Sandeep Garg Solutions Class 11 – Part B – Chapter

1-Microeconomics
Question 1

What is an economy?

Answer:

Economy is a system that provides people with the means to work and earn a living.

Question 2

Define scarcity.

Answer:

Scarcity refers to a situation in which resources are insufficient to meet all the human wants.

Question 3

What are the major central problems of the economy?

Answer:

The major central problems are:

● What to produce?
● How to produce?
● For whom to produce?

Question 4

What are the reasons for the economic problem?

Answer:

The three main reasons for the existence of economic problems are:

● Scarcity of resources
● Alternate uses of these scarce resources
● Unlimited human wants

Question 5

What are the two branches of economics?

Answer:

Economics is classified into two parts, namely,

 Microeconomics: It is that part of economic theory which studies the behaviour of individual
units of an economy.

Macroeconomics: It is that part of economic theory which studies the behaviour of aggregates of
the economy as a whole.

Students can also refer to – Introduction To Microeconomics

Question 6

Expand the term PPF.

Answer:

Production possibility frontier

True or False Questions

Question 7

The problem of ‘how to produce’ involves a choice between consumer goods and capital goods.
(True/False)

Answer:

False

Question 8

The economy always operates on the production possibility frontier. (True/False)

Answer:

False

Question 9

The growth of resources shifts the production possibility frontier towards the right. (True/False)

Answer:

True

Sandeep Garg Solutions Class 11 – Chapter 2 – Part A –

Microeconomics
Question 1

Define Total Utility.

Ans: Total Utility refers to the total satisfaction obtained from the consumption of all possible units
of a commodity.
Question 2

Explain how the Total Utility and Marginal Utility are calculated, by using graphical representation.

Ice Creams consumed Marginal Utility (MU) Total Utility (TU)

1 20 20

2 16 36

3 10 46

4 4 50

5 0 50

6 -6 44

Solution:
Question 3

Explain the Law of Diminishing Utility.

Ans: The Law of Diminishing Utility (LDMU) states that as we consume more and more units of a
commodity, the utility derived from each successive unit goes on decreasing.

Question 4

Mention 4 Assumptions of Law of Diminishing Utility.

Ans: The 4 assumptions of Law of Diminishing Utility are:

● Rational Consumer
● Perfect Knowledge
● Fixed Income and prices
● Independent utilities

Question 5

What is Indifference Curve?

Ans: Indifference Curve refers to the graphical representation of various alternatives combinations of
bundles of 2 goods among which the consumer is indifferent.

Question 6

Expand MRS.

Ans: MRS stands for Marginal Rate of Substitution.

Question 7

Give 3 Assumptions of Indifference Curve.

Ans: The three assumptions of indifference curve are :

● Non-satiety
● 2 commodities
● Ordinal Utility

Sandeep Garg Solutions Class 11 – Chapter 3 – Part A –

Microeconomics
Question 1

What is Demand?

Ans: Demand is an economic principle that refers to the consumers’ desire to purchase goods and
services and their willingness to pay a particular price for those goods and services.

Question 2
What are the Determinants of Demand?

Ans: The Determinants of Demands are:

● Price of the given commodity

● Price of related goods
● The income of the customer
● Tastes and preferences
● The expectation of change in the price in future

Question 3

What is the demand function?

Ans: Demand function shows the relationship between quantity demanded a particular commodity
and the factors influencing it.

Question 4

Define the law of demand.

Ans: The law of demand states the inverse relationship between price and quantity demanded,
keeping other factors constant (ceteris paribus).

Question 5

What are Complementary goods?

Ans: Complementary goods are those goods that are used together to satisfy a particular want.

Question 6

Define Normal goods.

Ans: Normal goods are referred to as those goods that witness an increased demand corresponding
to rise in income of consumers. The demand for normal goods is determined by the state of income
of the consumer. If consumer income increases, demand increases and if income decreases,
demand also declines.

Question 7

What are Inferior Goods?

Ans: Inferior goods refer to those goods whose demand decreases with an increase in income. And,
this is known as Inferior goods.

