Sahas Institute :- 11-12 Comm / FY – SY – TY B.

com /CA & CS Page |1

11th 12th (Commerce)

F.Y S.Y. T.Y. B.COM
C.A. & C.S ( All levels )
E-110, Vrundavan Township, Harni Road, Near Sangam, Vadodara. M : 99989 84152, 82384 48020
FF 9 – Sharnam Complex , Opp. Bahurani Restaurant , Near Crystal School , Waghodia Dabhoi Road.

F.Y.B.Com { Sem 2 } M.E. { 2.5 Marks IMP Que & Ans }

1. What is indifference curve :- Download

Ans:- :- Indifference curve is a group of different combination of two goods.

Which provides same level of satisfaction to a consumer.
# Suppose, a consumer wants to buy / purchase a combination of two goods [X&Y]
out of his limited income.
:- Indifference curve analysis was Developed by = Hicks & Allen.
:- It explains that, How a consumer will get Maximum & Highest satisfaction
out of limited Income & resources.
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2. What is short run production function:-

INTRODUCTION :
➔ Law of variable proportion explains short run production function.
➔ It explains relationship between inputs and output in short run.
(I) ASSUMPTIONS OF THIS LAW :
➔ This law is based on following assumption :
(a) Only one factor is variable and all other factors remain the same.
(b) The level / scale of production. That is plant capacity does not change.
(c) The method of production / technology does not change.
(d) All the units of variable factor are same (identical)

(II) STATEMENT OF LAW OF VARIABLE PROPORTION :

➔ According to law of variable proportion. “If only one factor is variable and all other factors are fixed,
then With increasing units of variable factor.
➔ Its average product and marginal product initially increases,
➔ Then, it reaches at maximum level and Finally diminishes”.

3. What is consumer surplus

The idea and concept of consumers surplus was introduced by Alfread Marhsall.
(I) DEFINITION :
➔ Consumers surplus is the excess of what consumer is willing to pay, over what he actually pay.
➔ So, consumer surplus is the deviation / difference between :
(i) The price, a consumer is willing to pay for a commodity, and Download
(ii) The price, he actually pays.
 Pr ice, he is willing  The price, he 
Consumers Surplus =   −  
 to pay   actually pays 

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= 30- 25
= Rs. 5
➔ For e.g. Suppose, a consumer, is ready to pay / willing to pay Rs. 30 for a commodity. But, actual
price is Rs.25. So, here consumers surplus is Rs. 5.
(II) MARHSALL’S MEASUREMENT OF CONSUMERS SURPLUS :
➔ Marshall have given below formula / equation to measure / examine consumers surplus.
➔ Consumers Surplus = Total Utility ( − ) Total Amount Spent
= (Total Utility) (−) [ Price (x) No. of units purchase ]
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4. Types of consumption
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TYPES OF CONSUMPTION :
(A) Useful Consumption :
➔ Useful consumption means consumption of goods and services for some useful objectives.
(B) Wasteful / Non-Useful Consumption :
➔ Non-useful (or) wastage consumption means use of certain goods,
➔ Which are not very useful
(C) Final (or) Direct Consumption :
➔ Final (or) Direct consumption means consumption of / use of those goods,
➔ Which can fulfill / satisfy our wants & needs directly.
(D) Productive (or) Indirect Consumption :
➔ Productive (or) Indirect Consumption means use of certain goods & services,
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5. What is iso quant :-
MEANING OF ISO-QUANT :
➔ IQ is a set (locus) of different combinations of two factors (x and y), which give / provide the same
level of total output.
➔ Principles of Iso-Quant :
➔ (a) All the combinations on the same Iso-quant, give same level of total output.
➔ (b) Higher the Iso-qaunt, higher the output and lower the Iso-quant, lower the output.
➔ (c) When a firm employ more units of a particular factor, MRTS is diminishing.
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6. What is iso cost
MEANING OF ISO-COST LINE :
:- In economics an iso cost line shows all combinations of inputs which cost the same total amount.
:- Although similar to the budget constraint in consumer theory, the use of
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the isocost line pertains to cost-minimization in production, as opposed to utility-maximization.
:- The slope is: The iso cost line is combined with the isoquant map
to determine the optimal production point at any given level of output.
:- Specifically, the point of tangency between any isoquant and an isocost line gives
the lowest-cost combination of inputs that can produce
the level of output associated with that isoquant.
:- Equivalently, it gives the maximum level of output that can be produced for a given total cost of inputs.
A line joining tangency points of isoquants and iso costs is called the expansion path.
7. What is expansion path
:-Expansion Path is a group / locus (set) of different least cost combination
/ minimum cost combinations for different levels of output.

