Question # 1

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.

In order to constitute an oligopolistic market structure.

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There must be a few firms in a given relevant market

There must be a few firms selling in a national market

There must be more than 20 firms selling in the international market

There must be fewer than 15 firm is any given market

Which of the following is correct with respect to the Paasche index.

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The consumer Price index is an example of the Paasche index.

The Paasche index is biased upward

The Passche index always exceeds 1

The Paasche index uses given period quantities

A monopolistically competitive firm differs from a perfectly competitive firming that unlike the perfectly competitive firm it.

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Faces a downward sloping demand curve

Can change the characteristics of its product.

Can vary the price of its product.

All of the above

If the prices 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 abut the Y axis

If X , Y, and Z are willing to work for Rs. 4, Rs, 5, and Rs.6 respectively but N pays them Rs. 7 each, producers surplus is.

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Rs. 4

Rs.7

Rs.5

Rs.6

A monolithically competitive market is characterized by all of the following except.

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Easy entry

Differentiated product

Excess capacity

Economic profit in the long run

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

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Less elastic

Very high elastic

Elastic

Perfectly inelastic

The demand for labor slopes down and to the right because of.

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The law of demand

The iron law of wages

The law of diminishing marginal returns

Economies of scale

when there is huge change in demand following method is used to measure elasticity of demand.

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Percentage method

Arc method

Point method

Other method

in monopolistic competition the firms desire to sell more output at the equilibrium because.

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Price is more than marginal cost

Price is less than marginal cost

Price is less than average cost

Price more than average cost

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

If a monopolist's has only fixed costs and chooses that output at which marginal cost equals price. it will

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Earn positive economic profits

Earn zero economic profits

Incur a loss equal to its variable costs

Incur a loss equal to its fixed costs

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

The key feature of oligopoly is.

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Excess capacity

High profitability

Product differentiation

Interdependence of firms

If the income elasticity of demand is +4

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The good is an inferior good

The good is an inelastic normal good

The good is an elastic normal good

the good is an elastic inferior good

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

The quantity of Y demanded increases by 6% when income changes, and income elasticity of demand is -0.9 income

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Decreased by 5.4 %

Decreases by 8%

Increased by 15%

Decreased by 6.7 %

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

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Perfect competition

Monopolistic competition

Oligopoly

Monopoly

Immediately after a through we would expect to have al

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Peak

Recession

Recovery

Another trough

The most important determinant of price elasticity is.

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The slope of the demand curve

The availability of substitutes

The price of other goods

The income of the consumer

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 the short run no firm operates with a loss unless

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Variable cost equals fixed cost

Variable cost falls short of fixed cost

Total revenue covers variable costs

Total revenue covers fixed cost

Labour has the following characteristics accept one.

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It cannot be separated form labourer

It cannot be stored

Its supply cannot be increase at once

Bargaining power of laborer is very strong

Economists tend to disagree primarily about.

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The implications of scarcity for our economy

Which resources are free

Topics in positive economics

Issues of normative economics

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