11th - Economics - Book Back Answers - Unit 4 - English Guides

  

 

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Tamil Nadu Board 11th Standard Economics - Unit 4 : Book Back Answers and Solutions

    This post covers the book back answers and solutions for Unit 4 – Economics from the Tamil Nadu State Board 11th Standard textbook. These detailed answers have been carefully prepared by our expert teachers at KalviTips.com.

    We have explained each answer in a simple, easy-to-understand format, highlighting important points step by step under the relevant subtopics. Students are advised to read and memorize these subtopics thoroughly. Once you understand the main concepts, you’ll be able to connect other related points with real-life examples and confidently present them in your tests and exams.

    By going through this material, you’ll gain a strong understanding of Economics Unit 4 along with the corresponding book back questions and answers (PDF format).

Question Types Covered:

• 1 Mark Questions: Choose the correct answer, Fill in the blanks, Identify the correct statement, Match the following 
• 2 Mark Questions: Answer briefly 
• 3, 4, and 5 Mark Questions: Answer in detail

All answers are presented in a clear and student-friendly manner, focusing on key points to help you score full marks.

All the best, Class 11 students! Prepare well and aim for top scores. Thank you!

Unit 4: Costs and Revenue Analysis

I. Multiple Choice questions.

1. Cost refers to

a. price

b. value

c. fixed cost

d. cost of production 

Answer key: 

 d. cost of production     

                  

2. Cost functions are also known as function.

a. production

b. investment

c. demand

d.consumption

Answer key:  

a. production  

 

3. Money cost is also known as cost.

a. explicit

b. implicit

c. social

d. real

Answer key: 

a. explicit  

 

4. Explicit cost plus implicit cost denote cost.

a. social

b. economic

c. money

d. fixed  

Answer key: 

b. economic  

 

5. Explicit costs are termed as

a. out of pocket expenses

b. real cost

c. social cost

d. sunk cost

Answer key:  

a. out of pocket expenses 

 

6. The costs of self–owned resources are termed as cost.

a. real

b. explicit

c. money

d. implicit

Answer key:  

d. implicit  

 

7. The cost that remains constant at all levels of output is cost.

a. fixed

b. variable

c. real

d. social

Answer key:  

a. fixed  

 

8. Identify the formula of estimating average variable cost.

a. TC/Q

b. TVC/Q

c. TFC/Q

d. TAC/Q

Answer key: 

b. TVC/Q  

 

9. The cost incurred by producing one more unit of output is cost.

a. variable

b. fixed

c. marginal

d. total

Answer key:  

c. marginal  

 

10. The cost that varies with the level of output is termed as cost.

a. money

b. variable cost

c. total cost

d. fixed cost

Answer key:  

b. variable cost 

 

11. Wage is an example for cost of the production.

a. fixed

b. variable

c. marginal

d. opportunity 

Answer key:

b. variable  

12. The cost per unit of output is denoted by----- cost.

a. average

b. marginal

c. variable

d. total

Answer key: 

a. average  

 

13. Identify the formula of estimating average cost.

a. AVC/Q

b. TC/Q

c. TVC/Q

d. AFC/Q

Answer key: 

b. TC/Q  

 

14. Find total cost where TFC=I00 and TVC = 125.

a. 125

b. 175

c. 225

d. 325

Answer key: 

c. 225  

 

15. Long-run average cost curve is also called as curve.

a. demand

b. planning

c. production

d. sales

Answer key:  

b. planning  

 

16. Revenue received from the sale of products is known as revenue.

a. profit

b. total revenue

c. average

d. marginal

Answer key: 

b. total revenue  

 

17. Revenue received from the sale of additional unit is termed as revenue.

a. profit

b. average

c. marginal

d. total

Answer key:  

c. marginal  

 

18. Marginal revenue is the addition made to the

a. total sales

b. total revenue

c. total production

d. total cost

Answer key: 

b. total revenue  

 

19. When price remains constant, AR will be---MR.

a. equal to

b. greater than

c. less than

d. not related to

Answer key:  

a. equal to  

 

20. A book seller sold 40 books with the price of Rs.10 each. The total revenue of the seller is RS. .

a. 100

b. 200

c. 300

d. 400  

Answer key:  

d. 400   

 

II. Answer the following questions in one or two sentences.

21. Define cost.                                                       

Cost refers to the total expenses incurred in the production of a commodity.

 

22. Define cost function.

The functional relationship between cost and output is expressed as ‘Cost Function’(or)

C = f ( Q )

where, C=Cost and Q=Quantity of output.

 

23. What do you mean by fixed cost?

Expenses on fixed factors are called fixed cost.

24. Define Revenue.  

The amount of money that a producer receives in exchange for the

sale of goods is known as revenue.

25. Explicit Cost - Define.

It refers to the actual expenditures of the firm to purchase or hire the inputs the firm needs.

 

26. Give the definition for ‘Real Cost’.

It includes the efforts and sacrifices landlords in the use of land.

