1) What is Marginal Cost?
Ans – Marginal Cost (MC) is the additional cost incurred by producing one more unit of a good or service. It is calculated by the change in total cost when output is increased by one unit. Mathematically, it can be expressed as:
Marginal Cost = ΔTotal Cost / ΔQuantity
where ΔTotal Cost is the change in total cost and ΔQuantity is the change in the number of units produced. Marginal cost helps firms determine the cost-effectiveness of increasing production.
2) What is Price?
Ans – Price is the amount of money required to purchase a good or service. It represents the value of a product as determined by supply and demand in the market. Price is a crucial factor in consumer decision-making and business profitability, as it affects both the quantity demanded by consumers and the revenue earned by producers.
3) Give formula of Average revenue.
Ans – Average Revenue (AR) is calculated by dividing the total revenue by the quantity of goods sold. It represents the revenue earned per unit of output. The formula is:
Average Revenue = Total Revenue / Quantity Sold
In a competitive market, average revenue is equal to the price of the good.
4) What is Macroeconomics.
Ans – Macroeconomics is the branch of economics that studies the behavior, performance, and structure of an economy as a whole. It focuses on aggregate indicators such as GDP, unemployment rates, inflation, and national income. Macroeconomics analyzes how these indicators interact and influence each other, and how economic policies can impact overall economic stability and growth.
5) What is the other name of Projection method?
Ans – The other name of the Projection Method is the Forecasting Method. This method involves estimating future trends or outcomes based on historical data and current trends. It is widely used in financial planning, budgeting, and strategic decision-making.
6) Write any two remedial measures to control deflation.
Ans – 1. Monetary Policy: Central banks can use monetary policy tools to combat deflation. This includes lowering interest rates to encourage borrowing and spending by consumers and businesses. Additionally, central banks may engage in quantitative easing, which involves purchasing government securities to increase the money supply and stimulate economic activity.
2. Fiscal Policy: Governments can implement fiscal policy measures to address deflation. This includes increasing public spending on infrastructure projects, social programs, and other initiatives that boost demand for goods and services. Additionally, governments can reduce taxes to increase disposable income and encourage consumer spending.
Both monetary and fiscal policies aim to increase aggregate demand and prevent further decline in prices, thereby stabilizing the economy and supporting growth.
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