A high value of cross-elasticity indicates that the two commodities are:
Very good substitutes
Poor substitutes
Good complements
Poor complements
Correct Answer :
A. Very good substitutes
Related Questions
With the change in the factor prices, the slope of the expansion path will:
Not change
Also change
Increase
Decrease
Average cost means:
Cost of the average units
Cost of the last units of average
Cost of the unit of production
Total cost marginal cost
Ceteris paribus clause in the law of demand means:
The price of substitute does not change
The taste of the consumer does not change
The income of the consumer does not change
All of the above
For a few products such as insulin for diabetics,:
The demand curve can be upward sloping
The price elasticity of demand could be zero
The price elasticity of demand could be greater than one
None of the above
When total product (TP) is maximum:
MP is negative
MP is infinite
MP is zero
None of the above
In microeconomics, we study:
Aggregates of the economy
Few units of the economy
Large units of the economy
Individual units of the economy
Which is not a central problem of an economy?
What to produce
How to produce
How to maximize private profit
For whom to produce
The standard form of demand function is:
Q = a- bP
Y = a- bP
Q = a+ bP
In perfect cartel, the:
Perfect competition price is charged
Monopoly price is charged
Monopoly price is not charged
None of the above
Who finalized the model of monopolistic competition?
Ricardo
Marshal
Chamberlin
Mrs. Robinson
Any straight line supply which cuts the x-axis will have:
Zero elasticity
An elasticity greater than one
Unitary elasticity of supply
An elasticity less than one
The elliptical isoquant represents the:
Economic combinations of labor and capital
Uneconomic combinations of labor and capital
Both a and b
None of the above
Cross-elasticity of demand is measured as:
Percentage change in the quantity of a commodity demanded divided by the percentage change in the price of that commodity
Percentage change in the quantity of commodity X divided by percentage change in the price of commodity Y
Percentage change in the quantity demanded of commodity X
Percentage change in the quantity demanded of commodity X divided by percentage change in the quantity demanded of commodity Y
Identify the work of Irving Fisher:
Policy on trade
Policy against inflation
The making of index numbers
Labor theory
If the commodities X and Y are perfect complements then:
None of the above
Supply of commodity is a:
A stock concept
A flow concept
Both stock and flow
None of the above
AR curve under perfect competition:
Slopes downwards to the right
Slopes upward to the right
Is vertical to the x-axis
Is horizontal to the x-axis
Marshallian approach is also known as:
Cardinal approach
Ordinal approach
Consumer approach
Production approach
The demand curve slopes downwards due to:
Income effect(I.E)
Substitution effect(S.E)
Taste effect
Both a and b
Total variable cost curve:
Steps downwards at first and then upwards
Steps upwards, then remains constant and then falls
Steps downwards
None of the above
If the commodity is normal then the Income Effect (I.E) and the Substitution Effect (S.E):
Both move together and reinforce each other
One moves and the other remains constant
Move in the opposite direction and neutralize each other
Both remain constant
Which of the following pairs of commodities is an example of substitutes?
Tea and sugar
Tea and coffee
Pen and ink
Shirt and trousers
In modern theory, LAC = LMC after the attainment of:
Maximum optimal scale
Average optimal scale
Minimum optimal scale
None of the above
The cournot model is a model of:
Instable equilibrium
Stable equilibrium
Constant equilibrium
Fluctuating equilibrium
The entry of new firms in cournot model is:
Banned
Free
Partially free
Allowed
Least cost combination of two factor inputs is achieved at a point where:
Budget line cuts the isoquant
Budget line is below the isoquant
Budget line is tangent with isoquant
None of the above
In monopolistic competition, the firm compete on the basis of:
Price
Entry
Both a and b
None of the above
A country is advised to devalue (reduce external value of) its currency only when its exports face:
Inelastic demand in foreign markets
Elastic demand in foreign markets
Unit elastic demand in foreign markets
None of the above
In monopolistic competition, the individual demand curve is also known as:
Planned products curve
Planned material curve
Planned costs curve
Planned sales curve
The MRTS along an iso-quant goes on to:
Appear
Diminish
Prominent
Increase