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Question
Write short note on:
Paradox of value
Solution
Paradox of value refers to the difference between the value in use of a commodity and the value in exchange. This paradox states that a commodity that has a high use value may have a low exchange value intermsofprice . For instance, water, which has a high use value commands a low price in the market, i.e. it has a low exchange value. On the other hand, diamonds that have a low use value have high very high exchange value. Thus, there is a disparity between the use value and exchange value.
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RELATED QUESTIONS
............... consumption can not be zero.
(Induced / Autonomous / Government / Private)
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Complete the following table:
|
Consumption expenditure (Rs) |
Savings (Rs) |
Income (Rs) |
Marginal propensity to Consume |
|
100 |
50 |
150 |
|
|
175 |
75 |
……. |
…… |
|
250 |
100 |
……. |
…… |
|
325 |
125 |
……. |
…… |
Write explanatory answer:
Explain the subjective and objective factors determining consumption function.
Give reasons or explain the following statement:
Income which is not saved is consumption.
Match the following Group ‘A’ with Group ‘B’:
| Group ‘A’ | Group ‘B’ | ||
| (a) | Giffen’s goods | (1) | Uses of commodities |
| (b) | Essential commodities | (2) | Keynes |
| (c) | Consumption | (3) | Primary function of bank |
| (d) | Consumption function | (4) | Inferior goods |
| (e) | Accept deposits | (5) | Money lender |
|
|
(6) | Inelastic demand | |
|
|
|
(7) | Luxurious commodities |
|
|
|
(8) | Dr. Marshall |
Answer in brief.
Explain the relationship between Income and Consumption.
Choose the correct answer :
When income increases consumption and saving will _________.
Distinguish between Average propensity to consume and Marginal propensity to consume.
Define 'or' explain the following concept.
Propensity to save
Give reason or explain the following statement
Demand for necessary goods is inelastic.
Answer the following question.
What is meant by autonomous consumption? Explain with the help of a diagram.
Suppose in a hypothetical economy, the income rises from ₹ 5,000 crores to ₹ 6,000 crores. As a result, the consumption expenditure rises from ₹ 4,000 crores to ₹ 4,600 crores. Marginal propensity to consume in such a case would be __________.
Answer the following question.
Which of the two, average propensity to consume or average propensity to save, can be negative, and why?
An economy is in equilibrium. From the following data calculate investment expenditure :
(i) Marginal propensity to consume = 0·9
(ii) Autonomous consumption = 200
(iii) Level of income = 10000
Answer the following question.
In an economy, investment increased by 1,100 and as a result of it income increased by 5,500. Had the marginal propensity to save been 25 percent, what would have been the increase in income?
Calculate the change in final income, if Marginal Propensity to Consume (MPC) is 0.8 and change in initial investment is ₹ 1,000 crores.
What will be APC when APS = 0?
If the income is ₹ 400 crores and consumption is ₹ 250 crores, what will be the APC?
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APC + APS = ?
Which or is true?
Which one is correct?
The value of MPC is ______
The relation between consumption and savings are ______
A consumer spending on the purchase of goods regardless of the income in possession is an example of _______ consumption.
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______ buy goods and services for consumption and also supply factors of production.
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Reason (R): Saving function refers to the functional relationship between saving and income.
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