Question # 1

As the opportunity cost of a good falls, ceteris paribus the substitution effect implies that people buy

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Less of the good and more of its substitutes

More of that good and less of its substitutes

Less of that good and less of its substitutes

More of that good and more of its substitutes

The Isoquant curve shows different combinations of two factors of production which give the producer.

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Different level of output

High level of output

low level of output

Same level of output

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

An -increase the expected future price of a good.

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Increases its demand

Decreases its demand

Increases its supply

Has no effect on either its demand or its supply.

What is the per unit marginal cost of increasing production from 20 to 25 units.

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Rs. 3,500

Rs.100

Rs.4,000

Rs.500

Which of the following correct about firms in an oligopoly.

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Each firm has complete control over its own selling price

All firms independently charge monopoly prices

No one firm controls price but each has an influence on the price

There is no competition in oligopoly industries

The competitive firm maximizes its profit by operating where

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Average costs are at a minimum

Total revenue is at a maximum

Profit per unit is at a maximum

Marginal cost equals price

Which of the following does not characterize monopolistic competition.

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Product differentiation

Many producers

Absence of advertising

Some control over price

For commodities, X and Y, the possibilities are X is preferred to Y , Y is preferred to X or X and Y are equally preferred, In indifference curve analysis, this is known as the.

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Comparability assumption

Transitivity assumption

Non seriation assumption

Reflexivity assumption

Extension and contraction of demand mean

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Movement on the same demand curve

Movement to high demand curve

Movement to lower demand curve

Movement to another demand curve

When the price of a pizza decreased from 1200 Rupees to 1000 Rupees, it is definitely the case that the.

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Income effect means people buy less pizza

Substitution effect means people buy more pizza

Quantity demanded of pizza will not change

None of the above

The short run supply curve for a competitive industry is derived by.

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Horizontally summing the marginal cost curves for each firm in the industry

Horizontally summing the average variable cost curves for each firming the industry

Vertically summing the marginal cost curves for each firm in the industry

None of the above

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.

Which of the following is a characteristics of monopolistic competition.

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One seller serving the entire market

When each firm sells an identical product

When firms do not compete on a product's quality price and marketing.

When firms are free to enter and exit the market

Because a monopoly hires workers up to the point where their marginal revenue product equals the wage rate the monopoly will.

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Pay less than the going wage rate

Pay a wage equal to the value of the marginal product of labor

Pay less than the value of the marginal product of labor

Pay workers what they are worth to society

A utility contour shows all the alternative combinations of two consumption goods that.

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Can be produced with a given set of resources and technology

Yield the same total of utility

Can be purchased with a given budget at given prices

Equate the marginal utilities of these goods and therefore make the consumer indifferent between them.

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

A Market situation where the number of buyers is very large and the number of sellers are very small is called.

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Perfect competition

Duopoly

Oligopoly

In perfect competition

If the demand curve for a good is downward sloping then the good must be.

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Normal

Inferior

Giffen

Either a or b

A monopolist who is charging high price operates on.

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inelastic part of demand curve

Elastic demand of part curve

Ignore elasticity

More elastic demand of part curve

Which of the following will not be a determinant of the price elasticity of demand for a commodity.

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The absence of substitute for the good.

The presence of substitutes for the good.

The importance of the commodity in consumers budgets

The cost of producing the commodity

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