A good tends to have relatively inelastic demand, if:
Close substitutes are available
It has a high price
It is a luxury
It has no very close substitutes
Correct Answer :
D. It has no very close substitutes
Related Questions
Which of the following conditions is met in the long-run equilibrium in monopolistic competition, where the firm is earning only normal profits?
MC =AC and P
MC = AC and P=MR
P =MC and P
MC=MR and P =AR= ATC
According to Diamond Water Paradox diamonds are more expensive than water because:
They yield higher total utility
They yield higher marginal utility
They are more useful
None of the above
In substitution effect and income effect:
The substitution effect is more certain
The income effect is more certain
The substitution effect is uncertain
The income effect is always positive
Identify the coefficient of price-elasticity of demand when the percentage increase in the quantity of a commodity demanded is smaller than the percentage fall in its price:
Equal to one
Greater than one
Smaller than one
Zero
The game theory is concerned with:
Perfect competition
Imperfect competition
Price discrimination
Duopoly and oligopoly
Which of the following would be least likely to cause a consumer to eat less beef?
An increase in the price of beef
An increase in the price of lamb
A reduction in the consumers income
A reduction in the price of lamb
The demand curve of ostentation goods (Veblen goods) will be:
Negatively sloped
Positively sloped
Parallel to X-axis
None of the above
If production increases under constant returns to scale, the cost will:
Increase at a constant rate
Decrease at a constant rate
Increase at a variable rate
Decrease at a variable rate
A mixed economy is characterized by the coexistence of:
Modern and traditional industries
Public and private sectors
Foreign and domestic investments
Commercial and subsistence farming
In the case of superior (normal) commodity, the income elasticity of demand is:
Positive
Unitary
Negative
Infinite
Which of the following is not a feature of isoproduct curves?
Are downward sloping to the right
Show different input combination producing the same output
Intersect each other
Are convex to the origin
The horizontal demand curve for a commodity shows that its demand is:
Highly elastic
Perfectly inelastic
Perfectly elastic
Zero elastic
The giffen paradox is an exception to law of:
Supply
Demand
Production
Consumption
The arc elasticity is the measure of average elasticity at the mid-point of the chord and connects:
Two points on demand curve
Two points on supply curve
Many points on demand curve
Many points on demand curve
The alternative of profit maximization theory is:
Cost maximization
Product maximization
Revenue maximization
None of the above
Normally when price per unit of time falls:
Quantity demanded increases
Quantity demanded decreases
Quantity demanded remains constant
Quantity demanded becomes zero
The budget constraint equation of the firm is:
Indifference curve approach (ordinal approach) is superior to utility approach (cardinal approach) because:
In ordinal approach we can separate the income effect from the substitution effect of a price change
In ordinal approach we can study the consumer behavior more closely
In ordinal approach the consumer is assumed more rational
In ordinal approach the consumer has more income
The concept of industry in monopolistic competition has been replaced by:
Firm
Product group
Producers
Shopkeepers
The proportionality rule in production requires that the ratios of MP and factor prices are:
Doubled
Equalized
Not equalized
None of the above
Opportunity costs are also known as:
Spill-over costs
Money costs
Alternative costs
External costs
Law of variable proportions is based on the assumption of:
Short period of time
Long period of time
Timeless production relationship
All of the above
In terms of price, the indirect utility function may be:
Concave
Quasi-convex
Straight line
Convex
An optimum level of a firms output is:
Where marginal cost is minimum
Where average cost is minimum
Where both the marginal and the average cost curves are at their respective minimum
Where the firm earns the maximum profits
Which of the following goods is most likely to be exchanged in a market of local rather than national scope?
University professors
Computer components
Building materials
Jet airplanes
By saying that monopolist create a contrived scarcity, economist mean that monopolist:
Restrict output to increase price
Produce where MC > P
Create a gap b/w quantity demanded and supplied
None of the above
The relationship between AC and MC curves depend upon the behavior of:
AP curves
MP curves
Both of them
None of them
In monopoly and perfect competition, TC curves are:
Different
Similar
Opposite
None of the above
7.In an economy based on the price system the decision on what shall be produced is made by:
Government
Consumer
Producer
Stock holder
An inferior commodity is one whose quantity demand decreases when income of the consumer:
Decreases
Increases
Remains constant
Zero