Question # 1

Which of the following is an automatic stabilizer.

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Unemployment benefits

Spending on education

Defense spending

Net interest

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

Given a proportional income tax and a government budget that is currently in balance, an increase in autonomous investment ceteris paribus, Increases equilibrium income and the budget.

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Remains is balance

Has a surplus

Has a deficit

None of these

Indifference curve is alwyas.

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Vertical

Horizontal

Concave

Convex

In pure monopoly there is.

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A lot of firms

Two firms

A single firm

Many firms

The monopolization of the competitive market results in a deadweight loss to society of

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RSJK

JKL

THJ

RSJL

Which of the following is a function of money

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Medium of exchange

Store of value

Unit of accounting

All of the above

A price decrease and an increase in income are similar in that

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Both force the consumer to achieve a lower level of well being

Both force the consumer to reach a lower indifference curve

Both move the budget line outward

^{They are not similar at all}

Which of the following groups is most hurt by unexpected inflation.

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Workers with cost of living adjustments in their labor contracts

Home owners

People with large debts to pay for their homes and cars

People with large retirement savings held in savings accounts.

As long as the principle of diminishing marginal utility is operating any increased consumption of good.

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Lowers total utility

Produces negative total utility

Lower marginal utility and therefore total utility

Lowers marginal utility, but may raise total utility.

If a firm which polluted the water of area had to pay all social cost would have

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Small output

Large output

Heavy output

B and C

Skills that embodied in a person are called.

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Human capital

Embodied skills

Physical capital

Experience skills

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

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

In the short run a competitive firm's supply curve is.

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Its average variable cost cure to the right of the marginal cost curve.

Its marginal cost curve above the average variable cost curve.

It marginal cost curves above its average cost curve.

The horizontal summation of the marginal cost curves

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 demand for labor is the same as the

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Marginal revenue product

Marginal physical product

Marginal cost

Wage

The marginal rate of substitution for two goods can be obtained from

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The slope of the demand curve

The slope of the indifference curve

The ration of first derivative of the total utility functions

B and D both

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.

A demand curve that is an equilateral hyperbola is.

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Perfectly elastic

Relatively elastic

Unit elastic

Relatively inelastic

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