At a point where a straight line demand curve meets the price axis (Y-axis), the elasticity of demand is:
Equal to one
Less than one
Equal to zero
Equal to infinite
Correct Answer :
D. Equal to infinite
At the point on demand curve where it meets the Y-axis, the upper segment of demand curve is zero and lower segment is some geometrical value .So elasticity of demand Ed = Lower segment /Upper segment, the answer will be infinite)
Related Questions
If as a result of an increase in prices, total outlay (expenditures) on a commodity decreases, its price-elasticity of demand is:
Perfect elastic (infinitely elastic)
Relatively elastic (greater than one elasticity)
Unit elastic
Relatively inelastic (less than one elasticity)
Under the perfect competition, the transportation cost:
Is considered to be negligible and thus ignored
Is considered to be vital for the calculation of total cost
Is charged along with the price of the commodity
None of the above
To attain maximum profits during short-run a firm should produce the output that will:
Yield maximum total revenue
Minimize marginal cost
Maximize marginal cost
Equate marginal revenue with marginal cost
Total utility and price are:
Directly related
Unrelated
Closely related
Negatively related
The effects according to which people use those goods which are concerned with distinctive standard of living are:
Bandwagon effects
Snob effects
Veblen effects
Steven effects
Change in demand (rise and fall of demand) is:
Due to change in price while other factors remain constant
Due to change in factors other than price
Both a and b
None of the above
In the long-run competitive equilibrium, the theory predicts that:
TC = TR and MC = MR
Firms operate at a minimum average total cost
There is no incentive for entry or exit of firms
All these conditions exist
When total product increases at a decreasing rate:
MP = AP
MP < AP
MP > AP =0
MP > AP
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
If the commodity is inferior then:
Income effect is positive but substitution effect is negative
Income effect is negative but substitution effect is positive
Both income effect and substitution effect are negative
Both income effect and substitution effect are positive
A straight line, downward-sloping demand curve implies that, as price falls, the elasticity of demand:
Increases
Decreases
Remains the same
Is zero
The concept of industry in monopolistic competition has been replaced by:
Firm
Product group
Producers
Shopkeepers
In context of oligopoly, the kinky demand curve (kinked demand curve) hypothesis is designed to explain:
Price and output determination
Price rigidity (price stickness)
Price leadership
Collusion among rivals
Which of the following does not have a uniform elasticity of demand at all points?
A vertical demand curve
A horizontal demand curve
A rectangular hyperbola demand curve
A downward sloping demand curve
If the factors have to be employed in a fixed ratio, then the elasticity of substitution under Leontief technology is:
One
Zero
Two
Five
By reducing the prices of its products below those of its competitors, a perfectly competitive seller:
Reduces its revenues
Increases its revenues
Can sell nothing
None of the above
Plumbing and pipe-fitting require many of the same skills. If the wage paid to pipe-fitters increased then the effect on the market for plumbers would probably be:
An increase in demand
A decrease in demand
An increase in supply
A decrease in supply
When elasticity of demand is one (e=1), then following the formula MR=P[1-1/e], the MR will:
Positive
Negative
Zero
None of the above
The supply curve for the short-run competitive firm is the same as:
Marginal cost curve
Average variable cost curve
That part of the marginal cost curve which equals or is greater than AVC
Average total cost curve
Formulation of an economic theory involves:
Statements of various assumptions or postulates
Logical deductions from the assumptions made
Testing the hypothesis against empirical evidence
All of the above
For monopolistic competitive firm:
P=AR and P>MR
P
P=MC and MC=AC
None of the above
In cournot model, at equuilibrium when MC = MR, the elasticity of demand is:
equal to one
zero
negative
equal to 2
A monopolist is:
Price winner
Price searcher
Price taker
Price leaver
Opportunity costs are also known as:
Spill-over costs
Money costs
Alternative costs
External costs
Theory of revealed preference is based on:
Weak orderings
Neutral orderings
Partial orderings
Strong orderings
Income distribution effects:
The price of complements
The price of substitutes
The market demand for commodities
The individuals scale of performances
Who introduced the concept of Elasticity of Demand into economic theory?
Alfred Marshal
Adam Smith
Karl Marx
George Stigler
In first degree price discrimination, monopolist takes away :
All of the consumer surplus
All of the producer surplus
Some part of the consumer surplus
None of them
Liquidity of Preference Theory was introduced by:
Alfred Marshal
Lord Keynes
Karl Marx
Prof. Robbins
Utility is:
A subjective concept
An ethical concept
An objective concept
A historical concept