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4

According to the principle of substitution?

A. Many goods have no effective substitutes

B. Nearly all goods have substitutes

C. The prices of substitute goods must be the same

D. Buyers will stop buying a good if its price rises

Correct Answer :

B. Nearly all goods have substitutes


Related Questions

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4

The horizontal demand curve for a commodity shows that its demand is:

A. Highly elastic

B. Perfectly inelastic

C. Perfectly elastic

D. Zero elastic

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4

Pure monopoly exists:

A. When there is a single producer

B. When there is a single producer without any close substitute

C. When there is a single producer with close substitutes

D. When a few producers control the industry

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4

The economic problem of determining the combination of inputs yielding lowest cost for producing a given output:

A. Is only a choice among the technologically efficient combination

B. Depends on the relative price of inputs

C. Depends on the price of the product

D. Depends on the profits made

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4

If by doubling all inputs in the long run output is less than double, it is a case of:

A. Increasing returns to scale

B. Decreasing returns to scale

C. Constant returns to scale

D. Variable returns to scale

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4

The behavior of MC curve is determined by the behavior of the:

A. AC curve

B. SC curve

C. TC curve

D. None of the above

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4

A firms profit is equal to:

A. R-C

B. R>C

C. R

D. R=C

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4

Consumer surplus is the difference between

A. Price demanded and price paid

B. Price quoted and price actually paid

C. Price that a consumer is willing to pay and the price actually paid

D. None of the above

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4

Marshallian demand function is also known as:

A. Utility demand function

B. Compensated demand function

C. Collective demand function

D. Relative demand function

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4

If the demand curve is horizontal then its slope is:

A. Infinite

B. Zero

C. Equal to one

D. None of the above

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4

If the factors have to be employed in a fixed ratio, then the elasticity of substitution under Leontief technology is:

A. One

B. Zero

C. Two

D. Five

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4

Competitors in monopolistic competition have full control over:

A. The price of their product

B. Product quality

C. The shape of the market demand curve

D. The elasticity of product substitution

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4

Selling costs are incurred under monopolistic competition to:

A. Attract more customers

B. Prevent its customers from going to others

C. Establish superiority of its product on the others

D. All of the above

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4

Which of the following is called Gossens first law?

A. Law of production

B. The Law of Equi-Marginal Utility

C. The Law of Diminishing Marginal Utility

D. Law of Variable Proportions

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4

Airlines that try to lower fares in order to increase revenues believe that demand for airline services is:

A. Price elastic

B. Price inelastic

C. Income elastic

D. Income inelastic

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4

The Law of Diminishing Marginal Returns can be explained in terms of:

A. Economies and diseconomies of production

B. Indivisibility of factors

C. Fixity of supply of land

D. Variable factor productivity

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4

The isoquant approach is based upon:

A. One output

B. One input

C. Two outputs

D. Two inputs

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4

Which of the following models are associated with non-collusive oligopoly?

A. Bertrand model

B. Chamberlin model

C. Kinked demand model (Sweezy Model)

D. All of the above

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4

In the theory of firm, Chamberline presented the idea of:

A. Rising cost

B. Falling cost

C. Rising input

D. Falling input

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In case of straight-line isoquant, the factors are not substituted because they are each others:

A. Imperfect substitutes

B. Perfect substitutes

C. Complements

D. None of the above

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4

The Cambridge School of Thought refers to the group of English economists who came under the influence of:

A. Alfred Marshal

B. J.M.Keynes

C. Paul A.Samuelson

D. A.C.Pigou

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4

The law of demand is most directly a result of:

A. The law of comparative advantage

B. The law of diminishing returns

C. The principle of substitution

D. Economics of large scale production

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4

In monopolistic competition, the cost curves of all firms are:

A. Uniform

B. Different

C. Dependent

D. Independent

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4

Excess capacity is not found under:

A. Monopoly

B. Monopolistic competition

C. Perfect competition

D. Oligopoly

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4

The price consumption curve (PCC) for commodity X is the locus of points of consumer equilibrium resulting when:

A. The price of only Y is varied

B. The price of only X is varied

C. The prices of both Y and X are varied

D. None of the above

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4

Total profits are maximized at the point where:

A. TR equals TC

B. The TR curve and the TC curve intersect such that TR and TC lie at the same point

C. The TR curve and the TC curve are parallel and TC exceeds TR

D. The TR curve and the TC curve are parallel and TR exceeds TC

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4

With the expansion of output, the short run average cost curve, beyond a point, starts rising because:

A. Average fixed cost increases sharply

B. More production yields lower per unit price

C. The law of variable proportions applies to short run production

D. Sales expenses become much larger

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4

If X and Y are close substitutes, a fall in price of X will lead to:

A. Increase in demand for Y

B. Decrease in demand for Y

C. Increase in demand for both X and Y

D. Increase in demand for Y

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4

In Nash equilibrium, a player:

A. Deviates from his strategy

B. Does not deviate from his strategy

C. Does not think in a good way

D. None of the above

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4

Which is not a central problem of an economy?

A. What to produce

B. How to produce

C. How to maximize private profit

D. For whom to produce

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4

Ceteris paribus clause in the law of demand means:

A. The price of substitute does not change

B. The taste of the consumer does not change

C. The income of the consumer does not change

D. All of the above