Illustrate out with the aid of a diagram, the effect on the consumer’s equilibrium, of a raise in the price of commodity X while consumer’s money income and price of commodity Y remains unchanged.
If the government intends to restore the consumer’s current welfare to its original level, illustrate out how the process of income compensation would proceed to realise that objective.
Define and illustrate out, using diagrams, consumers’ surplus; producers’ surplus and total surplus that a society can derive from consumption and production of the good at a specific price.
Illustrate out why these surpluses are maximised at the equilibrium price and output only in a purely competitive market.
Illustrate out inflation and discuss its origin using Keynesian and Classical theories.
Illustrate out with diagram how can inflation occur in the economy with substantial unemployment of factors of production.
Comment on the effects of inflation in economy and the measures to control inflation.