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    Practice Question Set 1

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    Tanushree Choudhary
    The document outlines 20 problems/questions related to economics concepts for a problem set. The questions cover topics such as trade-offs, elasticity, incentives, demand and supply, opportunity cost, and market equilibrium. Students are asked to define concepts, provide examples, analyze scenarios, and discuss the effects of various market changes. The problem set requires both positive and normative economic analysis and the use of supply and demand diagrams.

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    Practice Question Set 1

    Uploaded by

    Tanushree Choudhary
    16 views2 pages
    The document outlines 20 problems/questions related to economics concepts for a problem set. The questions cover topics such as trade-offs, elasticity, incentives, demand and supply, opportunity cost, and market equilibrium. Students are asked to define concepts, provide examples, analyze scenarios, and discuss the effects of various market changes. The problem set requires both positive and normative economic analysis and the use of supply and demand diagrams.

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    Practice question set 1

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    The document outlines 20 problems/questions related to economics concepts for a problem set. The questions cover topics such as trade-offs, elasticity, incentives, demand and supply, opportunity cost, and market equilibrium. Students are asked to define concepts, provide examples, analyze scenarios, and discuss the effects of various market changes. The problem set requires both positive and normative economic analysis and the use of supply and demand diagrams.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    16 views2 pages

    Practice Question Set 1

    Uploaded by

    Tanushree Choudhary
    The document outlines 20 problems/questions related to economics concepts for a problem set. The questions cover topics such as trade-offs, elasticity, incentives, demand and supply, opportunity cost, and market equilibrium. Students are asked to define concepts, provide examples, analyze scenarios, and discuss the effects of various market changes. The problem set requires both positive and normative economic analysis and the use of supply and demand diagrams.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    PROBLEM SET 1

    1. Why are trade-offs unavoidable? Illustrate with the help of examples (3)
    2. Explain different types of elasticity. (3)
    3. What are incentives? Do they always work? (3)
    4. How do economists perceive individuals in the society? (5)
    5. From the statements below, classify the statements as positive or normative: (10)
    a) Universal Basic Income should be implemented in India
    b) An increase in inflation temporarily reduces unemployment
    c) Price ceiling causes shortage in the economy
    d) RBI should reduce the rate of money growth
    e) Has tax benefits increased investment in the economy?
    f) Society ought to require welfare recipients to look for jobs.
    g) Should there be restraints on textile imports?
    h) The inheritance tax should be repealed because it is unfair.
    i) Allowing trade from China would reduce domestic competitiveness.
    j) Government should solve migrant problems
    6. State two differences between positive and normative economics. (1)
    7. What items would you include to figure out the opportunity cost of a vacation to Disney
    World? (3)
    8. Suppose the curator of a museum wishes to increase its total revenue. What policy would you
    suggest? (5)
    9. Why is the demand curve downward sloping? (5)
    10. Discuss various determinants of demand. (5)
    11. a. Differentiate between change in demand and change in quantity demanded. (1)
    b. State an exception to the law of demand.
    (1)
    c. All inferior goods are Giffen goods. Do you agree? Give reason. (2)
    12. Consider the following events: Scientists reveal that consumption of oranges decreases the
    risk of diabetes, and at the same time, farmers use a new fertilizer that makes orange trees
    more productive. Illustrate and explain what affect these changes have on the equilibrium
    price and quantity of oranges.
    (3)
    13. Why are property rights necessary for the functioning of a market? In light of this, discuss
    tragedy of commons. (5)
    14. In the 1970s, OPEC caused a dramatic increase in the price of oil. What prevented it from
    maintaining this high price through the 1980s?
    15. Imagine that many businesses are located beside a river, into which they discharge industrial
    waste. There is a city downstream, which uses the river as a water supply and for recreation.
    If property rights to the river are ill-defined, what problems may occur?
    16. Kathy, a college student, has Rs. 200 a week to spend; she spends it either on junk food at
    Rs.15 a snack, or on stationary Rs.10 per unit. Draw Kathy’s opportunity set. What is the
    trade off between junk food and stationary? (2+2)
    17. The University devise a mechanism to increase student’s attendance in the classroom. It does
    so by increasing the marks allotted to attendance from 5 to 10. Does this work as an
    incentive? Can this policy backfire? If yes, how? (2)
    18. Can demand curve be upward sloping? (2)
    19. Using supply and demand diagrams show the effect of the following events on the
    market for sweatshirts. (5)
    a. A hurricane in South Carolina damages the cotton crop.
    b. The price of leather jackets falls.
    c. new knitting machines are invented
    20. Opportunity cost is what you give up to get an item. Because there is no such thing as a free
    lunch, what would likely be given up to obtain each of the items listed below?
    a. Susan can work full time or go to college. She chooses college.
    b. Farmer Jones has 100 acres of land. He can plant corn, which yields 100 bushels per acre, or he
    can plant beans, which yield 40 bushels per acre. He chooses to plant corn.

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