11
Production function is the relation of
A)
Cost and Profit
B)
Input and Output
C)
Profit and Loss
D)
Price and Demand
Answer & Solution
Answer: Option
B
12
Which of the following does not have a uniform elasticity of demand at all points?
A)
a downward sloping demand curve
B)
a vertical demand curve
C)
a rectangular hyperbola demand curve
D)
a horizontal demand curve
Answer & Solution
Answer: Option
C
13
The MC curve cuts AVC and ATC curves at
A)
falling parts of each
B)
different points
C)
rising parts of each
D)
their minimum level
Answer & Solution
Answer: Option
D
14
A monopolist produces 14,000 units of output and charges Rs. 14 per unit. Its marginal revenue is Rs. 8, its marginal cost is Rs. 7 and rising, its average total cost is Rs. 10, and its average variable cost is Rs. 9. The monopolist should
A)
Increase output, which will increase the firm's positive economic profit
B)
Increase output, which will reduce the firm's economic losses
C)
Shut down, which will reduce the firm's economic losses
D)
Decrease output, which will increase the firm's positive economic profit
Answer & Solution
Answer: Option
A
15
Under perfect competition a firm will be in stable equilibrium in the long run if the price is equal to
A)
Marginal revenue
B)
Marginal cost
C)
Average fixed rate
D)
Average variable cost
Answer & Solution
Answer: Option
A
16
Which of the following statement is incorrect?
A)
Money is an asset, which provides cash to its owner
B)
Money is an asset, which is used in exchange for goods and services
C)
The United States money supply is largely composed of accumulating or borrowed money
D)
The commodity is backbone of the United States money supply
Answer & Solution
Answer: Option
D
17
Which of the following is a criticism of the theory of monopolistic competition?
A)
It is difficult to define a monopolistically competitive market and to determine the firms and products that comprise it
B)
When product differentiation is slight, each firm's demand curve is nearly horizontal so the perfectly competitive solution provides an adequate approximation to the monopolistically competitive solution
C)
When there are strong brand preferences and few producers of many differentiated products, or when there are many producers but only a few compete as rivals for any given consumer, the oligopoly solution then provides an adequate approximation to the monopolistically competitive solution
D)
All of the above
Answer & Solution
Answer: Option
D
18
When the law of demand operates the demand curve
A)
slopes downward from left to right
B)
slopes upward from left to right
C)
slopes upward from right to left
D)
parallel to horizontal axis
Answer & Solution
Answer: Option
A
19
Assertion (A) A perfectly competitive firm is not a market but is a price taker.Reason (R) The firm is intereshed in deciding the level of output only.
A)
Both (A) and (R) are true
B)
Both (A) and (R) are false
C)
(A) is false, but (R) is true
D)
(A) is true, but (R) is not a correct explanation of (A)
Answer & Solution
Answer: Option
D
20
Which one of the following statement is true?
A)
In case of inferior goods, the income effect is negative, although the substitution effect is positive
B)
In inferior goods, the income and substitution effect is positive
C)
In inferior goods, the income and substitution effect are negative
D)
In case of inferior goods, the income effect is positive, although the substitution effect is negative
Answer & Solution
Answer: Option
A
