(i) Rural development should minimise, the gap between rural and urban areas in terms of the provision of infrastructural facilities.
(ii) It was called as PURA by former President Abdul Kalam.

(i) Consumer's surplus = potential price - actual price (or)
(ii) Consumer's surplus = what a person is willing to pay - what he actually pays (or)
(iii) Consumer's surplus = TU - (P x Q)

(i) A discriminating monopoly is a single entry.
(ii) It charges different prices for different consumers.

(i) The plan aimed to double the per capita income of India in the next 10 years.
(ii) It aimed to reduce the poverty ratio to 15 % by 2012.
(iii) Its growth target was 8.0 % but it
achieved only 7.2%.

(i) Iso-cost line represents a combination of inputs which show the same amount of cost.
(ii) It gives information on factor prices and financial resources of the firm.

1. Rice
2. Kambu
3. Corn
4. Groundnutbr /> 5. Millets
6. Pulses
7. Maize

(i) Liberalization was needed because the various licensing policies were preventing economic growth.
(ii) Since the private sector was not given enough opportunities to earn more money privatization was done.
(iii) Globalization was needed because today a developed country
can grow without the help of the underdeveloped countries.

(i) Goods are tangible, (eg) car but services are intangible (eg) goodwill.
(ii) Goods can be stored but services cannot be stored.

(i) Nominal or money wages are the wages paid in terms of money.
(ii) Real wages are the wages paid in terms of goods & services.

It is the payment made for the efforts, pain and sacrifices of all factor owners in production.

(i) According to Planning Commission's National Human Development Report 2011, HDI has improved significantly between 1980 and 2011. That is, The HDI went up from 0.302 in 1981 to 0.472 score in 2011.
(ii) As per latest Human Development Report (2016) by the United Nations Development Programme (UNDP), India has been ranked 131st out of 188 countries.
(iii) Out of 188 countries, India lies in Medium Human Development bracket.
(iv) The other nations such as Bangladesh, Bhutan, Pakistan, Kenya, Myanmar and Nepal attained the medium human development.
(v) The HDR 2016 stated that regional disparities in education, health and living standards within India has caused India's downfall to 27 % on HDI score.
(vi) India's HDI rank value in 2015 stood at 0.624, which had increased from 0.580 in 2010. India's rank in 2014 was 131.

Energy Sources:
Electrical energy is one of the necessary components of our life. Nowadays, without electricity, we cannot survive in this world of technology. The energy sources are classified under two heads based on the availability of the raw materials used, while generating energy.
(a) Non-renewable energy sources and
(b) Renewable energy sources
(a) Non-renewable energy sources: As the name suggests, the sources of energy which cannot be renewed or re-used are called non-renewable energy sources. Basically these are the energy sources which will get exhausted over a period of time. Some of the examples of this kind of resources are coal, oil, gas etc.
(b) Renewable energy sources: These are the kind of energy source which can be renewed or reused again and again. These kinds of materials do not exhaust or literally speaking these are available in abundant or infinite quantity. Example for this kind include
(i) Solar energy
(ii) Wind energy
(iii) Tidal energy
(iv) Geothermal energy
(v) Biomass energy
Sometimes renewable sources are also called non-conventional sources of energy since; these kinds of materials of these ways of energy production were not used earlier or conventionally.

i) Price: Demand is always related to price.
ii) Time: Demand always means demand per unit of time, per day per work per month or per year.
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(i) It is a market structure in which there is only one buyer of a good or service.
(ii) If there is only one customer for a certain good that customer has 'Monopsony' power in the market for that good.
(iii) Monopsony is analogous to monopoly. But monopoly has market power on the demand side rather than the supply side.

(i) The policy aimed at correcting the weaknesses and rigidities in the various sectors of the economy - industry, trade, fiscal and agriculture.
(ii) To liberate the industry from licensing system.
(iii) To reduce the role of public sector.
(iv) To encourage foreign participation in India's industrial development.

