Question # 1

If Supply and demand both decrease simultaneously. Which of the following will happen.

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Price will rise

Quantity sold will rise

Price will fall

Quantity sold will decrease

Economists tend to disagree primarily about.

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The implications of scarcity for our economy

Which resources are free

Topics in positive economics

Issues of normative economics

Firms entering a perfectly competitive market will cause the price of the product to

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Decrease

Increase

Remain constant

Respond more to consumer demand than supply

When the price of an inferior goods falls ceteris paribus the substitution effect leads to ________ in the quantity purchased and the income effect leads to _______ in the quantity purchased.

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An increase an increase

An increase, a decrease

A decrease, an increase

A decrease, a decrease

The conditions necessary for a firm to be able to price discriminate include.

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Segment able markets

Difference in price elasticity of demand among the segments

The inability of customers to transfer products

All of the above

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.

If average fixed cost is 40 and average variable cost is 80 for a given output we the know that average total cost is.

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40

¹²⁰

80

None of the above

The supply curve of a perfectly competitive firm

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Includes the upward sloping portion of the marginal cost

Is equal to entire margin cost

Includes the downward sloping portion of marginal cost

None of these

A profit maximizing monopolist in two separate markets will

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Charge different price according to elasticity

Charged same price

Charged very high price

Charged very low price

The same graph shows that the firm order to maximize profits , should produce.

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30 units charges a price of Rs. 16

20 Units and charge a price of Rs. 22

35 Units and charge a price of Rs. 12

38 units and charge a price or Rs. 10

Skills that embodied in a person are called.

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Human capital

Embodied skills

Physical capital

Experience skills

A normal good can be defined as one which consumers purchase more of as.

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Price fall

Price rise

Income fall

Incomes increase

BATA's marginal utility per dollars is .8 for both shorts and running shoes,. To attain her consumer equilibrium BATA should.

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Buy an additional pair of shorts

Buy an additional pair of both items

Possibly not make any adjustment in her behavior

Sell her shorts and keep her shoes

When goods are compliments the cross demand curve

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Upward to the right

Backward to bottom

Inwards to the right

Downwards to right

The negative slope of the demand curve indicates that there is _______ relationship between the price and the quantity demanded.

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A direct

An inverse

A positive

No relationship

Projects A,B,C,D,E cost Rs. 100, Rs, 200, Rs. 300, Rs. 400, and Rs. 500 with MEC's of 0.07, 0.06,0.09 ,0.10 and 0.11 respectively. The market rate of interest is 8% Total investment spending is

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Rs. 1500

Rs.1300

Rs.1200

Rs.300

the ouput where diminishing return to production begin is also the ouput where

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Marginal cost is at a minimum.

Average total cost is at a minimum

Average variable cost is at a minimum

Marginal and average

In a perfectly competitive market if firms are earning an economic profit the economic profit.

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Attracts entry by more firms, which lowers the market price

Can be earned both in the short run and long run

Is less than the normal profit

Leads to a decreases in market demand

In monopolistic competition, firms desire to sell more output at equilibrium because.

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Price is greater than average cost

Price is greater than average variable cost

Price is greater than marginal cost

Price is equal to marginal revenue

If leisure is an inferior good the individuals supply curve for labor is.

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Back ward bending

Completely inelastic

Upward sloping

Perfectly elastic

In the short run, the supply of farm commodities is.

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Inelastic

Less elastic

More elastic

Undetermined

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