milk.
b) The independent variables are price of fresh cow milk, average household income, advertising expenditure on processed packet milk, population, price of processed packet milk.
c) Qd = a + bP + cY + dA + eN + f Pc
a shows the value of Qd when the variables P, Y, A, N, Pc are all simultaneously =0. b, c, d, c, f are called slope parameter. They show the effect on quantity demanded of changing one of the variables P, Y, A, N or Pc while holding the rest of these variables constant.
| Variable | Relation to quantity demanded |
| P | inverse when price of fresh milk increases, demand decreases. |
| Y | direct when income increases the demand for fresh milk increases. |
| A | direct when advertising expenditure on processed milk increases the demand for fresh milk increases. |
| N | direct Price of packet milk increases the demand for fresh milk increases |
| Pc | direct Population increases the demand for fresh milk increases. |
11th Standard Syllabus & Materials
11th Standard
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