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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
(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
AFC=2
AVC=TVCQ
AVC=1255
AVC=25
AC=TCQAC=1355
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)
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