Question # 1

Suppose an individual spends all his income on only two goods, good X and good Y moreover suppose that you were asked to derive his price consumption curve for good Y Which of the following would be allowed to very.

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Money income

The tastes of the consumer

The price of good X

The price of good Y

In price discrimination, which section of the market is charged the higher price.

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The section with the richest people

The section with the oldest people

The section with the most inelastic demand

The section with the most elastic demand

Which of the following is not a basic assumption of perfect competition.

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Free entry and exit

Many small sellers and buyers

Perfect information

Short run

Which of the following is a characteristic 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 quality price and marketing

When firms are free is enter and exit the market

If a tax of Rs. 6 per units is imposed upon the suppliers, then.

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Tax revenue will equal Rs. 108

Price increases by Rs. 4

Quantity decreases by 4 units

Producers pay Rs. 36

A firm A's break even quantity is.

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10 units

40 units

50 units

30 units

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 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

The demand curve of unitary elastic commodity is.

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Rectangular hyperbola

Parabola

Straight line

None of these

Some goods are not closely related to each other and are neither substitutes nor complements for such goods the cross price elasticity of demand would be.

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Positive

Negative

Zero

Cannot tell without more information

If a good is normal then the demand curve for that good must be.

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Downward sloping

Upward sloping

Perfectly elastic

Completely inelastic

Price elasticity at a given price is not affected by.

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The price of complements

The price of substitutes

The consumer's income

A change in supply

The total utility of the third unit of product x is.

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10

5

23

38

If a monopolist's demand curve is downward sloping and linear, then its total revenue curve must be.

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Identical to the demand curve

A ray from the origin with a slope equal to price

negative sloped with twice the slope of the demand curve

A rising function of output that increases at a decreasing rate , reaches a maximum, then falls.

The income elasticity of demand

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Is negative for normal goods

Is positive for normal goods

Equals the relative change in demand for a good divided by the relative change in the iincome of consumers all else being equal

Is correctly described by all of the above

When the demand curve is vertical its shows that the demand is.

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Less elastic

Very high elastic

Elastic

Perfectly inelastic

Which of the following does not apply to pareto efficiency.

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Consumptive efficiency

Productional efficiency

Allocative efficiency

Equity

The "Law of demand" states that other things remaining the same the quantity demanded of any good is.

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Directly related to its price

Positively related to its price

Inversely related to its price

Directly elated to the supply of the good

If the government lower taxes by $10 billion, the Real GDP will rise by

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More than $10 billion

Less than $10 billion

Exactly $10 billion

None of these

Which of the following does not characterize monopolistic competition.

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Product differentiation

Many producers

Absence of advertising

Some control over price

The "Law of demand" most directly means that consumers buy

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More of a good the higher their incomes, ceteris paribus.

Less of good the higher its price ceteris paribus

Buy more of a good the less is its supply ceteris paribus

Buy less of a good the greater is its supply ceteris paribus

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