Question # 1

When Daimler Benz maker of the Mercedes bought Chrysler the merger was

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Horizontal

Vertical

Conglomerate

None of these

In the long run a profit maximizing monopoly produces an output volume that

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Equates long run marginal cost with marginal revenue

Equates long run average revenue

Assures permanent positive profit

Is correctly described by both a and c

Average fixed cost

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Is U shaped

Declines over the entire output range.

Is a long run concept only

Is influenced by diminishing returns to production

An entrepreneur who collects profits in the short run for a new invention is collecting.

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The competitive rate of return on capital

Temporary monopoly profit

Rent

A Ramsey surplus

A normal good can be defined as one which consumers purchase more of as.

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Price fall

Price rise

Income fall

Incomes increase

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

If the price 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 about the Y axis

When the price of a pizza decreased from 1200 Rupees to 1000 Rupees, it is definitely the case that the.

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Income effect means people buy less pizza

Substitution effect means people buy more pizza

Quantity demanded of pizza will not change

None of the above

If the demand curve for a good is downward sloping then the good must be.

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Normal

Inferior

Giffen

Either a or b

The Lorenz curve shows that

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unemployment does not affect social group

People with low income spend more

People with low income spend less

the degree of income equality in the economy

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

Firms in monopolistic competition compete on

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Price

Quality

Advertising

All of the above are correct

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

A market demand curve can be derived by adding all the individual demand curves

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Vertically

Horizontally

In parallel

Any of the above as long as it is consistent

In substitution effect a consumer

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Shifts away from the commodity which price has risen

shifts in favor of commodity which price has risen

shifts away from the commodity which price has fallen

None of these

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

In a perfectly competitive market if firms are earning an economic profit the economic profit.

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Attracts entry by more firms, which lowers the market price

Can be earned both in the short run and long run

Is less than the normal profit

Leads to a decreases in market demand

A situation in which firms choose their best strategy given the strategies chosen by the other firms in the market is called.

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a competitive equilibrium

An open market solution

The Nash equilibrium

The cartel equilibrium

In monopolistic competition, firms desire to sell more output at equilibrium because.

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Price is greater than average cost

Price is greater than average variable cost

Price is greater than marginal cost

Price is equal to marginal revenue

Given the above demand and supply equations for widgets, the equilibrium price and quantity is.

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P = Rs. 20, Q = 60

PO = Rs. 60, Q, = 20

P Rs. 35, Q = 45

P - Rs. 12, Q = 88

In monopoly there is.

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Single seller

Single buyer

Two producers

Few seller

Skills that embodied in a person are called.

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Human capital

Embodied skills

Physical capital

Experience skills

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.

change in quantity demanded

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Downward shift of demand curve

Movement on the same demand curve

Downward shift

None of these

A production function for a firm which produces a product with two or more inputs.

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Represents a physical relationship between outputs for a specified set of inputs

Indicates the least cost combinations of inputs for a given output

Relates revenues and costs

Indicates the dollar cost for each level of ouput.

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