QNS.1 Define micro economics.

What is its place in economic

Theory ? How it is different from macro economics?
ANS:- The study of the operations of the components of a national economy, such
as individual firms, households and consumers.

Microeconomics is a branch of economics that studies how individuals, households

and firms and some states make decisions to allocate limited resources typically in
markets where goods or services are being bought and sold. Microeconomics examines
how these decisions and behaviors affect the supply and demand for goods and
services, which determines prices; and how prices, in turn determine the supply and
demand of goods and services.

Macroeconomics is the branch of economics that deals with aggregate

economic decision or behavior of an economy as a whole for example the problem of
inflation. level of un employment balance of payment deficity simply it studies the
economy as a whole while Microeconomics is the branch of economics that studies
the behavior of an individual decision making unit such as individual firms decision in
the market, how an individual uses it's income to maximize satisfaction, how the price of
each commodity in the market is affected by the forces of demand and supply.

QNS.2 Define elasticity of demand. Distinguish between

price elasticity, income elasticity and cross elasticity of
demand. Discuss the factors that determine the elasticity
of demand.

ANS:- Responsiveness of the demand for a good or service to the increase or

decrease in its price. Normally, sales increase with drop in prices and decrease with rise
in prices. As a general rule, appliances, cars, confectionary and other non-essentials
show elasticity of demand whereas most necessities show inelasticity of demand

Cross price elasticity of demand measures how much demand of one good, say x
changes when the price of another good, say y changes, holding everything else
constant.

For example, you can measure what happens to the demand of bread when the price of
milk changes.
presence of barriers to quick change in prices; in some countries there is regulation for
price of milk, no matter the situation of markets, the price must allignent to regulations;
then no matter the demand, it is inelastic because regulations. More barriers means
less elasticity. Relation between demand and supply: here there is a little difficult
mathematician relation to understand. In extreme cases where demand and supply are
too oriented to one of them; then the elasticity is more low.

QNS.3 Discuss the difference between Perfect

Competition and Monopoly.
Discuss the general consideration to be kept in mind while
formulating the price policy for a product

ANS:- In Market Structure, the Perfect Competition (PC) and the monopoly are
considered extreme market structures, while other market structures also exist, like the
oligopoly and the monopolistic competition(MC). Before understanding the
differences of these 2 market structure. It's important to realize that the PC market
structure consists of many firms or sellers in an area or industry. The monopoly on the
other hand, consists of a single seller.

The appropriate place to begin is with discussion of exactly how countries

intervene in markets for food. By food, I mean the staple food or foods, typically a grain
that is used to make bread, or that is eaten directly, as rice is in Asia. Beans also fit into
this category if they form part of a staple diet as, combined with rice, they do in Brazil. In
any case, there are one or two foods or food products that make up very large shares of
the diet of poor people. Usually, the government tends to intervene rather drastically to
control what happens in the markets for these food products, and this kind of
intervention raises some problems.

QNS.4 What are the various market structures in

existence in real life?

ANS:- To provide an overview of the different types of market structure and to

introduce the diagrammatic representations used in analysing these market structures.
The Activity encourages students to analyse how market structure definitions can vary
according to the way in which a firm is classified within its market. Through such
analysis, the student is encouraged to appreciate that market power is not only wielded
by very large firms but also by small firms in a localised context. This is caused by
imperfections in the market, mainly due to a lack of knowledge of prices, availability and
so on.

It is always tempting when looking at market structure to investigate the likes of

Microsoft or the supermarkets but interesting cases can be found all around in relation
to how firms behave and the complexities of analysing market structures.
We tend to assume that monopolies, for example, are large firms who dominate national
and international markets - this can be the case but is not always so.

Qns.5 What do you mean by Social Accounting? Discuss

its techniques briefly.

ANS:- Social accounting (also known as Social and Environmental

Accounting, Corporate Social Reporting, Corporate Social Responsibility
Reporting, Non-Financial Reporting, Sustainability Accounting) is the process of
communicating the social and environmental effects of organisations' economic actions
to particular interest groups within society and to society at largeSocial accounting is
commonly used in the context of business, or corporate social responsibility (CSR),
although any organisation, including NGOs, charity and government agencies may
engage in social accounting.

Social accounting is a process that seeks to measure the progress and performance of
organisations against their social, environmental and economic objectives.

In Cambridgeshire a range of both 3rd sector and statutory organisations are starting to
look at ways on which this can be taken forward to improve the way in which outcomes
are identified, measured and reported. Particularly helpful for 3rd Sector organisations,
whose work often includes many ‘soft’ hard to measure outcomes.

Recently The Social Enterprise People have secured Investing in Communities funding
to apply Social Accounting techniques to local projects. The findings of these studies
can be found on their web site.