31
Income elasticity is computed by the formula
A)
$${e_i} = \frac{{{Q_1} - {Q_2}}}{{{P_1}}}$$
B)
$${e_i} = \frac{{{Q_2} - {Q_1}}}{{\frac{{{Q_1}}}{{\frac{{{Y_2} - {Y_1}}}{{{Y_1}}}}}}}$$
C)
$${e_i} = \frac{{{Q_2} - {Q_1}}}{{{Q_1}}} \times \frac{{{Y_1}}}{{{Y_2} - {Y_1}}} \times 100$$
D)
$${e_i} = \frac{{{Y_1} - {Q_1}}}{{{Y_2} - {Q_2}}}$$
Answer & Solution
Answer: Option
B
32
In case a decrease in price of a commodity results in an increase in its demand on a negatively sloping demand curve, it is called
A)
an increase in demand
B)
an increase in quantity demanded
C)
law of demand
D)
All of the above
Answer & Solution
Answer: Option
B
33
On a less than perfectly elastic demand curve, the MR for a given price and output is equal to price multiplied by
A)
$$\left[ {1 - e} \right]$$
B)
$$\left[ {e - \frac{1}{e}} \right]$$
C)
$$\left[ {1 - \frac{1}{e}} \right]$$
D)
$$\left[ {\frac{1}{e} - 1} \right]$$
Answer & Solution
Answer: Option
B
34
When AR is constant, MR is
A)
Equal to AR
B)
Less than AR
C)
More than AR
D)
Equal to zero
Answer & Solution
Answer: Option
A
35
Any straight line supply curve which cuts the X-axis will have
A)
An elasticity less than one but not zero
B)
Unitary elasticity of supply
C)
An elasticity greater than one
D)
Zero elasticity of supply
Answer & Solution
Answer: Option
A
A)
Goes through the lowest point of the LMC curve
B)
Rises when the LMC curve rises
C)
Falls when the LMC curve falls
D)
Falls when LMC < LAC and rises when LMC > LAC
Answer & Solution
Answer: Option
D
37
In conditions of pure competition, in which the demand for a firm's product is infinitely elastic, the firm's average revenue curve will be
A)
U shaped
B)
A horizontal straight line
C)
A vertical straight line
D)
A straight line at 45° to the horizontal axis
Answer & Solution
Answer: Option
B
A)
Remains the same whatever the level of output
B)
Increases as output increases
C)
Diminishes as output increases
D)
All the three are possible
Answer & Solution
Answer: Option
C
39
A demand curve is a boundary concept because it shows
A)
The minimum price and minimum quantity
B)
The maximum price and minimum quantity
C)
The maximum quantity and the minimum price
D)
Both price and quantity is maximum
Answer & Solution
Answer: Option
C
40
Match the following.
List-I (Economist) List-II (Statement)
a. Robinson
1. The elasticity of demand at any price or at any output is the proportional change of amount purchased in response to a small change in price divided by the proportional change in price.
b. Boulding
2. The elasticity of demand may be defined as the percentage change in quantity demanded which would result from 1% change in price.
c. Cairn cross
3. The elasticity of demand for a commodity is the rate at which the quantity bought changes as the price changes.
d. Marshall
4. The elasticity for demand in a market is great or small according as the amount of demand increases much or little for a given fall in price and diminishes much or little for a given rise in price.
A)
a-1, b-3, c-4, d-2
B)
a-1, b-2, c-4, d-3
C)
a-1, b-3, c-2, d-4
D)
a-1, b-2, c-3, d-4
Answer & Solution
Answer: Option
D
