11th Economics - Book Back Answers - Unit 5 - English Medium Guides

  

 


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    Tamil Nadu Board 11th Standard Economics - Unit 5 : Book Back Answers and Solutions

        This post covers the book back answers and solutions for Unit 5 – 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 5 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 5:Market Structure And Pricing


    I. Multiple Choice questions.

    1. In which of the following is not a type of market structure Price will be very high?
    a. Perfect competition
    b. Monopoly
    c. Duopoly
    d. Oligopoly 
    Answer key: 
    a. Perfect competition  
     
    2. Equilibrium condition of a firm is......
    a. MC = MR
    b. MC > MR
    c.MC<MR
    d. MR=Price
    Answer key:  
    a. MC = MR  
     
    3. Which of the following is a feature of monopolistic competition?
    a. One seller
    b. Few sellers
    c. Product differentiation
    d. No entry
    Answer key:  
     
    c. Product differentiation  
    4. A firm under monopoly can earn …………. in the short run.
    a. Normal profit
    b. Loss
    c. Super normal profit
    d. More loss
    Answer key:  
    c. Super normal profit  
     
    5. There is no excess capacity under …………………
    a. Monopoly
    b. Monopolistic competition
    c. Oligopoly
    d. Perfect competition
    Answer key:  
    d. Perfect competition  
     
    6. Profit of a firm is obtained when ……………..
    a. TR < TC
    b. TR - MC
    c. TR > TC
    d. TR = TC 
    Answer key:  
    c. TR > TC  
    7. Another name of price is……………..
    a. Average Revenue
    b. Marginal Revenue  
    c. Total Revenue
    d. Average Cost
     Answer key: 
    a. Average Revenue 
      
    8. In which type of market, AR and MR are equal …..
    a. Duopoly
    b. Perfect competition
    c. Monopolistic competition
    d. Oligopoly
    Answer key:  
    b. Perfect competition  
     
    9. In monopoly, MR curve lies below ………….
    a. TR
    b. MC
    c. AR
    d. AC
    Answer key:  
    c. AR  
     
    10. Perfect competition assumes …………
    a. Luxury goods
    b. Producer goods
    c. Differentiated goods
    d. Homogeneous goods
    Answer key:  
    d. Homogeneous goods  
     
    11. Group equilibrium is analysed in …….
    a. Monopolistic competition
    b. Monopoly
    c. Duopoly
    d. Pure competition
    Answer key:  
    a. Monopolistic competition 
     
    12. In monopolistic competition, the essential feature is ..…
    a. Same product
    b. selling cost
    c. Single seller
    d. Single buyer
    Answer key: 
    b. selling cost  
     
    13. Monopolistic competition is a form of .…….
    a. Oligopoly
    b. Duopoly
    c. Imperfect competition
    d. Monopoly
    Answer key:  
    c. Imperfect competition  
     
    14. Price leadership is the attribute of …………
    a. Perfect competition
    b. Monopoly
    c. Oligopoly
    d. Monopolistic competition
    Answer key:  
    c. Oligopoly  
     
    15. Price discrimination will always lead to………….
    a. Increase in output
    b. Increase in profit
    c. Different prices
    d. b and c
    Answer key:  
    d. b and c  
     
    16. The average revenue curve under monopolistic competition will be……
    a. Perfectly inelastic
    b. Perfectly elastic
    c. Relatively elastic
    d. Unitary elastic
     Answer key:  
    c. Relatively elastic  
     
    17. Under perfect competition, the shape of demand curve of a firm is...............
    a. Vertical
    b. Horizontal
    c. Negatively sloped
    d. Positively sloped
    Answer key:  
    b. Horizontal  
     
    18. In which market form, does absence of competition prevail?
    a. Perfect competition
    b. Monopoly
    c. Duopoly
    d. Oligopoly
    Answer key: 
    b. Monopoly  
     
    19. Which of the following involves maximum exploitation of consumers?
    a. Perfect competition
    b. Monopoly
    c. Monopolistic competition
    d. Oligopoly
    Answer key:  
    b. Monopoly  
     
    20. An example of selling cost is …
    a. Raw material cost
    b. Transport cost
    c. Advertisement cost
    d. Purchasing cost 
    Answer key:  
    c. Advertisement cost  
     

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

    21. Define Market.
    In Economics, the term ‘market’ refers to a system of exchange between the buyers and the sellers of a commodity directly or indirectly.
     