(i) To regulate the lender and the borrower of microfinance and bring stability to the microfinance system.
(ii) To extend finance and credit support to microfinance institutions and agencies that lend money to small businesses, retailers, self help groups and individuals.
(iii) To register all MFIs and introduce a system of performance rating and accreditation for the first time.
(iv) Offer a credit guarantee scheme for providing guarantees to loans offered to micro businesses.
(v) Introduce appropriate technologies to assist in lending, borrowing and monitoring of distributed capital.

(i) Gross State Domestic Product refers to the total money value of all the goods & services produced annually in the state.
(ii) Tamil Nadu is the 2nd largest economy with a GSDP of $207.8 billion in 2016-17.
(iii) This is equal to the GDP of Kuwait (on nominal terms) and of UAE (PPP terms).
(iv) This is due to population effect.
(v) If per capita GSDP is considered for comparison Tamil Nadu may go below.

Marginal revenue is the addition to the total revenue by the sale of an additional unit of a commodity. It is got by dividing change in TR by the change in quantity sold.
\(M R=\frac{\Delta T R}{\Delta Q}\), where MR = Marginal revenue.
\(M R=T R_{n}-T R_{n-1} \quad \Delta T R=\text { change in total revenue. }  \)
\(M R=T R_{n+1}-T R_{n} \quad \Delta Q=\text { change in total quantity. }  \)
\(T R_{n}=\text { total revenue of } n^{\text {th }} \text { item }  \)
\(T R_{n-1}=\text { total revenue of } n-1^{\text {th }}  item\)
\(T R_{n+1}=\text { total revenue of } n+1^{\text {th }}item\)

Rao's examination of the "interrelation between investment, income and multiplier in an under developed economy" (1952) was his major contribution to macroeconomic theory.

Marginal Productivity Theory of Distribution: Assumptions:
This theory is based on the following assumptions:
(i) All the factors of production are homogenous.
(ii) Factors of production can be substituted for each other.
(iii) There is perfect competition both in the factor market and product market.
(iv) There is perfect mobility of factors of production.
(v) There is full employment of factors.
(vi) This theory is applicable only in the long-run.
(vii) The entrepreneurs aim at profit maximization.
(viii) There is no government intervention in fixing the price of a factor.
(ix) There is no technological change.

Fixed cost and variable cost: Fixed cost and variable cost are helpful in understanding the behaviour of costs over different levels of output.
Meaning of Fixed and Variable factors and costs:
Fixed and variable factors are with reference to short run production function. Short run is a period of time over which certain factors of production cannot be changed, and such factors are called fixed factors. The costs incurred on fixed factors are called fixed costs. The factors whose quantity can be changed in the short run are variable factors, and the costs incurred on variable factors are called variable costs
Fixed costs are those which are independent of output, that is, they do not change with changes in output. These costs are a 'fixed' amount, which must be incurred by a firm in the short run whether the output is small or large. E.g. contractual rent, interest on capital invested, salaries to the permanent staff, insurance premia and certain taxes. Variable costs are those costs, which are incurred on the employment of variable factors of production whose amount can be altered in the short run. Thus the total variable costs change with the level of output. It rises when output expands and falls when output contracts. When output is nil, variable cost becomes zero. These costs include payments such as wages of labour employed, prices of raw materials, fuel and power used arid the transport costs.

1. Changes in Tastes and Fashions
The demand for some goods and services is very susceptible to changes in tastes and fashions.
2. Changes in Weather: An unusually
dry summer results in a increase in the demand for cool drinks.
3. Taxation and Subsidy
If fresh taxes are levied or the existing rates of taxation on commodities are increased their prices go up. The subsidies will bring down the prices. Therefore taxes reduce demand and subsidies raise demand.
4. Changes in Expectations
Expectations also bring about a change in demand. Expectation of rise in price in future. results in increase in demand.
5. Changes in Savings
Savings and demand are inversely related.
6. State of Trade Activity:
During the periods of boom and prosperity, the demand for all commodities tends to increase. On the contrary, during times of depression there is a general slackening of demand.
7. Advertisement
In advanced capitalistic countries advertising is a powerful instrument increasing the demand in the market.
8. Changes in Income
An increase in family income may increase the demand for durables like video recorders and refrigerators. Equal distribution of income enables poor to get more income. As a result consumption level increases.
9. Change in Population
The demand for goods depends on the size of population. An increase in population tends to increase the demand for goods and a decrease in population.

