IGNOU ECO 06 ECONOMIC THEORY Free Solved Assignment 2022-23

by

IGNOU ECO 06 Free Solved Assignment 2022-23, IGNOU ECO 06 ECONOMIC THEORY Free Solved Assignment 2022-23 If you are interested in pursuing a course in radio production and direction, IGNOU ECO 06 can be an excellent choice. In this article, we will take a closer look at what IGNOU ECO 06 is all about and what you can expect to learn from this course.

Important Links : Handwritten Hardcopy 

IGNOU ECO 06 Free Solved Assignment 2022-23 is a course offered by the Indira Gandhi National Open University (IGNOU) under the School of Journalism and New Media Studies. As the name suggests, it is a course on “Production and Direction for Radio.” The course is designed to provide students with a comprehensive understanding of radio production and direction and covers various topics related to this field. IGNOU ECO 06 Free Solved Assignment 2022-23

IGNOU ECO 06 Free Solved Assignment 2022-23

Q1. Explain the law of demand with the help of a demand schedule and a demand curve. Explain the exceptions to the law of demand using the distinction between substitution and income effects.

The law of demand is an economic principle that states that there is an inverse relationship between the price of a good or service and the quantity demanded of that good or service, ceteris paribus (all other things being equal). This means that as the price of a good or service increases, the quantity demanded of that good or service will decrease, and vice versa.

A demand schedule is a table that shows the quantity of a good or service that consumers are willing and able to purchase at different prices. For example, the following demand schedule shows the quantity of coffee that consumers are willing and able to purchase at different prices:

Price of Coffee | Quantity Demanded

$5 | 10 $4 | 20 $3 | 30 $2 | 40 $1 | 50

A demand curve is a graphical representation of the demand schedule. It plots the relationship between the price of a good or service and the quantity demanded of that good or service. The demand curve for coffee based on the above demand schedule would be downward sloping, indicating the inverse relationship between price and quantity demanded.

Exceptions to the law of demand occur when the relationship between price and quantity demanded is not inverse, but rather positive or neutral. There are two main exceptions to the law of demand: the Giffen goods and the Veblen goods.

Giffen goods are goods that are considered to be inferior goods, and their demand increases when their price increases. This occurs because consumers may be so poor that they cannot afford to purchase other, more expensive goods, and therefore have to allocate a larger portion of their income towards the inferior good. This results in a substitution effect that works in the opposite direction of the income effect, which leads to the exception to the law of demand.

Veblen goods are goods that are considered to be status symbols, and their demand increases as their price increases. This occurs because consumers view the high price of the good as a signal of its quality, exclusivity, or prestige. This results in an income effect that works in the opposite direction of the substitution effect, which leads to the exception to the law of demand.

In summary, the law of demand states that as the price of a good or service increases, the quantity demanded of that good or service will decrease, and vice versa. This relationship is demonstrated by a downward sloping demand curve. Exceptions to the law of demand occur when the relationship between price and quantity demanded is not inverse, but rather positive or neutral, and can be explained by the distinction between substitution and income effects.

Q2. What are the main determinants of Elasticity of Supply of a Commodity? Distinguish between Perfectly Elastic, Perfectly Inelastic, Unit Elastic, Inelastic and Elastic supply curves with the help of diagrams.

The elasticity of supply of a commodity is a measure of how responsive the quantity supplied is to a change in price. There are several factors that determine the elasticity of supply of a commodity, including:

Availability of raw materials: If raw materials are readily available, then producers can easily increase production to meet a rise in demand, and the supply is said to be elastic. However, if raw materials are scarce, then producers may not be able to increase production, and the supply is said to be inelastic.

Time horizon: The longer the time horizon, the more elastic the supply is likely to be, as producers have more time to adjust their production levels in response to changes in price.

Production capacity: If producers have excess capacity, then they can quickly increase production to meet a rise in demand, and the supply is said to be elastic. However, if production capacity is fully utilized, then producers may not be able to increase production, and the supply is said to be inelastic.

