Question # 1

As long as the principle of diminishing marginal utility is operating any increased consumption of good.

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Lowers total utility

Produces negative total utility

Lower marginal utility and therefore total utility

Lowers marginal utility, but may raise total utility.

A price cross elasticity of 0.81 between X and Y shows that.

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They are complementary goods

They are competitive substitutes

They are not substitutes

a reduction in the price of one would cause an increase in the consumption of the other.

For a competitive firm the demand curve

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A horizontal

Coincides with the marginal revenue curve

Coincides with the average revenue curve

All of the above

When there is a surplus in a market

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There is downward pressure on price

There is upward pressure on price

The market could still be in equilibrium

There are too many buyers chasing too few goods.

Indifference curve has following characteristics except.

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Convex to origin

Intersect each other

Not necessary to be parallel

None of these

When oligopolistic firms interacting with one another each choose their best strategy given the strategies chosen by other firm in the market we have

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A cartel

The perfect competitive outcome

The Nash equilibrium

Monopolistic competiton

Average fixed cost

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Is U shaped

Declines over the entire output range.

Is a long run concept only

Is influenced by diminishing returns to production

The marginal rate of substitution for two goods can be obtained from

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The slope of the demand curve

The slope of the indifference curve

The ration of first derivative of the total utility functions

B and D both

The exit of firms out of a competitive market causes the supply curve to.

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Shift leftward

shift rights ward

None of the above for the exit of firms supply curve

shift either left or right depending on the number of firms leaving the market

Which of the following groups is most hurt by unexpected inflation.

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Workers with cost of living adjustments in their labor contracts

Home owners

People with large debts to pay for their homes and cars

People with large retirement savings held in savings accounts.

The demand for labor slopes down and to the right because of.

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The law of demand

The iron law of wages

The law of diminishing marginal returns

Economies of scale

The Marginal cost of product W exhibiting positive externalities is McW = 25 + 5 Qs, the competitive price for each unit of W (Pw) is Rs. 175 and the positive externality is worth Rs. 100 to society for each unit produced. Society considers product W under produced by how many units.

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10 Units

15 Units

20 Units

5 units

The demand curve of unitary elastic commodity is.

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Rectangular hyperbola

Parabola

Straight line

None of these

The expected profit from the profit distribution above is.

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40 units

60 units

100 units

20 units

The market demand for a product is found by

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Horizontally summing the individual demand curves

Vertically summing the induvial demand curves

Both horizontally and vertically summing the individual demand curve.

None of the above

Under perfect competition, the price system automatically result in efficient output selection when

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MC = MR

MC = MU

P = ATC

P > AVC

Indifference curve approach is also called.

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Law of diminishing marginal utility

Law of substitution

Ordinal measure approach

None of these

A production function for a firm which produces a product with two or more inputs.

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Represents a physical relationship between outputs for a specified set of inputs

Indicates the least cost combinations of inputs for a given output

Relates revenues and costs

Indicates the dollar cost for each level of ouput.

The price elasticity of demand is teh same thing as the negative of the

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Slope

Reciprocal of slope

The first derivative of the demand function

Reciprocal of slope times the ratio of price to quantity

The elasticity of demand for cigarettes by a non smoker is.

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Unitary price elastic

Relatively price elastic

Perfectly price elastic

Perfectly price inelastic

In perfect competition there is.

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Many buyers

Many sellers

Homogeneous product

All of these

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