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.

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:
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.

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:
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

Wind energy: Muppanthal wind farm supplies the villagers with electricity for work. Wind farms are found in Nagercoil, Tuticorin, Coimbatore, Pollachi, Dharapuram & Udumalaipettai. They generate about half of India's 2000 megawatts of wind energy. Tamil Nadu has the highest installed wind energy capacity in India. The state has very high quality of offshore wind energy potential off the Tirunelveli coast & southern Thoothukudi & Rameswaram Coast.
Nuclear energy: The Kalpakkam Nuclear Power Plant and the Koodankulam Nuclear Power Plant are the major nuclear energy plants for the energy grid.
Thermal energy: The thermal power plants are at Athippattu (North Chennai), Ennore, Mettur, Neyveli & Thoothukudi.
Hydel energy: There are 20 hydro electric units in Tamil Nadu at Hundah, Mettur, Periyar, Maravakandy, Parson Valley.
Solar energy: Tamil Nadu tops in solar power generation.

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.

Steps of Deductive method:
(i) Have a clear idea of the problem to be inquired.
(ii) Define the technical terms used. Assumptions should be precise.
(iii) Deduce hypotheses from the assumptions.
(iv) Verify hypotheses through direct observation of events and statistical methods.
Steps of Inductive method:
(i) The collected data must be systematically arranged
(ii) Based on the data, conclusions are drawn
(iii) Generalization of the hypothesis.
(iv) Verification of the hypothesis.

(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

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

Introduction:
The mineral resources in India are iron ore, coal, lignite, bauxite, mica, crude oil, gold and diamond.
Iron ore:
(i) India possesses high quality iron ore in abundance.
(ii) There is 14,630 million tonnes of hematite and 10,619 million tonnes of magnetite.
(iii) Hematite iron is found in Chattisgarh, Jharkhand, Odisha, Goa and Karnataka.
(iv) Magnetite iron is available at Western coast of Karnataka, Kerala, Tamilnadu and Andhra Pradesh.
Coal and Lignite:
(i) Coal is the largest available mineral resource. India ranks third in the world after China and USA in coal production.
(ii) The coal centres are in Bihar, W.Bengal, Madhya Pradesh, Maharashtra, Odisha and Andhra Pradesh.
(iii) Bulk of coal production comes from Bengal Jharkhand coalfields.
Bauxite:
(i) Bauxite is the main source of aluminium.
(ii) Major reserves are in East Coast, Odisha and Andhra Pradesh.
Mica:
(i) It is a heat resisting mineral - a bad conductor of electricity.
(ii) It is used as an insulator. India stands first in sheet mica production.
(iii) It contributes 60% of mica trade in the world. Mica bearing pegmatite is found in Andhra Pradesh, Jharkhand, Bihar and Rajasthan.
Crude oil:
Oil is being explored at Assam and Gujarat, Digboi, Badarpur, Naharkatia, Kasimpur, Pallaria, Rudrapur, Shivasagar, Mourn in Assam and Bay of Khambhat, Ankaleshwar and Kalol in Gujarat are the oil exploration places in India.
Gold:
There is only limited gold reserve in three gold mine regions, Kolar Goldfield in Kolar district, Hutti Goldfield in Raichur district (both in Karnataka) and Ramgiri Goldfield in Anantpur district in Andhra Pradesh.
Diamond:
(i) The total diamond reserve of 4582 thousand carats is found in Panna (Madhya Pradesh), Rammallakota of Kurnool district (Andhra Pradesh) and in the Basin of Krishna river.
(ii) The new Kimberlite fields have been discovered in Raipur and Pastar districts of Chattisgarh, Nuapada and Bargarh districts of Odisha, Narayenpet - Maddur Krishna areas of Andhra Pradesh and Raichur-Gulbarga districts of Karnataka.