Jnu ,Igidr eco doubts

[The Villain]

Q1 The law of diminishing marginal utility is most useful for explaining
A) law of supply
b) law of demand
c) diminishing marginal product of capital
d) curvature of total cost curve
e)shape of production possibilty frontiers

Q2


Q3



I'm getting q1 as c and q2 as a..pls confirm

[Anjali]

For 1st , I guess b

[Anjali]

For 3rd , when efficiency is achieved. It's like when all resources are efficient in producing all commodities - MRT is constant.

[Anjali]

N yeah A for ques 2
Ron , for first Iam not really sure , it can be the ans you have marked - because the concept behind diminishing marginal product of capital and diminishing utility is same , so it may determine its shape. Let's see others replies.

[Granpa Simpson]

The answer to question 1 will be "b"...law of demand...!!!

[Arushi :))]

I think first is b,
because as quantity increases MU decreases
And a person pays price equal to marginal benefit/ marginal utility
So as Q increases, MU = P decreases .
For 3rd,
I guess it should be perfect substitutes, i.e b
for 2nd,
Its for sure a

[Arushi :))]

WIKIPEDIA says :
If opportunity costs are constant, a straight-line (linear) PPF is produced. This case reflects a situation where resources are not specialised and can be substituted for each other with no added cost. Products requiring similar resources (bread and pastry, for instance) will have an almost straight PPF, hence almost constant opportunity costs. More specifically, with constant returns to scale, there are two opportunities for a linear PPF: firstly, if there was only one factor of production to consider, or secondly, if the factor intensity ratios in the two sectors were constant at all points on the production-possibilities curve. With varying returns to scale, however, it may not be entirely linear in either case.
So, it should be d i guess

[The Villain]

Thanku guys :)
@Arushi ...so for quest 3 its d ryt

[Homer Simpson]

Ron, answer for 3 is b - its constant opportunity cost and resources can be substituted without additional cost, in other words - perfect substitutes.

Even when resources arent specialized, like say you need both labor and capital to produce x and y, then you'll get a kinked PPF to meet the constraints of production using both labor and capital.

[Anjali]

So is "b" the final answer for 3rd ?

[Arushi :))]

Straight line PPF just means that you need to give up constant amounts of y always to produce an additional unit of x.
It has constant opportunity cost that doesnt imply that the goods are to be perfect substitutes.
we can take computers and cars on x-y axis.

[Anjali]

Yeah true arushi , d seems right - because if MRT is constant , then all the resources can produce all goods efficiently - no specialization. Had the ppf been concave and bowed , cost would be increasing.

[The Villain]

Arushi..ur explanation seems quite apt...Thanks a ton..!!
will post more quest of igidr n jnu..

[Homer Simpson]

thanks for clearing that up Arushi!

[Ashima]

For 2nd its 1.5 ? right?

%change in q/ %change in income

isn't it?

[Anjali]

Yup Ashima