(a) Discuss the nature and scope of business
(b) Explain the concept of income
elasticity of demand and mention its practical significance.
2. (a) Explain the law of variable proportions
(b) Explain the internal and external
economics of large-scale production.
3. (a) Discuss Cyert-March hypothesis of
Satisfying Behaviour as an objective of modern business firms.
(b) Write the features of perfect
competition. Explain the process of price-output determination, under perfect
competition in the long-run.
4. (a) Explain the process of wage rate
determination in a perfectly competitive labour market.
(b) Discuss the Ricardian theory of rent
determination and mention some of the criticisms of the theory.
5. (a) Discuss the Loanable Fund theory of
interest. Is it an improvement over the Classical theory of interest?
(b) Distinguish between normal profit
and supernormal profit. Explain Schumpeter’s Innovation
theory of profit.