1) Define Isoquants.
Ans – Isoquants are curves that represent different combinations of two inputs, such as labor and capital, which produce the same level of output in a production process. The term "isoquant" comes from "iso," meaning equal, and "quant," referring to quantity. Isoquants are used in economics to analyze the efficient allocation of resources in the production process. Each point on an isoquant curve indicates a specific combination of inputs that yields the same quantity of output. The shape of the isoquant curve typically reflects the substitutability between inputs: if the inputs are perfect substitutes, the isoquant will be a straight line; if they are complementary, the isoquant will be more curved.
2) What is total cost?
Ans – Total cost refers to the sum of all costs incurred by a firm in the production of a certain level of output. It includes both fixed costs, which do not vary with the level of output (such as rent, salaries, and machinery costs), and variable costs, which change directly with the level of production (such as raw materials, labor, and utilities). Mathematically, total cost (TC) can be expressed as:
Total Cost = Fixed Costs + Variable Costs
Understanding total cost is crucial for firms in determining pricing strategies, profit margins, and overall financial planning.
3) Give any two advantages of Cost control.
Ans – a. Increased Profitability:
Effective cost control helps a business to minimize unnecessary expenses and optimize resource usage, leading to higher profit margins. By keeping costs in check, companies can improve their bottom line without necessarily increasing sales.
b. Competitive Advantage:
Cost control enables a business to offer competitive pricing to its customers. By reducing production costs, a company can lower the prices of its products or services, making them more attractive to consumers compared to competitors who may have higher costs.
4) Give meaning of Marginal revenue.
Ans – Marginal revenue is the additional income earned by a firm from selling one more unit of a good or service. It is calculated by dividing the change in total revenue by the change in the quantity of output sold. Marginal revenue is a key concept in microeconomics, particularly in the analysis of profit maximization, as firms will continue to produce and sell additional units as long as the marginal revenue exceeds the marginal cost of production. In a perfectly competitive market, marginal revenue equals the price of the good, but in imperfect competition, it typically decreases as more units are sold due to the downward-sloping demand curve.
5) Which are the three Classes of accounts?
Ans – The three main classes of accounts in accounting are:
a. Personal Accounts: These accounts relate to individuals, firms, and institutions. They include debtor accounts, creditor accounts, and accounts of shareholders.
b. Real Accounts: These accounts pertain to tangible and intangible assets owned by a business. Examples include cash, machinery, buildings, and patents.
c. Nominal Accounts: These accounts deal with expenses, losses, incomes, and gains. Examples include rent, salaries, sales, and interest earned.
6) Which are 2 main branches of economics?
Ans – The two main branches of economics are:
a. Microeconomics: This branch of economics focuses on individual economic units, such as consumers, firms, and markets. It studies the behavior of these entities in decision-making processes, resource allocation, and price determination within specific markets.
b. Macroeconomics: This branch of economics deals with the economy as a whole, focusing on aggregate measures such as national income, inflation, unemployment, and overall economic growth. Macroeconomics examines the broader economic factors that influence an entire economy and the policies that can stabilize or stimulate economic activity.
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