    22. Who is price-taker?
    1. A price taker is a seller who has no control to fix prices for a good or service
     
    23. Point out the essential features of pure competition.
    a. Large Number of Buyers and Sellers
    b. Free Entry and Exit
     
    24. What is selling cost?
    Selling costs refer to those expenses which are incurred for popularizing the differentiated product and increasing the demand for it.
     
    25. Draw demand curve of a firm for the following:
    a) Perfect Competition b) Monopoly

    26. Mention any two types of price discrimination
    (i) Personal (ii) Geographical

    27. Define “Excess capacity”.
    A monopolistic firm produces deliberately output which is less than the optimum output that is the output corresponding to the minimum average cost.

    III. Answer the following questions in one paragraph.

    28. What are the features of a market?
    1. Buyers and sellers of a commodity or a service
    2. A commodity to be bought and sold
    3. Price agreeable to buyer and seller
    4. Direct or indirect exchange.
     
    29. Specify the nature of entry of competitors in perfect competition and monopoly.
    Nature of Entry of competitor
    Perfect Competition
    Monopoly
    It is possible for the very efficient producer, producing the product at a very low cost, to earn super normal profits. Attracted by such a profit, new firms enter into the industry.
    There is strict barrier for entry of any new firm;

     

    30. Describe the degrees of price discrimination.
    According to A.C.Pigou, there are three degrees of price discrimination.
    (i) First degree price discrimination
    A monopolist charges the maximum price that a buyer is willing to pay. Example: Auctions
    (ii) Second degree price discrimination
    Under this degree, buyers are charged prices in such a way that a part of their consumer’s surplus is taken
    away by the sellers. Example: Cinema theatres .
    (iii) Third degree price discrimination
    The monopolist splits the entire market into a few sub-market and charges different price in each submarket.
    Example : Railways Ticket

     

    31. State the meaning of selling cost with an example.
    1. It was Chamberlin who introduced the analysis of selling costs.
    2. Selling costs play the key role in monopolistic competition. The firms have to compete to promote
    their sale by spending on advertisements and publicity ads to the demand of the product.
    3. In selling costs we include the salaries of sales persons, allowances to retailers to display the
    products etc. besides the advertisements.
     
    32. Mention the similarities between perfect competition and monopolistic competition.
    s.no
    Basis of Similarities
    Perfect Competition
    Monopolistic Competition 
    1
    Number of Producers/
    sellers
    In numerable
    Large
    2
    Entry / Exit
    Free
    Free
    3
    Profit
    Abnormal profit in short- run, Normal profit in long-run
    Abnormal profit in short-run,Normal profit in long run

    4

    Quantity
    Very large
    Substantial
     
    33. Differentiate between ‘firm’ and ‘industry’.
     
    Firm
    Industry
    Meaning
    A firm refers to a single production unit in an industry
    An industry refers to a group offirms
    Production
    Production Producing a large or a small quantum of a commodity or service
    Producing the same product or service in an economy.

    Example
    A single cement firm
    Cement Industry (group of firms)
    34. State the features of duopoly.
    1. Each seller is fully aware of his rival’s motive and actions.
    2. Both sellers may collude (they agree on all matters regarding the sale of the commodity).
    3. They may enter into cut-throat competition.
    4. They fix the price for their product with a view to maximising their profit.

    IV. Answer the following questions in about a page.

    35. Bring out the features of perfect competition.
    Meaning of Perfect Competition
    Perfect Competition market is that type of market in which the number of buyers and sellers is
    very large, all are engaged in buying and selling a homogenous product at uniform price.
    Features
    1. Large Number of Buyers and Sellers
    The term, ‘large number of sellers’ implies that share of each individual seller is a very, very small
    quantum of a product.
    2. Homogeneous Product and Uniform Price
    All the units of the product are identical (ie) of the same size, shape, colour, quality etc. Therefore,
    a uniform price prevails in the market.
    3. Free Entry and Exit
    Efficient producer producing the product at a very low cost, to earn super normal profits. Attracted
    by such a profit, new firms enter into the industry.
    4. Absence Of Transport Cost
    The prevalence of the uniform price is also due to the absence of the transport cost.
    5. Perfect Knowledge of the Market
    All buyers and sellers have a thorough knowledge of the quality of the product, prevailing price etc.
    6. No Government Intervention
    There is no government regulation on supply of raw materials, and in the determination of price etc.
    Price & Output Determination-Perfect Competition during Short Run
    AR – Average Revenue
    AC – Average Cost
    MR – Marginal Revenue
    MC – Marginal Cost
    The firms under Perfect Competition take the price (10) from the industry and start adjusting
    their quantities produced.
    For example Qd= 100 5P and Qs=5P. At equilibrium Qd=Qs. Therefore 100-5P=5P.
    100 = 10P; 100/10 = P Qd = demand P = 10 P = Price
    Qd = 100-5(10) Qs = Supply 100-50 = 50
    Qs = 5(10)=50
    Therefore 50 = 50
    Its total revenue is 50X10=500. Its total cost is 50X12=600. Therefore, its total loss is 600-500=100.
    Price = AR=MR = Minimum AC

