Billoo currently spends Rs. 200 per month on long-distance telephone calls. If the telephone company decides to reduce the rate from Rs. 10 a minute to Rs. 5 a minute, then
A. Whether she spends more or less than Rs. 200 per month depends on whether long-distance telephone calls are a normal good or an inferior good
B. She will spend less than Rs. 200 per month on long-distance telephone call as the new price is an effective price floor
C. Whether she spends more or less than Rs. 200 per month on long-distance telephone calls depends on whether her demand is elastic or inelastic
D. She will spend more than Rs. 200 per month on long-distance telephone calls as her demand has shifted out
Answer: Option C
The capital that is consumed by an economy or a firm in the production process is known as
A. Capital loss
B. Production cost
C. Dead-weight loss
D. Depreciation
Who propounded the opportunity cost theory of international trade?
A. Ricardo
B. Marshall
C. Heckscher & Ohlin
D. Haberler
Which among the following statement is INCORRECT?
A. On a linear demand curve, all the five forms of elasticity can be depicted
B. If two demand curves are linear and intersecting each other, then, coefficient of elasticity would be same on different demand curves at the point of intersection.
C. If two demand curves are linear and parallel to each other, then, at a particular price, the coefficient of elasticity would be different on different demand curves.
D. The price elasticity of demand is expressed in terms of relaive not absolute changes in Price and Quantity demanded.
A. Increase
B. Decrease
C. Remain the same
D. Become zero
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