DCM1107 ECONOMIC THEORY JAN FEB 2026

Description

SESSION	JAN-FEB 2026
PROGRAM	BACHELOR OF COMMERCE (B.COM)
SEMESTER	I
COURSE CODE & NAME	DCM1107 ECONOMIC THEORY

 

Set – 1

 

Q.1. Elucidate the differences between Micro and Macro Economics. (10 Marks)

Ans 1.

Micro and Macro Economics

Economic research is generally divided into two branches. These are Microeconomics and Macroeconomics. Both of them study the economy however from different perspectives. Recognizing the different aspects of each aids in analyzing economic issues much more effectively.

Microeconomics

Microeconomics deals with the financial behavior of specific parts. They could be consumer

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JAN-FEB 2026

 

Q.2. Examine the Factors affecting Supply of a product. (10 Marks)

Ans 2.

Factors Affecting Supply

Supply refers the number of a good or service which producers are willing and are able to provide for sale with different prices for a given period of time. Supply is not determined just by price. Many other variables affect how much an individual producer is prepared to sell on the market.

Price of the Product

Price is the main influence on supply. When the cost for a particular product goes up producers

 

Q.3. Explain the concept of the Law of Demand and illustrate its applications with suitable examples. (4+6 = 10 Marks)

Ans 3.

Law of Demand

Demand law is a basic principle of economics. It says that when the price for a product is increased, the value requested by customers decreases and when the cost falls then the amount demanded increases. The inverse relationship between the demand and price is valid in the event that all other elements remain the same. The term “ceteris” means paribus. Demand law can be

 

Set – 2

 

Q.4. Discuss the Loanable Funds Theory of Interest in detail. (10 Marks)

Ans 4.

Loanable Funds Theory of Interest

The Loanable Funds Theory is a method of explaining the rates of interest. It was created by economists including Wicksell, Ohlin, Robertson, and other experts. It states that the rate of interest is determined by the demand for loanable funds in the money market. The term “loanable” refers to funds that can be used for lending and borrowing in the economy.

Supply of Loanable Funds

The supply of loanable funds is derived from a variety of sources. Businesses and household

 

Q.5. Describe the Subsistence Theory of Wages and its basic assumptions. (10 Marks)

Ans 5.

Subsistence Theory of Wages

The Subsistence Theory of Wages is one of the first theories in economics. The theory was developed by the classical economists such as David Ricardo and Thomas Malthus. The theory states that wages typically settle at a level that is just enough to allow workers to survive and maintain their families. The minimum amount of money necessary for survival in the bare

 

Q.6. Describe the Modern Theory of Rent and its main assumptions. (10 Marks)

Ans 6.

Modern Theory of Rent

The Modern Theory of Rent was developed in the late 19th century by Alfred Marshall and other neo-classical economists. As opposed to the classic belief that rent is only applicable to land, the new theory is much broader. The theory says that rent could be earned by any aspect of production, and not only land. Modern theory defines rent as the extra amount an entity earns over its earnings from transfer. Transfer earnings constitute the bare minimal income that a