Q2 of 30 Page 1

Define normative economics, with a suitable example.

Normative economics is the type of economics that examines the way an economy should work under ideal circumstances.


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1

When is a consumer said to be rational?

 3

State the meaning of `quantity demanded of a commodity`.

 4

If a firm’s production department data says that the total variable cost for producing 8 units

and 10 units of output is 2,500 and 3,000 respectively, the marginal cost of the 10th unit will be


a. 100 b. 150 c. 500 d. 250

 5

State any one assumption for the construction of the curve that shows the possibilities of

potential production of two goods in an economy.