Question # 1

Law of variable proportion sis applicable in.

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Short run

Long run

Anytime

Fore ever

As long as the principle of diminishing marginal utility is operating any increased consumption of a good.

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Lowers total utility

Produces negative total utility

Lowers marginal utility and therefore total utility

Lowers marginal utility, but may raise total utility.

If a price floor of Rs.15 is imposed, the governments cost is.

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Rs.150

Rs.300

Rs.750

Rs.450

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 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

Indifference curve theory is old wine in new labeled bottle is said by.

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Marshall

Griffin

Ricardo

Allen

One of the difference between a perfectly competitive fir's long run equilibrium and the long run equilibrium of a monopolistically competitive firm is that

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LMS = MR under perfect competition but not under monopolistic competition

SAC = LAC under perfect competition but not under monopolistic competition

SMC = LMC under perfect competition but not under monopolistic competition

LAC = LMC under perfect competition, but not under monopolistic competition

When there is a surplus in a market

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There is downward pressure on price

There is upward pressure on price

The market could still be in equilibrium

There are too many buyers chasing too few goods.

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 firm charges Rs. 800 for its unique word processor. If total revenue is Rs. 56,000 in July, how many word processor were sold that month.

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70

95

700

800

What is the per unit marginal cost of increasing production from 20 to 25 units.

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Rs. 3,500

Rs.100

Rs.4,000

Rs.500

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

When due to change in price of commodity x demand of commodity y is charged it is called.

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Income elasticity

Price elasticity

More elastic

Cross elasticity

Given the cost data indicated in the table above the average variable cost of producing 7 units of output is

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Rs.37

Rs.29

Rs.31

Greater than Rs.37

An increase in the discount rate at the FED generally has the following effect on bond prices.

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There is no demonstrated effect

Such an increase tends to lower bond prices.

Such an increase tends to raise bond prices

Bond prices are related to the government purchase and sale of bonds.

In monopsony there is

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Single seller

Two buyers

Single buyer

Few buyer

If the price of an apple increases.

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Its opportunity cost decreases

Its opportunity cost increases

The substitution effect does not occur

The income effect does not occur

Firm A's margin of safety is.

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0.10

0.40

0.20

0.30

Perfect competition implies

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Homogeneous goods

Inferior goods

Superiors goods

Differential goods

Elasticity of demand of luxurious goods is always more elastic

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More elastic

Less elastic

Equal elastic

None elastic

Which of the following is NOT an example of non price competition the auto industry.

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Zero percent auto loans

Television advertising

Establishing market niches

End of the year discounts

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