Q2 of 24 Page 1

Define marginal physical product.


The marginal physical product is the change in the total product with the employment of an extra unit of input. It shows the change in the total product with the employment of an extra unit of input. It is the slope of the total product curve. The marginal physical product is generally expressed in terms of the changes in variable factor in the short run.


MP = rTP/rI; rTP - change in TP


rI – change in input


MP = TPn – TPn-1



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1

Which of the following is a statement of normative nature in economics?

a) Economics is the study of choices/alternatives.


b) The government should be concerned with how to reduce unemployment


c) According to an estimate, in spite of severe shortage, more than 10% of houses in Indian cities are lying vacant.


d) Accommodation of Refugees is posing a big problem for Europe

 3

A firm is operating with a Total Variable Cost of 500 when 5 units of the given output are produced and the Total Fixed Costs are 200, what will be the Average Total Cost of producing 5 units of output?

i) 140


ii) 100


iii) 120


iv) 300

 4

In an imperfectly competitive market, if the Total Revenue is maximum, Marginal Revenue will be _______________.

 5

State and discuss any two factors that will shift the Production Possibility Frontier (PPF) to the right.

OR


Draft a hypothetical schedule for a straight line Production Possibility Curve.