Ease of entry and exit: If it is easy for new firms to enter the market or for existing firms to exit the market, then the supply is likely to be more elastic, as producers can quickly adjust their production levels in response to changes in price.

Now, let’s take a look at the different types of supply curves:

Perfectly elastic supply curve: A perfectly elastic supply curve is a horizontal line, indicating that producers can supply any quantity at a given price, but are unable or unwilling to supply at a higher price. This occurs when the commodity can be produced by any number of producers, and they have no advantage over one another.

 

Perfectly inelastic supply curve: A perfectly inelastic supply curve is a vertical line, indicating that producers are unable or unwilling to change the quantity supplied at any price. This occurs when the commodity can only be produced by a single producer or if it is not possible to increase production in the short run.

 

Unit elastic supply curve: A unit elastic supply curve is a curve where the elasticity of supply is equal to one. This means that the percentage change in quantity supplied is equal to the percentage change in price. In other words, the quantity supplied is equally responsive to changes in price.

 

Inelastic supply curve: An inelastic supply curve is a curve where the elasticity of supply is less than one. This means that the percentage change in quantity supplied is less than the percentage change in price. In other words, the quantity supplied is not very responsive to changes in price.

 

Elastic supply curve: An elastic supply curve is a curve where the elasticity of supply is greater than one. This means that the percentage change in quantity supplied is greater than the percentage change in price. In other words, the quantity supplied is very responsive to changes in price.

 

In summary, the determinants of elasticity of supply of a commodity are availability of raw materials, time horizon, production capacity, and ease of entry and exit. The different types of supply curves include perfectly elastic, perfectly inelastic, unit elastic, inelastic, and elastic supply curves, which can be distinguished by their shape and the responsiveness of quantity supplied to changes in price.

Q3. State the Law of Diminishing Marginal Utility and its limitations. Is the Law of Diminishing Marginal Utility applicable to money? Explain your answer.

The Law of Diminishing Marginal Utility states that as a consumer consumes more and more units of a good or service, the satisfaction or utility derived from each additional unit consumed decreases, all else being equal.

The limitations of this law are:

  • It only holds true when all other factors remain constant. In reality, consumers’ preferences and incomes change, which can affect their marginal utility.
  • It assumes that the goods are homogeneous, i.e., there is no difference between the units of a particular good or service. However, in reality, there may be differences in quality, size, and other attributes that can affect the marginal utility.
  • The law also assumes that consumers are rational and make decisions based on their self-interest. However, consumers may have other motivations, such as social status, that can influence their decisions.

Regarding money, the Law of Diminishing Marginal Utility can be applied to it. As a person acquires more money, the marginal utility of each additional dollar earned or received typically decreases. This is because the person’s basic needs and wants are already met, and the additional money may be used for less essential or lower-priority goods or services. However, this is not always the case, as some people may value money for reasons beyond its purchasing power, such as the feeling of security or power it provides.

Q4. What is interdependence in an oligopolistic market? What kind of problems does it creates for oligopoly equilibrium?

In an oligopolistic market, interdependence refers to the fact that each firm’s actions affect the other firms in the market. This interdependence arises due to the small number of firms in the market, and their ability to impact the overall market equilibrium through their decisions.

The main problem that arises due to interdependence in an oligopoly is the difficulty in achieving a stable equilibrium. Each firm has to take into account the possible reactions of other firms when making decisions about prices, output levels, advertising, and other strategic choices. The firm’s profit depends not only on its own decisions but also on the decisions made by its competitors. Therefore, a change in one firm’s strategy can have a significant impact on the other firms’ profits and market share.

The interdependence also creates the possibility of strategic behavior, such as collusion, price-fixing, or other forms of anti-competitive behavior. Firms may engage in these practices to increase their profits at the expense of consumers or other firms in the market.

Moreover, the interdependence makes it difficult for new firms to enter the market, as the existing firms may respond aggressively to new entrants in order to protect their market share. This can lead to barriers to entry, which further exacerbate the concentration of the market.

