Easy Indian Economics GK Questions and Answers

There is freedom of entry and exit. Sellers have perfect knowledge about the market conditions. They are price taker. Price Elasticity of Demand of a firm is Infinite which means demand curve for Perfect competition is a Perfectly Elastic.

A change in the price of a good does not shift the demand curve. Instead, it causes a movement along the demand curve.

Price discrimination is practiced based on the seller's belief that customers in certain groups can be asked to pay more or less based on certain demographics or on how they value the product or service in question.

The supply of labour also depends on the proportion of working population in the total labour force. This partly depends on the minimum age at which a person can join the labour force and engage in full time employment.

The consumption function is an economic formula that measures the relationship between income and total consumption of goods and services in the economy. The consumption function was introduced by John Maynard Keynes.

Since all firms in perfect competition sell identical products and face the same market price, the market demand curve is determined by horizontally summing the individual firm's demand curves. Therefore, the market demand curve coincides with the demand curve of a single firm in perfect competition.

Supply curve is the curve which shows the quantity of products a seller wishes to sell at a given price level. Supply curve projects different level of goods which can be suppliied by the producers at different levels.