Can i get some value based questions..??

Some of the sample value based questions are as follows.

Q.1 Suppose a new coal mine is discovered in Chattisgarh. How will this affect the Production Possibility curve?

Ans. The discovery of new coal mine implies that the resource endowment for India has increased. This further implies that India can produce more of every good that requires coal as input. In other words, with the increase in the total coal resources the production of one good can be increased without sacrificing the production of any other good. Thus, the Production Possibility Curve will shift parallely outwards.

Q.2 Due to rising house rents in a city, a lot of people are not able to afford housing in the city.  To ease the situation, the government decides to impose a price ceiling on the rents. With this move will more people be able to get housing facilities?

Ans. No. the imposition of ceiling on rent will not ease the situation. Imposition of ceiling on rent lowers the rent below the market price. As a result, housing will become affordable and the demand for housing will increase. On the other hand, lower rent discourages people to offer houses on rent. That is, the availability of houses offered for rent falls. Consequently, there emerges a gap between the demand for housing and the availability of housing.  This further worsens the situation and people will still not be able to get housing facilities.

Q.3 To control the consumption of cigarette in the country, the government imposes a sales tax on cigarettes. Do you think this would affect the demand for cigarettes?  Give reasons.

Ans. Imposition of sales tax on cigarettes implies that the price of cigarettes increases. However, even with the rise in price the demand for cigarettes will not be affected much. This is because such goods have inelastic demand. People are habitual of such goods and cannot reduce their consumption. Thus, imposition of sales tax will have little impact on the consumption of cigarettes.

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