The total effect of a price change of a commodity is
A. Sustitution effect plus price effect
B. Substitution effect plus income effect
C. Substitution effect plus demonstration effect
D. Substitution effect minus income effect
Answer: Option B
Solution(By Examveda Team)
The total effect of a price change of a commodity is substitution effect plus income effect. The income effect is the change in consumption patterns due to a change in purchasing power. This occurs with income increases, price changes, and even currency fluctuations. Since income is not a good in and of itself (it can only be exchanged for goods and services), price decreases increase purchasing power.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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