Question # 1

In an industry with a falling long term supply curve, which of the following is true.

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Industry unit cost are constant

Industry unit costs are decreasing

Industry unit costs are increasing

Industry unit costs cannot be determined

A firm's long run average total cost lineis

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Identical to its long run marginal cost line

Also its long run supply curve

In fact the average total cost curve of the optimal plant

Tangent to all the curve of short run average total cost

A profit maximizing monopolist in two separate markets will

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Charge different price according to elasticity

Charged same price

Charged very high price

Charged very low price

The key feature of oligopoly is.

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Excess capacity

High profitability

Product differentiation

Interdependence of firms

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

Which of the following correct about firms in an oligopoly.

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Each firm has complete control over its own selling price

All firms independently charge monopoly prices

No one firm controls price but each has an influence on the price

There is no competition in oligopoly industries

If there is no price surprise, total output is.

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50

150

400

200

If the price of factor A is Rs.8.00 per hour, and its marginal product is 10 units, and the price of factor B is Rs. 5.00 and its marginal product is 9, is the producer is likely to.

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Hire more of A and less of B

Hire more of B and less of A

Start paying factor A more

Try to use factor B more productively

The marginal rate of substitution of two goods can be obtain from

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Slope of budget line

Slope of demand curve

Slope of indifference curve

None of these

If the estimated values of Y and Py in 1987 are Rs. 30,000 and Rs. 8 respectively the marginal revenue of X is.

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260 - 160 x

420 - 4Qx

240 - 16 Px

80 - 4Qx

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

Law of variable proportion is also called.

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Law of non proportion returns

Law of substitution

Law of casts

Law of demand

Which of the following is a characteristics 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's quality price and marketing.

When firms are free to enter and exit the market

BATA's marginal utility per dollars is .8 for both shorts and running shoes,. To attain her consumer equilibrium BATA should.

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Buy an additional pair of shorts

Buy an additional pair of both items

Possibly not make any adjustment in her behavior

Sell her shorts and keep her shoes

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

In perfect competition, a seller by increasing price.

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Sell more

Produce its revenue

Decrease cost

Sell nothing

The classical are of the view that utility can be.

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Ranked

Counted

Expressed in numbers

Not counted

If a firm which polluted the water of area had to pay all social cost would have

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Small output

Large output

Heavy output

B and C

The "compensated" demand curve is the demand curve that.

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Shows only the income effect

Shows only the substitution effect

Shows both the income and substitution effects

Shows the Geffen good demand curve

The negative slope of the demand curve indicates that there is _______ relationship between the price and the quantity demanded.

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A direct

An inverse

A positive

No relationship

"The quantity demanded increases as its price increases and falls as its price falls" is called given goods, is presented by.

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Allen

Marshall

Adam smith

Robert griffin

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