Q1: The relationship between elasticity and total revenue
Answer
Answer:
Q2: A cartel is
Answer
Answer: 1. A group firms which get together and make joint price and output decisions to maximize joint profits
2. A group of producers who mutually agree to limit their production, in order to sustain a price floor
Q3: A change in demand refers to
Answer
Answer: Shift of the demand curve
Q4: A change in quantity demanded refers to
Answer
Answer: Movement along a demand curve
Q5: A complementary explanation of a downward sloping demand curve is given by
Answer
Answer: diminishing marginal utility
Q6: A firm facing a linked demand curve expects that its competitors
Answer
Answer: will match its price decrease, but not its price increase
Q7: A firm is price taker in perfect competition market structure because
Answer
Answer: Both—Single firm supplies significant part of total market supply
Single firm supplies Homogeneous product
Q8: A firm maximizes its total profit when
Answer
Answer: TR exceeds TC by the greatest amount
Q9: A firm reaches its optimum size in the long run when
Answer
Answer: its MC = MR and AR = AC
Q10: A firm’s declining LAC curve over some ranges of output can be explained by
Answer
Answer: increasing return to scale
Q11: A firms costs are reated in the following way
Answer
Answer: MCcuts AC at the minimum point of AC
Q12: A firms short run supply is constructed from its
Answer
Answer: short run marginal cost and average variable cost
Q13: A monopolist who faces a negatively sloped demand curve operates in the region where the elasticity of demand is
Answer
Answer: between 0 and 1
Q14: A non discriminating monopolist
Answer
Answer: will never produce in the output range where demand is ineastic
Q15: A perfectly competitive firm can increase its sales by
Answer
Answer: Increasing the production
Q16: A pure monopolist
(a) always realizes an economic profit
(b) will realize an economic loss if MC intersects the down sloping portion of MR
(c) will realize an economic profit if ATC exceeds MR at the equilibrium output.
(d) Will realize an economic profit if price exceeds ATC at the equilibrium output.
Answer
Answer: Will realize an economic profit if price exceeds ATC at the equilibrium output.
Q17: A pure monopolistic demand curve is the industry demand curve
Answer
Answer: Wrong – False
Q18: A pure monopolists demand curve
Answer
Answer: coincides with its marginal revenue curve
Q19: A purely competitive firm is in short run equilibrium and its MC exceeds its A3. It can be included that
Answer
Answer: the firm is realizing an economic profit
Q20: A purely competitive firm will be willing to produce at a loss in the short run provided
Answer
Answer: the oss is no greater than its variable costs
Q21: A zero-sum game is one in which
Answer
Answer: The gain of one player equals the loss of another player
Q22: AFC equals the vertical distance between the
Answer
Answer: AC curve and the AVC curve
Q23: All of the cost curves are U-shaped except the
Answer
Answer: AFC curve
Q24: An increase in tax will affect the customers less than the producers if the demand schedule is inelastic
Answer
Answer: Correct – True
Q25: An increase in tax will affect the customers less than the producers if the supply schedule is inelastic
Answer
Answer: Correct – True
Q26: An increase in tax will affect the customers more than the producers if the demand schedule is inelastic
Answer
Answer: Correct – True
Q27: An increase in tax will affect the customers more than the producers if the supply schedule is inelastic
Answer
Answer: Wrong – False
Q28: An increase in the quantity supplied leads to a fall in the price resulting in the shifting of the supply curve towards the left.
Answer
Answer: Correct – True
Q29: An indifference curve is the locus of
Answer
Answer: All the combinations of good X and Y giving same level of satisfaction
Q30: An individual demand curve shifts upward because of
Answer
Answer: Snob effect.
Q31: An isoquant shows
Answer
Answer: All combinations of labor and capital
Q32: As more labor is added to a fixed amount of input, the rate at which output goes up begins to decrease. This is called
Answer
Answer: Diminishing marginal costs
Q33: As the price rises the quantity demanded will fall
Answer
Answer: Wrong – False
Q34: Average fixed costs remain constant as the output increases
Answer
Answer: Wrong – False
Q35: Average variable costs remain constant as the output increases
Answer
Answer: Wrong – False
Q36: Barriers to entry
Answer
Answer: Two option-Both are correct
Cannot exist in oligopoly
May allow monopolies to earn profit in the long run
Q37: Cartels and collusion are
Answer
Answer: Legal framework
Q38: Changes in income are shown by
Answer
Answer: Parallel shift of budget line
Q39: Econometrics is
Answer
Answer: A specialized branch of economics which applies the tools of statistics to the economic problems
Q40: Elasticity of demand decreases as one goes down the demand curve
Answer
Answer: Wrong – False
Q41: Elasticity of demand increases as one goes down the demand curve
Answer
Answer: Correct – True
Q42: Elasticity of demand is constant throughout the demand curve
Answer
Answer: Wrong – False
Q43: Explicit cost is also known as
Answer
Answer: Accounting Cost
Q44: Fixed costs are those costs
Answer
Answer: that are independent of the rate or output
Q45: For a normal good
Answer
Answer: The price elasticity of demand is positive; the income elasticity of demand is positive
Q46: For an imperfectly competitive firm,
Answer
Answer: the marginal revenue curve will lie above the demand curve because any reduction in price applies to al units sold
Q47: For complementary goods, the cross elasticity of demand will be
Answer
Answer: Negative
Q48: For in imperfectly competitive firm,
Answer
Answer: the demand and marginal revenue curves will coincide
Q49: Four-firm concentration refers to
Answer
Answer: The percent of the total industry output that is accounted for by the largest four firms
Q50: Highest degree of allocative inefficiency is the feature of
Answer
Answer: Perfect competition
Q51: Identify the item which is not a factor payment
Answer
Answer: free uniform to defence personnel
Q52: If a change in all inputs leads to a proportional change in the output, it is a case of
Answer
Answer: Constant returns to scale
Q53: If a few firms dominate an industry the market is known as
Answer
Answer: Monopolistic competition
Q54: If a firm doubles all inputs in the long run and total output less than doubles, we have a case of
Answer
Answer: decreasing returns
Q55: If a good has close substitutes
Answer
Answer: Its demand curve will be relatively elastic
Q56: If a pure monopolist is producing a level of output in excess of the MR=MC output,
Answer
Answer: it will be in the interest of the firm, but not necessarily of society, to reduce output
Q57: If an imperfectly competitive firm is seling its 100th unit of output for $35, its marginal revenue
Answer
Answer: will be ess than $35
Q58: If both income and substitution-effects are strong, this region of the demand curve must be
Answer
Answer: Relatively price elastic
Q59: If demand rises, the demand schedule shifts to the left
Answer
Answer: Correct – True
Q60: If marginal cost is positive and falling
Answer
Answer: Total cost is falling at a falling rate
Q61: If marginal product is negative, it means that the
Answer
Answer: Average product is falling
Q62: If the cost of sugar rises and sugar is a major ingredient in jelly beans, then the jelly bean
Answer
Answer: supply curve shifts to the left,
Q63: If the demand falls, the price will fall
Answer
Answer: Wrong – False
Q64: If the number of firms in a monopolisticaly competitive industry increases and the degree of product differentiation diminishes
Answer
Answer: the industry would more closely approximate pure competition.
