Question # 1

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

A price decrease and an increase in income are similar in that

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Both force the consumer to achieve a lower level of well being

Both force the consumer to reach a lower indifference curve

Both move the budget line outward

^{They are not similar at all}

In the short run the competitive firm will produce if.

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Price is equal to marginal cost

Price is equal to marginal revenue

Price is equal to total cost

Price is equal to are greater than average variable cost.

An exceptional demand curve is.

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Vertical

Horizontal

Downward sloping

Positive slope

The firm under monopolistic competition is likely to produce less and set a higher price than under perfect competition because.

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The firm faces decreasing returns to scale

The firm faces increasing costs

The firm must incur selling expenses including advertising.

The firm faces a downward sloping demand curve

When oligopolistic firms interacting with one another each choose their best strategy given the strategies chosen by other firms in the market we have.

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A cartel

The perfect competitive outcome

The Nash equilibrium

Monopolistic competition

If the government lower taxes by $10 billion, the Real GDP will rise by

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More than $10 billion

Less than $10 billion

Exactly $10 billion

None of these

In capitalistic economy price is determined by

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Supply and production

Demand and production

Demand and consumption

Demand and supply

In case of complimentary goods, if the price of one commodity falls there will be.

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Rise in demand of other commodity

Fall in demand of other commodity

Fall is demand of both commodities

Nor charge

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

The "Law of demand" most directly means that consumers buy

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More of a good the higher their incomes, ceteris paribus.

Less of good the higher its price ceteris paribus

Buy more of a good the less is its supply ceteris paribus

Buy less of a good the greater is its supply ceteris paribus

Price discrimination is possible

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Oligopoly

Duopoly

Perfect competition

Monopoly

In long run equilibrium a monopolistically competitive firm will find.

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Marginal cost below average total cost

Marginal cost wqual to minimum average total cost

Both a and b

Neither a nor b

A linear homogenous production function would reveal.

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Constant returns to scale

Increasing returns to scale

Decreasing return to scale

Doubling all inputs would more than double output

Given a proportional income tax and a government budget that is currently in balance, an increase in autonomous investment ceteris paribus, Increases equilibrium income and the budget.

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Remains is balance

Has a surplus

Has a deficit

None of these

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

A utility contour shows all the alternative combinations of two consumption goods that.

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Can be produced with a given set of resources and technology

Yield the same total of utility

Can be purchased with a given budget at given prices

Equate the marginal utilities of these goods and therefore make the consumer indifferent between them.

In monopolistic competition firm sell

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Same goods

Differential goods

Inferior goods

Superior goods

A monopsony is

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The scale supplier of an input

The scale supplier of an output

The sole buyer of some type of input

A unionized industry

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

How much will a speculator invest now if he expects to earn Rs. 144 two years from now assuming the nominal rate of interest is 20%

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Rs.1654.29

Rs.100.00

Rs.94.00

Rs.68.00

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