     

    36. How price and output are determined under the perfect competition?
    Meaning of Perfect Competition
    Perfect Competition market is that type of market in which the number of buyers and sellers is
    very large, all are engaged in buying and selling a homogenous product at uniform price.
    Important Features
    1. Large Number of Buyers and Sellers 3. Homogeneous Product and Uniform Price
    2. Free Entry and Exit 4. Absence Of Transport Cost
    Price & Output Determination-Perfect Competition during Short Run
    AR – Average Revenue AC – Average Cost
    MR – Marginal Revenue MC – Marginal Cost
    The firms under Perfect Competition take the price (10) from the industry and start adjusting
    their quantities produced.
    For example Qd= 100 5P and Qs=5P. At equilibrium Qd=Qs. Therefore 100-5P=5P.
    100 = 10P; 100/10 = P Qd = demand P = 10 P = Price
    Qd = 100-5(10) Qs = Supply 100-50 = 50
    Qs = 5(10)=50
    Therefore 50 = 50
    Its total revenue is 50X10=500. Its total cost is 50X12=600. Therefore, its total loss is 600-500=100.
    Price = AR=MR = Minimum AC
     
    37. Describe the features oligopoly.
    1. Few large firms
    Very few big firms own the major control of the whole market by producing major portion of the
    market demand.
    2. Interdependence among firms
    The price and quality decisions of a particular firm are dependent on the price and quality decisions
    of the rival firms.
    3. Group behaviuor
    The firms under oligopoly realise the importance of mutual co-operation.
    4. Advertisement cost
    The oligopolist could raise sales either by advertising or improving the quality of the product.
    5. Nature of product
    Perfect oligopoly means homogeneous products and imperfect oligopoly deals with heterogeneous
    products.
    6. Price rigidity
    The oligopolistic firms do not change their prices due to the fear of rivals’ reaction.
     
    38. Illustrate price and output determination under Monopoly.
    Meaning
    Monopoly is a market structure characterized by a single seller, selling the unique product with the
    restriction for a new firm to enter the market.
    Features of Monopoly
    1. There is a single producer / seller of a product;
    2. The product of a monopolist is unique and has no close substitute;
    3. There is strict barrier for entry of any new firm;
    4. The monopolist is a price-maker
    Price & Output Determination Under Monopoly
    Explanation
    1. The Diagram shows that MC cuts MR at E to give
    equilibrium output as OM.
    2. At OM, the price charged is OP (we find this by extending line EM till it touches AR or demand
    curve).
    3. Also at OM, the cost per unit is MS.
    4. Therefore, profit per unit is SQ or total profit is PQRS.
    Total profit = (Average Revenue Average Cost) X Total output
     
    39. Explain price and output determined under monopolistic competition with help of
    diagram.
    Meaning
    Monopolistic competition refers to a market situation where there are many firms selling a
    differentiated product.
    Important Features
    1. Large number of buyers and many sellers.
    2. Firms produce differentiated products.
    3. Firms compete with each other by incurring selling cost
    4. Non – price competition
    Short run                                                    Profit Short run                                                Loss Long run Equilibrium
    Explanation
    1. The profit maximisation is achieved when MC=MR.
    2. Total profit is ‘PQRS’. This is super normal profit under short-run.
    3. Total loss is ‘PQLK’. This firm incurs loss in the short run.
    4. In the long run AR curve is more elastic
    5. At E’ point = AR=AC and MC=MR. It means that a firm earns normal profit. AR is tangent to
    the Long Run Average Cost (LAC) curve at point ‘Q’.
     





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