Q65: If two goods are complementary, the price elasticity of demand is
Answer
Answer: Negative
Q66: If two goods are substitutes, the price elasticity of demand is
Answer
Answer: Positive
Q67: In case certain goods are not sold within a reasonable time, the retailer pulls the price down, it is known as
Answer
Answer: Mark-down pricing
Q68: In case of inferior goods the income elasticity is
Answer
Answer: Negative
Q69: In choosing between beef 7 shirts, consumers increase their purchases of each until
Answer
Answer: the marginal utility from the last rupee spent on one is the same as on the other
Q70: In defining costs
(a) economists take implicit opportunity costs into account, but accountants do not
(b) accountants take implicit opportunity costs into account, but economists do not
(c) both take implicit opportunity costs into account
(d) neither take implicit opportunity costs into account.
Answer
Answer: economists take implicit opportunity costs into account, but accountants do not
Q71: In order to maximize profit, the firm follows
Answer
Answer: Equi-marginal principal
Q72: In perfect competition
Answer
Answer: all of these—(a) there are a large number of independent sellers, each too small to affect the commodity price
(b) the product of all firms is homogenous
(c) firms can easily enter or leave the industry
Q73: In perfect competition, a firm maximizing its profits will set its output at that level where
Answer
Answer: Marginal cost = price
Q74: In perfect price discrimination
Answer
Answer: Consumer surplus is zero
Q75: In perfect price discrimination The demand curve is the marginal revenue
Answer
Answer: Correct – True
Q76: In pure monopoly
Answer
Answer: there is a single seller of a commodity for which there are no close substitutes
Q77: In the case of inferior good income elasticity of demand is
Answer
Answer: negative
Q78: In the long run, a monopolistic competitor
Answer
Answer: makes a profit
Q79: In the long run, a perfectly competitive firm earns only normal profits because of
Answer
Answer: Free entry and exit of industry
Q80: In the marginal approach, the best level of output for a perfectly competitive firm is the output at which
Answer
Answer: MR or P = falling MC
Q81: In the ong run there are no
Answer
Answer: fixes costs
Q82: In the short run the supply curve of a firm in perfectly competitive market is
Answer
Answer: Marginal cost curve
Q83: In the short run, a monopolisticaly competitive firms economic profits
Answer
Answer: may be positive, zero, or negative
Q84: In the short run, a pure monopolists profits
Answer
Answer: may be positive, zero, or negative
Q85: In which of the following market structures the entry is least difficult
Answer
Answer: oligopoly
Q86: Internal economies of scale determine
Answer
Answer: The position of long run average cost curve
Q87: Isoquants are
Answer
Answer: Equal product lines
Q88: Long run average cost curve is also known as
Answer
Answer: Envelope curve
Q89: Marginal cost can be defined as the
Answer
Answer: amount one more unit of output adds to total cost.
Q90: Marginal cost remain constant as the output increases
Answer
Answer: Wrong – False
Q91: Market inefficiencies can come from
Answer
Answer: Imperfect information
Q92: Microeconomic theory studies how a free enterprise economy determines
Answer
Answer: all of these—(a) prices of goods
(b) the prices of services
(c) the prices of economic resources
Q93: Monopolistic competition differs from perfect competition because
Answer
Answer: each firm ses a differentiated product
Q94: Monopolistic competition refers to the form of market organization in which there are
Answer
Answer: few sellers of a homogenous product
Q95: Monopolistic competition resembles pure competition because
Answer
Answer: barriers to entry are either weak or nonexistent
Q96: MR for the perfectly competitive firm
Answer
Answer: equals P
Q97: Mutual interdependence means that each firm
(a) produces a product similar but not identical to the products of its rivas
(b) produces a product identical to the products produced by its rivas
(c) must consider the reactions of its rivas when it determines its price policy
(d) faces a perfectly eastic demand for its product
Answer
Answer: must consider the reactions of its rivas when it determines its price policy
Q98: National income differs from net national product at market prices by the amount of
Answer
Answer: net indirect taxes
Q99: Net national product at factor cost is
Answer
Answer: equal to national income
Q100: Net value-added is equal to
Answer
Answer: value of output minus depreciation
