Question # 1

As disposable income increases from Rs. 1500 to 2000 , saving increases from minus Rs. 50 to Rs.250 if the relationship between disposable income and saving is linear, the MPC obviously has a value of.

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.6

.8

.4

.2

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

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 typical demand curve cannot be

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Rising upwards to the right

A straight line

Concave to origin

Convex to origin

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 price elasticity of demand will increase with the length of the period to which the demand curve pertains because.

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Consumers incomes will increase

The demand curve will shift toward

All prices will increase over time

Consumers will be better able to find substitutes

When the demand curve is a straight line the elasticity of demand at the center point will be.

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Equal to zero

infinite

More than one

Equal to one

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

A drop in the price of compact disc shifts the demand curve for prerecord tapes leftward from that you know that compact discs and precorded tapes are.

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Inferior goods

Substitutes

Complements

Normal goods

Which skills are most likely to be paid for by the employer.

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General skills

Specific skills

Educational skills

None of these

The quantity of Y demanded increases by 6% when income changes, and income elasticity of demand is -0.9 income

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Decreased by 5.4 %

Decreases by 8%

Increased by 15%

Decreased by 6.7 %

Marginal cost is the change is cost the result from a one unit increase in.

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Price

Cost

Output

Revenue

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

The average total cost when 20 units of output are produced is

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Rs. 2,900

Rs.195

Rs. 20

Rs.900

Assume a cosumer buys 25 units of good X at Rs.8 and 10 units of good Y at Rs. 6 in 1980. If Px = Rs. 6 and Py = Rs. 4 in 1970 the pasasche index is.

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1.14

1.65

1.37

1.47

Some goods are not closely related to each other and are neither substitutes nor complements for such goods the cross price elasticity of demand would be.

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Positive

Negative

Zero

Cannot tell without more information

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

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.

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

Elasticity of demand of luxurious goods is always more elastic

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More elastic

Less elastic

Equal elastic

None elastic

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

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Horizontal

Vertical

Conglomerate

None of these

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