Question # 1

Which of the following explains why demand curves slope downward.

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Prices and income

substitutes and complements

Resources and technology

Substitution effect and income effect

In pure monopoly there is.

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A lot of firms

Two firms

A single firm

Many firms

Which of the following is not a basic assumption of perfect competition.

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Free entry and exit

Many small sellers and buyers

Perfect information

Short run

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

At level of income and output of 100 in the diagram above

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APC < 1

Equilibrium occurs

Consumption expenditures are equal to 100

MPC > APC

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

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}

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

A monopoly market.

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Generally falls to maximize total economic well being.

Always maximizes total economic well being.

always minimizes consumers surplus

Generally falls to maximum produce surplus

If the price elasticity of demand for a non giffen good is inelastic are decreased in its price result in.

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Increase in demand

Decrease in demand

Increase in total revenue

Decrease in total revenue

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.

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

If a monopolist's has only fixed costs and chooses that output at which marginal cost equals price. it will

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Earn positive economic profits

Earn zero economic profits

Incur a loss equal to its variable costs

Incur a loss equal to its fixed costs

In perfect competition there is.

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Many buyers

Many sellers

Homogeneous product

All of these

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

Projects A,B,C,D,E cost Rs. 100, Rs, 200, Rs. 300, Rs. 400, and Rs. 500 with MEC's of 0.07, 0.06,0.09 ,0.10 and 0.11 respectively. The market rate of interest is 8% Total investment spending is

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Rs. 1500

Rs.1300

Rs.1200

Rs.300

The demand for labor slopes down and to the right because of.

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The law of demand

The iron law of wages

The law of diminishing marginal returns

Economies of scale

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

The are price elasticity of demand is approximately

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0.3

3.3

6.0

0.2

Under perfect competition, the price system automatically result in efficient output selection when

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MC = MR

MC = MU

P = ATC

P > AVC

The method most commonly used to test the overall significance of a regression is.

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The t test

The F -test

Chi square test

R

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