1. “The definition of cost is quite different for the economist than for an accountant”. Discuss with the help of an income statement calculating both accounting as well as economic profit.

2. “Market demand curve is the total of the quantities demanded by all individual consumers in an economy at each price”. Show the derivation of market demand curve diagrammatically.

3. Explain the following concepts briefly:

(a) Price Elasticity of Demand

(b) Arc Elasticity of demand

4. Explain the relationship between Average Product, Marginal Product, and Average Variable Cost, Marginal Cost with the help of diagrams.

5. “Perfect competition and monopoly are two extreme market conditions which we rarely come across in real world of business”. Discuss their relevance in today’s business world.

6. Write short notes on the following:

(a) Product Differentiation

(b) Discounting Principle

(c) Returns to Scale