Overall, interdependence in an oligopoly creates a complex and dynamic market environment, which can result in instability, anti-competitive behavior, and barriers to entry.

Q5. Write short notes on the following:

(a) Income Consumption Curve

The income consumption curve is a graphical representation of the relationship between changes in income and changes in consumption, assuming that all other factors remain constant. It is also known as the Hicksian demand curve.

The curve shows how an individual’s consumption of goods and services changes as their income increases or decreases. Generally, as income increases, consumption also increases, but at a diminishing rate. This means that as income rises, the marginal propensity to consume (MPC) decreases.

The income consumption curve is usually drawn as a straight line that slopes upward to the right. The slope of the line reflects the marginal propensity to consume, which is the change in consumption divided by the change in income. The steeper the line, the higher the MPC.

The income consumption curve is useful for understanding how changes in income affect an individual’s spending behavior. It is often used in macroeconomics to study how changes in income levels affect overall consumption patterns in the economy. It is also used in microeconomics to study how changes in income affect individual consumer behavior.

(b) Economies of Scale

Economies of scale refer to the cost advantages that arise when the production of goods or services increases in size or scale. In other words, as a company produces more units of a product, the cost of producing each unit tends to decrease.

There are several reasons why economies of scale occur. One reason is that fixed costs, such as rent, machinery, and advertising, can be spread over a larger number of units, reducing the cost per unit. Additionally, larger companies are often able to negotiate better deals with suppliers, which can further reduce costs.

Another reason why economies of scale occur is that as production increases, companies can become more efficient in their processes. For example, they may be able to use specialized equipment or hire specialized workers who can produce more output per hour, reducing the cost per unit.

Overall, economies of scale can be a significant advantage for companies as they grow and expand their operations. By reducing costs, companies can increase their profit margins, invest in new products or services, or pass on the savings to their customers in the form of lower prices.

(c) Non-competitive Wages

Non-competitive wages refer to salaries or wages that are not in line with the prevailing market rates for a particular job or occupation. In other words, it refers to the payment of wages that are below what other companies or industries are offering for the same type of work.

There can be several reasons why an employer may choose to pay non-competitive wages. For example, the company may be facing financial difficulties and may not be able to afford higher wages. Alternatively, the company may believe that it can attract and retain employees through non-wage benefits such as flexible working hours or better working conditions.

Non-competitive wages can have both positive and negative effects on employees and employers. On the one hand, non-competitive wages can be a disadvantage to employees who may feel undervalued and may be more likely to leave the company for better-paying opportunities. On the other hand, non-competitive wages can be an advantage to employers as they may be able to reduce their labor costs and increase their profits.

Overall, non-competitive wages can have a significant impact on the labor market and the economy. Employers need to carefully consider the potential consequences of paying non-competitive wages and weigh the costs and benefits of doing so. Employees, on the other hand, need to be aware of the prevailing market rates for their skills and experience and negotiate for fair compensation.

(d) Consumer’s Surplus

Consumer’s surplus refers to the difference between the maximum price that a consumer is willing to pay for a good or service and the actual price that they pay for it. In other words, it is the additional benefit that consumers receive beyond what they paid for a product or service.

For example, if a consumer is willing to pay $10 for a cup of coffee and the actual price they pay is $5, their consumer surplus is $5. This means that the consumer received $5 worth of benefit that they did not have to pay for.

Consumer’s surplus is an important concept in economics as it helps to measure the value that consumers derive from goods and services. It is often used in the analysis of market demand and pricing strategies. When consumers have a high consumer surplus for a particular product or service, it suggests that they place a high value on it and are likely to continue buying it at current or higher prices. Conversely, if consumers have a low consumer surplus for a product, it may indicate that they do not value it highly and may be less likely to buy it again in the future.

GET Handwritten Hardcopy 
All Over India Delivery 
WhatsApp – 8130208920

Leave a Comment