Question # 1

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

Suppose an individual spends all his income on only two goods, good X and good Y moreover suppose that you were asked to derive his price consumption curve for good Y Which of the following would be allowed to very.

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Money income

The tastes of the consumer

The price of good X

The price of good Y

Which of the following taxes is regressive

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The federal income tax

The state income tax

The sales tax

The Medicare tax

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

A firm charges Rs. 800 for its unique word processor. If total revenue is Rs. 56,000 in July, how many word processor were sold that month.

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70

95

700

800

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

The short run supply curve for a competitive industry is derived by.

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Horizontally summing the marginal cost curves for each firm in the industry

Horizontally summing the average variable cost curves for each firming the industry

Vertically summing the marginal cost curves for each firm in the industry

None of the above

Immediately after a through we would expect to have al

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Peak

Recession

Recovery

Another trough

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

Firms in monopolistic competition compete on

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Price

Quality

Advertising

All of the above are correct

In perfect competition price is settled by

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Sellers

Buyers

Producers

Both a and b

Which of the following is a characteristic of monopolistic competition.

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One seller serving the entire market

When each firm sells an identical product

When firms do not compete on a product quality price and marketing

When firms are free is enter and exit the market

A demand curve is not related to

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The time period

The price of the commodity

The price of substitution

Any of above

To maximize revenue, an excise tax should be imposed on a product

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That has a highly elastic demand curve

Such as St. Joseph's children's' aspirin.

Such as salt

such as Toyota automobiles

A demand curve shows that relation between price and demand.

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Positive

Negative

Zero

Very strong

"Principles of economics" is the book of

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Robbins

Adam smith

Hicks

Marshall

An exceptional demand curve is.

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Vertical

Horizontal

Downward sloping

Positive slope

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.

Which of the following shifts the demand curve for hot dogs leftward.

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An increase in the price of a hot dog bun

A decreases in the price of a hot dog bun

An increased in the price of a hamburger

An increases in the price of a hot dog

Economic growth is shown on the production possibility frontier as.

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The curvature of the PPF

An inward shift in the PPF

An outward shifts in the PPF

A movement from one point on the PPF to another

Along the long run supply curve all of the following can vary except.

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The level of profits

The number of firms in the industry

Input prices

The level of input usage

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