Sandeep Garg Solutions Class 11 – Chapter 4 – Part A –

Microeconomics
Question 1

What is the Elasticity of Demand?

Ans: Elasticity of Demand refers to the percentage change in demand for a commodity with respect
to the percentage change in any of the factors affecting demand for that commodity.

Question 2

How is the Elasticity of Demand calculated?

Ans:

Question 3

What are the 5 Degrees of Elasticity of Demand?

Ans: 5 types of price elasticities of demand are:

● Perfectly elastic demand

● Perfectly inelastic demand
● Highly elastic demand
● Less elastic demand
● Unitary elastic demand

Question 4

What are the factors that affect the price elasticity of demand?

Ans: Factors affecting the price elasticity of demand are:

● Nature of commodity
● Availability of substitutes
● Income level
● Level of price
● Number of uses
● Time period
● Habits

Also Read: Demand

Question 5

The demand for a good falls to 240 units in response to the rise in price by ₹.2. If the original
demand was 300 units at the price of ₹.20, calculate the price elasticity of demand.

New Quantity (
Rise in Price (

) = 240 Units
) = ₹2
 Original Quantity (Q) = 300 Units
Original Price = ₹ 20

Change in Quantity ( New Price (

) = -60 Units ) = ₹ 22

Elasticity of demand

=?

Solution:

State whether the following statements are true or false.

Question 6

A commodity with a large number of close substitutes shows high elasticity of demand.

Ans: True

Question 7

In the case of the horizontal straight line demand curve, demand does not change even with the
change in price.

Ans: False

Sandeep Garg Solutions Class 11 – Chapter 5 – Part B –

Microeconomics
Question 1

Define production function.

Answer:

Production Function is an expression of the technological relation between physical inputs and
output of a good.

Question 2

How is the production function represented symbolically?

Answer:

Question 3

Define variable factors.

Answer:

Variable factors refer to those factors, which can be changed in the short run.

Question 4

What is the concept of product?

Answer:

Product or output refers to the volume of goods produced by a firm or an industry during a specified
period of time.

Question 5

Define the law of diminishing returns.

Answer:

Law of Diminishing Returns states that when more and more units of variable factors are employed
with a fixed factor, then marginal product of the variable factor must fall.

Question 6

Identify the different phases of the law of variable proportions from the given schedule. Give
reasons for your answer.

Variable Inputs (Units) Total Physical Product (Units)

1 4

2 9

3 13
 4 15

5 12

Solution:

Variable Input Total Physical Marginal Physical Phase

(Units) Product or TPP Product or MPP (Units)
(Units)

1 4 4 1st Phase (IRF)

2 9 5

3 13 4 2nd Phase (IRF)

4 15 2

5 12 -3 3rd Phase (IRF)

Question 7

Complete the following table:

Units of labour Average product (Units) Marginal product (Units)

1 8 –

2 10 –
 3 – 10

4 9 –

5 – 4

6 7 –

Solution:

Units of Labour TP (in Units) AP (in units) MP (in Units)

Variable Factor (VF) AP=TP/VF

1 8 8 8

2 20 10 12

3 30 10 10

4 36 9 6

5 40 8 4

6 42 7 2
Sandeep Garg Solutions Class 11 – Chapter 6 – Part A –
Microeconomics
Question 1

What is Cost?

Ans: Cost is the sum total of explicit and implicit cost. Cost in economics includes actual
expenditure on inputs (i.e. explicit cost) and the computed value of the inputs supplied by the
owners (i.e. implicit cost).

Question 2

What is the Opportunity cost?

Ans: Opportunity cost is the cost of the next best alternative forgone.

Question 3

Define Total Variable Cost (TVC) or Variable Cost (VC).

Ans: Variable costs refer to those costs which vary directly with the level of output.

Question 4

What is the Average Variable Cost (AVC)?

Ans: Average Variable Cost (AVC) refers to the per unit variable cost of production. It is calculated by
dividing TVC by total output.

AVC = TVC/Q

Question 5

What is Marginal Cost?

Ans: Marginal cost refers to addition to the total cost when one or more unit of output is produced.

Sandeep Garg Solutions Class 11 – Chapter 7 – Part A –

Microeconomics
Question 1

What is a Profit?

