Question

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Q. 1. Explain with the help of suitable examples / graph the following:

    a. ‘Production Possibility Curve’

     b. The concept of ‘Opportunity Cost’

     c. Distinguish between ‘Quantity Demanded’ and ‘Demand Schedule’

Q. 2. In present scenario, the importance of microeconomics is increasing day by day, in your

         Opinion, what are the three ways that we can use macroeconomic analysis.

Answer 1

1) PPC shows all different possible combination of two goods which an economy can produce by optimal utilisation of given technology and resources. PPC is downward sloping with concave shape. It is downward slope means more of one good can be produced by decreasing the quantity of other.

B) opportunity cost is the next best alternative forgone. E.g. I got 4 jobs offers from company A,B,C and D and their income are 10000,9000,8000,7000 respectively. Then I’ll choose company A. When I work for company A than it means I forgone/left the other option. And best from other option is option B. Thus opportunity cost of working in country A is 9000.

c) Quantity demanded is a particular demand of a commodity at a particular price whereas demand schedule is a tabular representation of the quantity demanded for various price level.