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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

Correct Answer : A.


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  1. The long run average cost curve is:
  2. When the output of a firm is increasing, its average fixed cost:
  3. When the slope of a demand curve is zero (also known as vertical demand curve) then elasticity will…
  4. With elasticity of demand, the:
  5. The longer the period of time, the elasticity of supply will be:
  6. A firm is a sum of persons who convert:
  7. A demand curve which is horizontal and parallel to x-axis represents:
  8. In 1932, The nature and significance of economic science was written by:
  9. If the prices of goods rise then:
  10. In perfect cartel, the:
  11. When elasticity of demand is greater than one (e >1), then following the formula MR=P[1-1/e], the MR…
  12. Using total revenue and total cost, a profit maximizing firm will be equilibrium at a point:
  13. If less is demanded at the same price or same quantity demanded at a lower price, it is a case of:
  14. A producer attains the least cost combination when the relation between Marginal Rate of Technical Substitution…
  15. The behavior of MC curve is determined by the behavior of the:
  16. In cournot model, firms sell:
  17. As the price of diamond is higher, so it has:
  18. The General Theory of Employment, Interest and Money is the major work of :
  19. If as a result of an increase in prices, total outlay (expenditures) on a commodity decreases, its price-elasticity…
  20. Returns to scale is a:
  21. Change in quantity demanded (expansion and contraction of demand) is:
  22. An individual consumers demand is not determined by:
  23. If the commodity is normal then fall in price will result in:
  24. The expansion point is attained by joining:
  25. The spending of money by the producer to influence consumers is an example of:
  26. Price discrimination is possible:
  27. If the commodity is inferior then the Income Effect (I.E) and the Substitution Effect (S.E):
  28. Marginal utility is only meant for:
  29. Extension (expansion) of demand means:
  30. To calculate the elasticity of demand, which of the following formula is used?: