Q. 2. Fill In The Blanks: 1. Consumer Is A Human Being. 2. If The Price Of Substitute Goods Increases Then The Demand Curve Shifts To The 3. 4. According To Marshall Utility Can Be Measured In Terms Of. Propounded The Law Of Diminishing Returns. 5. An

Understanding the Fundamentals of Economics: Filling in the Blanks

1. Consumer is a human being.

A consumer is indeed a human being who purchases goods and services to satisfy their needs and wants. In economics, consumers play a crucial role in determining the demand for various products and services. The behavior and preferences of consumers can significantly impact the market dynamics and the overall economy. As a human being, a consumer has the ability to make choices based on their income, preferences, and availability of substitutes.

2. If the price of substitute goods increases then the demand curve shifts to the

When the price of substitute goods increases, it can lead to a shift in the demand curve for the original good. This phenomenon is known as the substitution effect. As the price of substitute goods rises, consumers may opt for the original good as a substitute, leading to an increase in demand. This shift in the demand curve can be either to the right (if the original good is a normal good) or to the left (if the original good is an inferior good).

3.

The correct answer is right. When the price of substitute goods increases, the demand curve for the original good shifts to the right. This is because consumers may opt for the original good as a substitute, leading to an increase in demand.

4. According to Marshall, utility can be measured in terms of.

According to Alfred Marshall, a renowned economist, utility can be measured in terms of money. Marshall proposed that utility can be measured in terms of the money that consumers are willing to pay for a particular good or service. This concept is known as the money metric utility. However, it's worth noting that utility can also be measured in terms of other factors such as satisfaction, happiness, or pleasure.

5. An economist who propounded the law of Diminishing Returns.

The correct answer is Alfred Marshall. However, it was actually Marshall's contemporary, John Stuart Mill, who discussed the concept of diminishing returns in his book "Principles of Political Economy". But the law of diminishing returns was first formulated by Marshall's predecessor, Thomas Malthus. However, the law of diminishing returns is often attributed to Alfred Marshall, who discussed it in his book "Principles of Economics".

Understanding the Law of Diminishing Returns

The law of diminishing returns is a fundamental concept in economics that describes the relationship between the quantity of a variable input and the resulting output. According to this law, as the quantity of a variable input (such as labor or capital) increases, the marginal output of that input will eventually decrease. This is because the law of diminishing returns states that as the quantity of a variable input increases, the productivity of that input will eventually decrease.

The Concept of Diminishing Returns

The concept of diminishing returns was first formulated by Thomas Malthus in the 18th century. Malthus argued that as the quantity of a variable input increases, the marginal output of that input will eventually decrease. This is because as the quantity of a variable input increases, the productivity of that input will eventually decrease. For example, if a farmer increases the quantity of labor on a farm, the marginal output of labor will eventually decrease as the farm becomes more crowded and the productivity of labor decreases.

The Law of Diminishing Returns in Practice

The law of diminishing returns can be observed in various industries and sectors. For example, in the manufacturing sector, as the quantity of labor increases, the marginal output of labor will eventually decrease as the factory becomes more crowded and the productivity of labor decreases. Similarly, in the agricultural sector, as the quantity of fertilizer increases, the marginal output of fertilizer will eventually decrease as the soil becomes more saturated and the productivity of fertilizer decreases.

Conclusion

In conclusion, filling in the blanks requires a deep understanding of the fundamental concepts of economics. The law of diminishing returns is a crucial concept in economics that describes the relationship between the quantity of a variable input and the resulting output. As the quantity of a variable input increases, the marginal output of that input will eventually decrease. This concept can be observed in various industries and sectors, and it has significant implications for businesses and policymakers.

References

• Marshall, A. (1890). Principles of Economics.
• Malthus, T. (1798). An Essay on the Principle of Population.
• Mill, J. S. (1848). Principles of Political Economy.

Further Reading

• Samuelson, P. A. (1948). Economics: An Introductory Analysis.
• Stigler, G. J. (1941). Production and Distribution Theories.
• Friedman, M. (1953). Essays in Positive Economics.
  Economics Q&A: Understanding the Fundamentals

Q: What is the law of supply and demand?

