ISC 2011

ISC Questions

Production, Cost, Revenue, Market.

2008

Short questions (2 marks each)

• Draw a diagram to show the effect of total product on marginal product of a
variable factor when total product reaches its maximum.
• State 2 similarities between perfect competition and monopolistic competition.
• Why is the AR curve below the MR Curve under imperfect competition?
• Differentiate between break even point and shut down point.
• Is it possible to measure profits earned by a firm in the following diagram?
Explain

Cost & MC
Revenue

P AR = MR

O Q Output
Long Questions.
• Give 1 difference between increasing returns to scale and diminishing returns
to scale. Discuss 2 reasons for each (8)

• Explain with the help of diagram the relationship between average cost and
marginal cost. (6)

• Define monopoly discuss 4 main features of monopoly market (8)

2007
Short Questions

• Distinguish between fixed factor and variable factor

• What is meant by Marginal Physical Product?
• Explain the shape of the total variable cost curve with the help of a diagram.
• What are the 2 types of production functions?
 Long questions

• The cost function of the firm is given below:

Output 0 1 2 3 4 5 6
Total Cost 40 80 110 126 128 135 180

Find the following :

i) Total Fixed Cost
ii) Total Variable Cost
iii) Average Fixed Cost
iv) Average Variable Cost
v) Average Total cost
vi) Marginal Cost (6)

• Explain two causes each of increasing returns, diminishing returns

and negative returns to a variable factor
(8)
• Enumerate any 4 applications of the concept of opportunity cost
(6)
• Explain the features of an oligopoly market. How is an Oligopoly
market different from a monopoly market? (8)

Some more short questions

• What are selling costs
• What is price discrimination
• Why is average variable cost curve U shaped?
• Give an example of increasing returns to scale
• Do fixed costs affect marginal costs ? Explain
• Define indivisibility of a factor of production
• Mention any 2 types of internal and external economies
• Distinguish between internal & external diseconomies
• Explain how large scale production can lead to financial economies.
• Will marginal cost always decrease when its average cost decrease?
• What is non price competition?
• Where does a competitive firm’s shut down and break even point
occur?
• Differentiate between real and fancied differentiation.

Long questions
• Explain the relationship between TP, AP, MP with the help of a
diagram
• Explain the laws of returns to scale
• Explain the slopes of the TVC and TFC curves.
• Derive the long run average cost curves from a number of short
run average cost curves .
• Explain the shape of the LAC curve with the help of Internal
economies and diseconomies
• Compare the AR and MR curve under perfect and imperfect
competitions
• Explain 6 features of perfect competitions
• Explain 6 features of monopoly
• Explain 6 features of monopolistic competitions
• Explain 6 features of oligopoly
• Explain how supernormal profit is earned by a perfectly
competitive firm in the short run
• Explain the loss situation of a perfectly competitive firm in the
short run
• Show how a perfectly competitive firm earns normal profit in the
long run.