Question # 1

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

Firm A's margin of safety is.

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0.10

0.40

0.20

0.30

Which of the following will not be a determinant of the price elasticity of demand for a commodity.

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The absence of substitute for the good.

The presence of substitutes for the good.

The importance of the commodity in consumers budgets

The cost of producing the commodity

A consumer is said to be in equilibrium when the marginla utility and price of a commodity

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More

Less

Irrelevant

Equal

If A is preferred to B and B is preferred to C and there is indifference between A and D

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D is preferred to C

B is preferred to D

There is indifference between C and D

There is indifference between B and D

MC = MR= AR=AC = Price shows the longs run

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Monopolist firm

Oligopolistic firm

Competitive firm

Both a and b

If average variable cos tis less then marginal cost then certainly.

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Per unit total cost is rising

Per unit total cost is constant

Per unit total cost is falling

Per unit variable cost is rising

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

A monopoly market.

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Generally falls to maximize total economic well being.

Always maximizes total economic well being.

always minimizes consumers surplus

Generally falls to maximum produce surplus

When due to change in price of commodity x demand of commodity y is charged it is called.

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Income elasticity

Price elasticity

More elastic

Cross elasticity

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

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 will be more elastic if

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There are few substitutes for labor

There is a shor time under consideration

Labor is a large percent of the total cost of production

The demand for the product is relatively inelastic

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

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

Firms in monopolistic competition compete on

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Price

Quality

Advertising

All of the above are correct

When the price of an inferior goods falls ceteris paribus the substitution effect leads to ________ in the quantity purchased and the income effect leads to _______ in the quantity purchased.

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An increase an increase

An increase, a decrease

A decrease, an increase

A decrease, a decrease

In perfect competition price is settled by

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Sellers

Buyers

Producers

Both a and b

As long as all prices remain constant an increase in money income results in.

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An increase in the slope of the budget line

A decrease in the slope of the budget line

An increase in the intercept of the budget line.

a decrease in the intercept of the budget line.

Foundation of law of demand is.

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Law of diminishing marginal utility

Law of substitution

Law of increasing return to scale

Law of diminishing marginal rate of substitution.

In a typical cartel agreement the cartel maximizes profit when it.

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Behaves like a monopoly

Behaves like a perfectly competitive firm

Behaves like a duopoly

Is flexible in enforcing production targets

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