 

27. What is meant by Sunk cost?

A cost incurred in the past and cannot be recovered in future is called as Sunk Cost

III. Answer the following questions in one paragraph.

28. Distinguish between fixed cost and variable cost.

Fixed cost	Variable cost
Expenses on fixed factors are called fixed cost	Expenses on variable factors are calledvariable cost
Fixed cost does not vary with the level of output	Variable cost vary with the level of output
Eg : Rent, Interest	Eg : Factor Price, Wages

 

29. State the differences between money cost and real cost.

Money cost	Real Cost
Production cost expressed in terms of money is called as money cost	Real cost expressed in terms of efforts and sacrifices of the owner.
It includes cost of raw materials and wages	it includes the expenses on owner’s own land and vechiles
Money costs are also called NominalCost or Explicit Cost	Real costs are called Opportunity Cost

 

30. Distinguish between explicit cost and implicit cost.

Explicit cost	Implicit cost
It includes actual money expenditure incurred by a firm	It is not actual money expenditure incurred by a firm
It enters in the firms books of accounts	It does not enter in the firms books of accounts
It is payment concept	It is receipt concept

31. Define opportunity cost and provide an example.

1. It refers, the value of the next best alternative foregone.

2 .For example, a farmer cultivate paddy instead of sugar cane,the opportunity cost of paddy out put is the amount of sugarcane output given up.

 

32. State the relationship between AC and MC.

1. When MC < AC , AC falls

2. When MC = AC ,AC is Constant at it’s minimum point

3. When MC > AC , AC rises

 

33. Write a short note on Marginal Revenue.

Marginal Revenue is the addition to the total revenue by the sale of an additional unit of a commodity.

MR = ΔTR/ ΔQ

1. MR curve perfectly elastic in perfect completion.

2. MR curve less elastic in monopoly

 

34. Discuss the Long run cost curves with suitable diagram.

1. In the long run all factors of production become variable.

2 LAC = LTC/Q

3. The LAC curve is derived from short- run average cost curve

4. It is the locus of points denoting the least cost curve of

producing the corresponding output.

Other names of LAC:

The LAC curve is called as ‘Plant Curve’ or ‘Boat shape

Curve’ or ‘Planning Curve’ or ‘Envelop Curve

IV. Answer the following questions in about a page.

35. If total cost = 10+Q3, find out AC, AVC, TFC, AFC when Q=5.

TC=TFC+TVC

$\mathbf{A}\mathbf{V}\mathbf{C}\mathbf{=}\frac{\mathbf{T}\mathbf{V}\mathbf{C}}{\mathbf{Q}}$ 

$\mathbf{A}\mathbf{F}\mathbf{C}\mathbf{=}\frac{\mathbf{T}\mathbf{F}\mathbf{C}}{\mathbf{Q}}$ 

$\mathbf{A}\mathbf{C}\mathbf{=}\frac{\mathbf{T}\mathbf{C}}{\mathbf{Q}}$ 

(i) TC=10+Q3 Total cost has two components TFC and TVC.

(ii) TFC=is the total fixed cost which does not change with the level of output.

(iii) It is determined by putting the the value of Q.

(iv) Given the total cost function TC=10+Q3

Q=units of output where Q=5

Here TFC=10(TFC will not change when output changes)

TC=10+(5)3

TC=10+125

TC=135

135=10+TVC

135-10=TVC

125=TVC

TVC=125, TC=135, therefore TFC?

TC=TFC +TVC

135=x+125

135-125=10

TFC=10 

$\mathrm{AFC}=\frac{\mathrm{TFC}}{\mathrm{Q}}$

AFC=2

$\mathrm{AVC}=\frac{\mathrm{TVC}}{\mathrm{Q}}$ 

$\mathrm{AVC}=\frac{125}{5}$ 

AVC=25 

$\mathrm{AC}=\frac{\mathrm{TC}}{\mathrm{Q}}$

$\mathrm{AC}=\frac{135}{5}$

AC=27 

 

36. Discuss the short run cost curves with suitable diagram.

Short run cost curves:

1. TFC - Total Fixed Cost Curve

2. TVC - Total Variable Cost Curve

3. TC - Total Cost Curve

4. AFC - Average Fixed Cost Curve

5. AVC - Average Variable Cost Curve

6. AC OR ATC - Average Cost or Average Total Cost

7. MC - Marginal Cost

Short run average cost curves

Total cost

Total cost is the sum of total fixed cost and total variable cost.

TC = TFC + TVC

TC = Total cost

TFC = Total Fixed cost (cost of fixed factors)

TVC = Total variable cost (Cost of Variable Factors)

Short run average cost curves

Average Fixed Cost (AFC)

The average fixed cost is the fixed cost per unit of output. It is obtained by dividing the total fixed

cost by the number of units of the commodity produced.

AFC = TFC / Q

Average Variable cost (AVC)

Average variable cost is the variable cost per unit of output. It is the total variable cost divided

by the number of units of output produced.

AVC = TVC / Q

Average Total Cost or Average Cost

Average total cost is simply called average cost which is the total cost divided by the number of units of

output produced.

AC = TC / Q (or)

AC = AFC+AVC

Marginal Cost

Marginal cost is defined as the addition made to the total cost by the production of one additional

unit of output.

MCn = TCn – TCn-1

 

37. Bring out the relationship between AR and MR curves under various price conditions.

Average Revenue

AR = TR / Q

Marginal Revenue

MRn = TRn – TRn-1

Explanation

1. If a firm is able to sell additional units at the same price then AR and MR will be constant and equal (Perfect Competition)

2. If the firm is able to sell additional units only by reducing the price, then both AR and MR will fall and be different (Monopolistic Competition)