Question # 1

Which of the following does not apply to pareto efficiency.

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Consumptive efficiency

Productional efficiency

Allocative efficiency

Equity

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

The Lorenz curve shows that

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unemployment does not affect social group

People with low income spend more

People with low income spend less

the degree of income equality in the economy

If there is no price surprise, total output is.

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50

150

400

200

The income effect of a price change

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Is always positive

Is always negative

May be positive or negative

Is associated with a change in nominal income

Suppose taht an exise tax is imposed on the monopolist's product if the monopolist's marginal cost is horizontally the relevant range, which of the following statements must be true.

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The price will increase by an amount less than the tax

The price will increase by an amount equal to the tax

The price will increase by a amount greater than tax

The price may either increase or decrease

If the estimated values of Y and Py in 1987 are Rs. 20,000 and Rs. 6 respectively, what is the maximum price of X.

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Rs.420

Rs.240

Rs.300

Rs.360

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

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

The long run is a time period that is.

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Five years or longer

Long enough to change the level of labor hired

Long enough to change the size of the firm's plant

Ten years or longer

The marginal rate of substitution of two goods can be obtain from

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Slope of budget line

Slope of demand curve

Slope of indifference curve

None of these

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

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Inelastic

Less elastic

More elastic

Undetermined

The firm under monopolistic competition is likely to produce less and set a higher price than under perfect competition because.

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The firm faces decreasing returns to scale

The firm faces increasing costs

The firm must incur selling expenses including advertising.

The firm faces a downward sloping demand curve

The price of salsa rises, How does the increase in the price of salsa affect the supply of salsa.

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The supply of salsa increases

The supply of salsa decreases

There is no change to either the supply of salsa or the quantity supplied of salsa

There is no change to the supply of salsa but the quantity supplied of salsa increases

Disposable income is equal to.

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National income

National income minus taxes plus transfers

Real GDP

National income Minus taxes

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

The largest source of tax revenue for the federal government is

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The prerenal income tax

The social security tax

the property tax

The sales tax

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

Skills that embodied in a person are called.

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Human capital

Embodied skills

Physical capital

Experience skills

As disposable income increases from Rs. 1500 to 2000 , saving increases from minus Rs. 50 to Rs.250 if the relationship between disposable income and saving is linear, the MPC obviously has a value of.

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.6

.8

.4

.2

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