A: The law of supply and demand is a fundamental concept in economics that describes the relationship between the quantity of a good or service that producers are willing to supply and the quantity that consumers are willing to buy. When the price of a good or service is high, suppliers are willing to supply more and consumers are willing to buy less, resulting in a surplus. Conversely, when the price is low, suppliers are willing to supply less and consumers are willing to buy more, resulting in a shortage.

Q: What is the difference between a normal good and an inferior good?

A: A normal good is a good that consumers buy more of when their income increases. An inferior good is a good that consumers buy less of when their income increases. For example, as income increases, people may buy more of a luxury item like a car, but they may buy less of a basic item like bread.

Q: What is the concept of opportunity cost?

A: Opportunity cost is the value of the next best alternative that is given up when a choice is made. For example, if a person chooses to spend their Saturday at the beach, the opportunity cost is the value of the other activities they could have done on that day, such as going to the movies or studying.

Q: What is the difference between a market economy and a command economy?

A: A market economy is an economic system in which the production and distribution of goods and services are determined by the interactions of buyers and sellers in the market. A command economy is an economic system in which the production and distribution of goods and services are controlled by the government.

Q: What is the concept of comparative advantage?

A: Comparative advantage is the idea that countries should specialize in producing goods and services for which they have a lower opportunity cost, and trade with other countries to obtain goods and services for which they have a higher opportunity cost.

Q: What is the difference between a fixed cost and a variable cost?

A: A fixed cost is a cost that remains the same even if the quantity of a good or service changes. A variable cost is a cost that changes as the quantity of a good or service changes.

Q: What is the concept of elasticity of demand?

A: Elasticity of demand is a measure of how responsive the quantity demanded of a good or service is to changes in its price. If the demand for a good or service is elastic, a small change in price will result in a large change in quantity demanded.

Q: What is the difference between a producer surplus and a consumer surplus?

A: A producer surplus is the difference between the price that producers are willing to accept and the price that consumers are willing to pay. A consumer surplus is the difference between the price that consumers are willing to pay and the price that producers are willing to accept.

Q: What is the concept of the production possibilities curve?

A: The production possibilities curve is a graph that shows the different combinations of two goods or services that can be produced with a given set of resources.

Q: What is the difference between a short-run production function and a long-run production function?

A: A short-run production function is a function that shows the relationship between the quantity of a good or service produced and the quantity of a variable input, such as labor, in the short run. A long-run production function is a function that shows the relationship between the quantity of a good or service produced and the quantity of a variable input, such as labor, in the long run.

Q: What is the concept of the law of diminishing returns?

A: The law of diminishing returns is a concept that describes the relationship between the quantity of a variable input and the resulting output. As the quantity of a variable input increases, the marginal output of that input will eventually decrease.

Q: What is the difference between a monopoly and a competitive market?

A: A monopoly is a market structure in which a single firm supplies the entire market with a particular good or service. A competitive market is a market structure in which many firms supply the market with a particular good or service.

Q: What is the concept of the concept of the Gini coefficient?

A: The Gini coefficient is a measure of income inequality in a society. It is a number between 0 and 1 that represents the degree of inequality in the distribution of income.

Q: What is the difference between a recession and a depression?

A: A recession is a period of economic decline that lasts for a relatively short period of time, typically less than a year. A depression is a period of economic decline that lasts for a longer period of time, typically several years.

Q: What is the concept of the concept of the multiplier effect?

A: The multiplier effect is a concept that describes the way in which an increase in aggregate demand can lead to an increase in output and employment.

Q: What is the difference between a fiscal policy and a monetary policy?

A: Fiscal policy is a policy that involves the use of government spending and taxation to influence the level of economic activity. Monetary policy is a policy that involves the use of interest rates and the money supply to influence the level of economic activity.

Q: What is the concept of the concept of the Phillips curve?

A: The Phillips curve is a graph that shows the relationship between the rate of unemployment and the rate of inflation. It is a concept that was developed by Alban William Phillips in the 1950s.

Q: What is the difference between a supply-side policy and a demand-side policy?

A: A supply-side policy is a policy that aims to increase the supply of goods and services in the economy. A demand-side policy is a policy that aims to increase the demand for goods and services in the economy.

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