Question # 1

The income elasticity of inferior goods is

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Zero

Positive

Negative

Unitary

Elasticity of demand of luxurious goods is always more elastic

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More elastic

Less elastic

Equal elastic

None elastic

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

Law of variable proportion is also called.

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Law of non proportion returns

Law of substitution

Law of casts

Law of demand

"Principles of economics" is the book of

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Robbins

Adam smith

Hicks

Marshall

In Production of goods and services tradeoffs exist becasue.

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Buyers and sellers often negotiate prices

Society has only a limited amount of productive resources

Not all production is efficient

Human wants and needs are limited at a particular point in time

In perfect competition, a seller by increasing price.

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Sell more

Produce its revenue

Decrease cost

Sell nothing

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.

In contract to perfectly competitive markets monopolists

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Do no have to worry about market demand

Sell only if demand is inelastic

Can never incur an economic loss

Can earn an economic profit indefinitely

In the short run the competitive firm will produce if.

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Price is equal to marginal cost

Price is equal to marginal revenue

Price is equal to total cost

Price is equal to are greater than average variable cost.

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

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Price

Cost

Output

Revenue

When oligopolistic firms interacting with one another each choose their best strategy given the strategies chosen by other firms in the market we have.

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A cartel

The perfect competitive outcome

The Nash equilibrium

Monopolistic competition

The price elasticity of demand will increase with the length of the period to which the demand curve pertains because.

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Consumers incomes will increase

The demand curve will shift toward

All prices will increase over time

Consumers will be better able to find 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

A demand curve that is an equilateral hyperbola is.

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Perfectly elastic

Relatively elastic

Unit elastic

Relatively inelastic

For a competitive firm the demand curve

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A horizontal

Coincides with the marginal revenue curve

Coincides with the average revenue curve

All of the above

If there is no price surprise, total output is.

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50

150

400

200

According to Keynes, when the great depression started the government should be.

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Done nothing

Decreased the money supply

Had a large increase in government spending.

Enacted high tariffs such as the smoot Hawley tariff

Which of the following does not characterize monopolistic competition.

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Product differentiation

Many producers

Absence of advertising

Some control over price

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 demand for labor is the same as the

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Marginal revenue product

Marginal physical product

Marginal cost

Wage

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