Question # 1

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

Naveed purchases product M for which his income elasticity of demand is negative Apparently product M is.

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A necessity

An independent good

An inferior good

A luxury good

Price discrimination is possible

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Oligopoly

Duopoly

Perfect competition

Monopoly

Marginal cost is the change is cost the result from a one unit increase in.

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Price

Cost

Output

Revenue

Which of the following does not apply to pareto efficiency.

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Consumptive efficiency

Productional efficiency

Allocative efficiency

Equity

If the production function is Q = 8 KL the marginal rate of technical substitution of labor for capital is.

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8

K/L

L/K

B/KL

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

A demand curve shows that relation between price and demand.

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Positive

Negative

Zero

Very strong

A consumer is said to be in equilibrium when the marginla utility and price of a commodity

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More

Less

Irrelevant

Equal

When the demand curve is a straight line the elasticity of demand at the center point will be.

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Equal to zero

infinite

More than one

Equal to one

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

In a typical cartel agreement the cartel maximizes profit when it.

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Behaves like a monopoly

Behaves like a perfectly competitive firm

Behaves like a duopoly

Is flexible in enforcing production targets

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

Firm A's annual profit is.

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Rs.10,000

Rs.20,000

Rs.30,000

Rs.60,000

If a monopoly is unable to cover its short run variable costs, if should.

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Shut down

Raise price

Lower price

Increase output

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.

The supply curve of a monopolist is always.

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More elastic

Less elastic

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Steeper

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

When due to change in price of commodity x demand of commodity y is charged it is called.

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Income elasticity

Price elasticity

More elastic

Cross elasticity

Allocative efficiency is achieved under which of the following market structures.

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Perfect competition

Monopolistic competition

Oligopoly

Monopoly

At level of income and output of 100 in the diagram above

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APC < 1

Equilibrium occurs

Consumption expenditures are equal to 100

MPC > APC

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