Ans: Profit refers to the excess of receipts from the sale of goods over the expenditure incurred on
producing them.
Question 2

Define Producer’s Equilibrium.

Ans: Producer’s Equilibrium refers to that price and output combination, which brings maximum
profit to the producer and profit declines as more is produced.

Question 3

On the basis of the data given below, determine the level of output at which the producer will be in
equilibrium. Use the marginal cost-marginal revenue approach.

Output (Units) 1 2 3 4 5 6 7

Average Revenue (₹) 7 7 7 7 7 7 7

Total Cost (₹) 8 15 22 28 33 40 48

Solution:

Output (Q) (in units) AR TC MC (₹) MR (₹)

(₹) (₹)

1 7 8 8 7

2 7 15 7 7

3 7 22 7 7

4 7 28 6 7

5 7 33 5 7
 6 7 40 7 7

7 7 48 8 7

Question 4

What are the two methods for determination of Producer’s Equilibrium?

Ans: The two methods for determination of producer’s equilibrium are :

● Total Revenue and Total Cost Approach (TR – TC Approach)

● Marginal Revenue and Marginal Cost Approach (MR – MC Approach)

Question 5

What are the conditions needed for the Producer’s Equilibrium?

Ans: The conditions needed for the producer’s equilibrium are :

● MC=MR
● MC is greater than MR after the MC = MR output level

Sandeep Garg Solutions Class 11 – Chapter 9 – Part A –

Microeconomics
Question 1

Define Supply.

Ans: Supply refers to the quantity of a commodity that a firm is willing and able to offer for sale at a
given price during a given period of time.

Question 2

What are the 6 Determinants of Supply?

Ans: 6 important factors affecting supply are:

● Price of a given commodity

● Prices of other goods
● Prices of factors of production
● State of technology
● Government policy
● Goals of the firm

Question 3
What are the 3 Determinants of Market Supply?

Ans: 3 Determinants of Market Supply are:

● Number of firms in the market

● Future expectation regarding price
● Means of transportation and communication

Question 4

Define Marker Supply Schedule (MSS).

Ans: Marker Supply Schedule refers to a tabular statement showing various quantities of a
commodity that all the producers are willing to sell at various levels of price, during a given period of
time.

Question 5

What is the Supply Curve?

Ans: Supply curve refers to a graphical representation of the supply curve.

Question 6

Graphically represent the Individual Supply Curve.

Ans:
Sandeep Garg Solutions Class 11 – Chapter 10 – Part A –
Microeconomics
Question 1

What is Market?

Ans: Market refers to the whole region where buyers and sellers of a commodity are in contact with
each other to effect the purchase and sale of the commodity.

Question 2

What are the forms of market structure?

Ans:
Question 3

What are the features of Perfect Competition?

Ans: Features of Perfect Competition are:

● A large number of buyers and sellers

● Homogeneous product
● Freedom of exit and entry
● Absence of selling costs
● Absence of transportation costs

Question 4

Define a Monopoly.

Ans: Monopoly refers to a market situation where there is a single seller selling a product which has
no close substitutes.

Question 5

What is Monopolistic Competition?

Ans: Monopolistic Competition refers to a market competition in which there are a large number of
firms which sell closely related but differentiated products.

Question 6

Define Oligopoly.

Ans: Oligopoly refers to a market situation in which there are a few firms selling homogeneous or
differentiated products.

Question 7
What are the features of Oligopoly?

Ans: The primary features of Oligopoly are explained as follows:

● Few firms
● Interdependence
● Non-price competition
● Nature of the product
● Role of selling costs
● Group Behaviour

Sandeep Garg Solutions Class 11 – Chapter 11 – Part A –

Microeconomics
Question 1

How is market equilibrium determined?

Ans: Market equilibrium is determined when the quantity demanded of a commodity becomes equal
to the quantity supplied.

Question 2

Graphically represent Viable industry.

Solution:
Question 3

Graphically represent Non-Viable industry.

Solution:
Question 4

Graphically represent Increase in Demand.

Solution:
Question 5

Graphically represent quantity demanded and supplied.

Solution: