Peaches and nectarines are substitute goods, and both are produced under conditions of competitive long-run equilibrium. Joyce, a producer in the peach industry, discovers a technological breakthrough that only reduces the cost of producing peaches. Explain how the change in technology will affect each of the following for Joyce.

1. Quantity of peaches produced

2. Price of peaches

3.Short-run profits Now assume that all other peach-producing firms adopt the new technology. Explain how the adoption of the new technology will affect each of the following in the peach-producing industry.

4.Price of peaches

5. Quantity of peaches produced This new technology is not applicable to the production of nectarines. Explain how the changes that occurred in the peach industry will affect each of the following in the nectarine industry.

6.Price of nectarines

7.Quantity of nectarines

1. Explain the innovation theory of profit.

11. What are the diseconomies of scale? Explain with illustrations

2. Discuss the different concepts of national income, How is national income estimated.

3. Compare and contrast the Classical and Keynesian Theory of income, output and employment.

4. Distinguish between quantitative and qualitative methods of credit control. Discuss quantitative methods elaborately.

5.Critically examine the principle of maximum social advantage.

6. Distinguish between cost-push and demand-pull inflation. Discuss the different effects of inflation.

7. If D=100-3p and S=50+2p calculate the equilibrium price and the quantity, When a specific tax of Rs. 3 per unit is levied calculate the new equilibrium price and the quantity.

8. Define the elasticity of the Total cost. Prove that the elasticity of the average cost is equal to the elasticity of the total cost minus one.

9. The long run cost functions of a firm is C=q3 - 4q2+8q. Prove that MC=AC at the minimum point of MC.