Question # 1

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

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

The income effect of a price change

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Is always positive

Is always negative

May be positive or negative

Is associated with a change in nominal income

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

Which of the following does not apply to pareto efficiency.

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Consumptive efficiency

Productional efficiency

Allocative efficiency

Equity

The ABC corporation.

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Is earning a pure economic profit

Should produce zero units of output

Is sustaining an economic loss

Is breaking even

A typical demand curve cannot be

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Rising upwards to the right

A straight line

Concave to origin

Convex to origin

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

In capitalistic economy price is determined by

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Supply and production

Demand and production

Demand and consumption

Demand and supply

Disposable income is equal to.

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National income

National income minus taxes plus transfers

Real GDP

National income Minus taxes

If there is no price surprise, total output is.

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50

150

400

200

The "Law of demand" states that other things remaining the same the quantity demanded of any good is.

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Directly related to its price

Positively related to its price

Inversely related to its price

Directly elated to the supply of the good

In the long run a profit maximizing firm will choose to exit a market when

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Fixed costs exceed total costs

Total revenue from production is less than total costs

Average fixed cost is rising.

Marginal cost exceeds marginal revenue at the current level of production.

Immediately after a through we would expect to have al

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Peak

Recession

Recovery

Another trough

The firms average variable cost of the 150th unit is.

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Rs.15

Rs.17

Rs.20

Rs.9

If A, B, C and D are any four market baskets, and if the consumer has ranked them so that D is preferred to C, A is hot preferred to B, and B is not preferred to c then.

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A is preferred to C

A is preferred to D

B is preferred to D

D is preferred to A

If a simultaneous and equal percentage decrease in the use of all physical inputs leads to a larger percentage decrease in physical output a firm's production function is said to exhibit.

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Decreasing returns to scale

Constant returns to scale

Increasing returns to scale

Diseconomies of scale

If both supply and demand for a good increase at the same time which of the following must also increase

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The equilibrium price

The use of substitutes

The equilibrium quantity

All of the above

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.

An increase in price causes an increase in total revenue when.

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Demand is elastic

Demand is inelastic

Demand is unit elastic

All of the above are possible

A firm's total revenue is Rs. 4,500 when it sells 15 pairs of boots compared to Rs. 4,480 when it sells 14 pairs,. The marginal revenue of the 15th pair of boots is.

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Rs.20

Rs.320

Rs. 4,480

Rs.300

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