Question # 1

Projects A,B,C,D,E cost Rs. 100, Rs, 200, Rs. 300, Rs. 400, and Rs. 500 with MEC's of 0.07, 0.06,0.09 ,0.10 and 0.11 respectively. The market rate of interest is 8% Total investment spending is

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Rs. 1500

Rs.1300

Rs.1200

Rs.300

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

A drop in the price of compact disc shifts the demand curve for prerecord tapes leftward from that you know that compact discs and precorded tapes are.

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Inferior goods

Substitutes

Complements

Normal goods

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

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

In perfect competition, a seller by increasing price.

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Sell more

Produce its revenue

Decrease cost

Sell nothing

A typical demand curve cannot be

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Rising upwards to the right

A straight line

Concave to origin

Convex to origin

An elasticity coefficient of -1 means that

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The demand curve is perfectly inelastic

The demand curve is parfectly elastic

The relative changes in price and quantity are equal

Expenditures on the good would increase if price were reduced.

The downward kinked demand curve facing the individual oligopolistic implies that

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He face price certainlty

Competitors have a tendency to follow price decreases but not price increase

Total revenue remains same if a firm increases price

None of these

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

A normal good can be defined as one which consumers purchase more of as.

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Price fall

Price rise

Income fall

Incomes increase

If the price of both goods increase by the same percent , the budget line will.

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shift parallel to the left

Shift parallel to the right

Pivot about the x axis

Pivot about the Y axis

The average total cost of a wedge increases from Rs. 0.79 ro Rs. 0.83 Evidently

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AFC exceeds AVC

MC is between Rs. 0.79 and Rs. 0.83

AVC is Rs. 0.83

MC is greater than Rs. 0.83

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

Firm A's margin of safety is.

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0.10

0.40

0.20

0.30

The arc elasticity formula is used to estimate elasticity when

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The product is thought to be inelastic

The product is thought to be elastic

The demand function is known

There are two observations of price and quantity

Which of the following would cause the demand curve for an input to shift.

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A change in technology

A change in demand for the product being produced

An increase in the number of firms in the industry

All of the above

In monopolistic competition firm sell

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Same goods

Differential goods

Inferior goods

Superior goods

An economy that falls to realize all of its p9otential gains from specialization is.

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Achieving productive efficiency

Operating outside its production possibilities curve

Operating on its production possibilities curve in an inefficient manner

Operating inside its production possibility curve

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

If there is no price surprise, total output is.

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50

150

400

200

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