Question # 1

Everyone's absolute income doubles family A's APC, according to the simple Keynesian consumption function is expected to.

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Fall

Double

Increase

Halve

In the long run a profit maximizing firm will choose to exit a market when

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Fixed costs exceed total costs

Total revenue from production is less than total costs

Average fixed cost is rising.

Marginal cost exceeds marginal revenue at the current level of production.

A monopolist will discontinue production if

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Marginal revenue is less than marginal cost

Marginal revenue is less than average total cost

Marginal revenue is less the average fixed cost

Price is less than average variable cost

when there is huge change in demand following method is used to measure elasticity of demand.

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Percentage method

Arc method

Point method

Other method

In the short run a competitive firm's supply curve is.

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Its average variable cost cure to the right of the marginal cost curve.

Its marginal cost curve above the average variable cost curve.

It marginal cost curves above its average cost curve.

The horizontal summation of the marginal cost curves

A long-run total cost curve can be constructed from

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An income consumption curve

A price consumption curve

Isoquant is cost expansion path diagram

An Engel curve

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

A monopolist who is charging high price operates on.

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inelastic part of demand curve

Elastic demand of part curve

Ignore elasticity

More elastic demand of part curve

Which of the following does not characterize monopolistic competition.

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Product differentiation

Many producers

Absence of advertising

Some control over price

If a monopolist's demand curve is downward sloping and linear, then its total revenue curve must be.

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Identical to the demand curve

A ray from the origin with a slope equal to price

negative sloped with twice the slope of the demand curve

A rising function of output that increases at a decreasing rate , reaches a maximum, then falls.

The Lorenz curve shows that

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unemployment does not affect social group

People with low income spend more

People with low income spend less

the degree of income equality in the economy

Skills that can be transferred to other employers are called.

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General skills

Specific skills

Non pecuniary skills

All of the above

A situation in which firms choose their best strategy given the strategies chosen by the other firms in the market is called.

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a competitive equilibrium

An open market solution

The Nash equilibrium

The cartel equilibrium

Duopoly is a market situation when there is

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Single seller

Many seller

Two seller

Few seller

A typical demand curve cannot be

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Rising upwards to the right

A straight line

Concave to origin

Convex to origin

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

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

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

A demand curve shows that relation between price and demand.

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Positive

Negative

Zero

Very strong

The statement that marginal cost = marginal revenue leads to profit maximization of loss minimization is true.

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All the time

Only in the long run

Only if "marginal cost is rising at the point of equality.

Only if average total cost is falling at the point of equality

In the long run a profit maximizing monopoly produces an output volume that

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Equates long run marginal cost with marginal revenue

Equates long run average revenue

Assures permanent positive profit

Is correctly described by both a and c

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