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(b) It is the group of the points of tangency between the Iso-quants & Iso-cost lines.
(c) It is also known as scale line, because it shows different level of production.

8. What is increasing return to scale

:- In the case of increasing returns to scale,
Increase in output is in greater ratio / proportion than increase in inputs
:- When the distance between successive Iso-quants is falling / diminishing,
Returns to scale is increasing, Y
# Let us take diagrammatic presentation
:- This diagram shows that,The distance between successive
Scale line
Iso-quants is diminishing

Factor - y [Capital (K) ]

T
:- That is PQ > QR > RS This shows that to produce every
20 units of additional output,
:- The firm requires / gets less and less units of both the factors
So, returns to scale is increasing
IQ4(80)
:- When a firm increases its level of operation,
IQ3(60)
Then atleast in the starting stage of expansion,
IQ2(40)
returns to scale are increasing
IQ1(20)
➔ This is because of following reasons : O X
(i) Elements of economies Factor - x [Labour (L)]

(ii) Indivisibility of the factors

(iii) Huge / large possibility of specialization of labour and machinery

9. What is Prefect Competition

:- Pure / perfect competition is that type of market situation, Which have following features / conditions :
(i) Large number of sellers and buyers, and
(ii) Homogeneous product
:- If both the conditions are present, there is pure / perfect competition in the market.

# FEATURES OF PERFECT COMPETITION : M = 82384 48020 , 99989 84152

:- Perfectly competitive market means that market,
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which have all of the following necessary characteristics of perfect competition.
(1) Large number of Buyers and Sellers
(2) Free Entry and Free Exist
(3) Perfect Knowledge
(4) Homogeneous / same kind of product
(5) Absence of Transport Cost (6) Price Determination
ADMISSION OPEN
(7) Perfect Transferability of factors of Production : - for S.Y.B.Com
10. What is monopoly :- @ SAHAS
Ans : # MEANING OF MONOPOLY : INSTITUTE
:- The word “monopoly” has been got from two greek words – “Mono” and “poly”
:- Mono means single and Poly means seller / supplier
= Monopoly is that type of market, In which there is only
one single seller of a particular product, and It has no close substitutes.
:- For e.g. Indian Railway, Post and Telegraph etc.
# FEATURES / CHARACTERISTICS OF MONOPOLY :
➔ Following are the main features of monopoly
(1) Only One Seller
(2) No Free Entry
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(3) Firm and Industry
(4) No Need of Selling Cost

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(5) No Close Substitutes

(6) Non equality in Price (or) Imperfect Knowledge of Market conditions:
(7) Lack of Mobility
(8) Product

11. What is oligopoly :-

# MEANING :
:- Oligopoly is a market situation, in which there are only a few sellers [firms] producing (or) selling
a particular product.

# CHARACTERISTICS / FEATURES : ADMISSION OPEN

(1) Small Number of Firms
(2) Entry of Firm
- for S.Y.B.Com
(3) Price Rigidity / Sticky Price @ SAHAS INSTITUTE
(4) Co-ordination of Activities
(5) Interdependence
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(6) Undecided / Indeterminate Demand Curve
(7) Importance of Advertising & Selling Cost
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12. Define land , labour, capital :- SAHAS Smart App
:- Functional distribution means distribution of national income among four factors of production.
:- It shows how different factors of production get their income.
:- There are four factors of production = land, labour, capital, & organization ( Entrepreneur )
:- In the theory of functional distribution.
We study how the prices of these factors of production are decided.
:- That is, how rent, Wages, Interest, & Profit of entrepreneur (businessman) are decided
:- Theory of functional distribution is also known as the theory of factor pricing.

13. What is rent, wages, interst and profit :-

1. wages :-
Wages are the reward (or) remuneration for the service of labour. They are of TWO Type
[A] Nominal Wages (or) Money Wages :
[B] Real Wages (or) Non-Monetary Wage :
# RENT :
:- In ordinary sense, rent means any periodical payment for the use of any asset like land (or) building.
:- But in economic sense, rent means only that part of payment,
Which is given by tenant to landlord, For the use of land only.
:- In short, any periodical payment is called rent.
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# TYPES OF RENT
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1] Gross Rent / Contract Rent 2] Economic Rent
3] Differential Rent
Interest is a reward (or) price paid for the use of capital / fund.
# There are two types of interest :
(a) Gross Interest (b) Net Interest (Pure Interest)
# Profit is the income of organizer [Businessmen] entrepreneur for his service
:- It is the reward for taking risk and uncertainty taking.
1] GROSS PROFIT 2] NET PROFIT

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