Cross-elasticity of demand or cross-price elasticity between two substitutes will be:
Negative
Positive
Infinite
Zero
Correct Answer :
B. Positive
If the two goods are substitutes, the cross elasticity of demand will be positive, so that as the price of one goes up the demand of the other will increase)
Related Questions
The main contribution of Adam Smith is in the field of:
Economics of state
Wealth of Nations
Value and price
Theory of demand
We can find total utility by:
Multiplying the number of unit by its marginal utility
Adding up the marginal utility of all units
Multiplying price by number of units
None of the above
The least cost combination of factors x , y and z will generally be the point at which:
Price of x = Price of z Price of y Price of x
MP of x = MP of y Price of x Price of x
MP of x = MP of y = MP of z Price of x Price of y Price of z
MP of x = MP of y = MP of z
If the consumers expect that the price of computers will decrease in next year then:
Current demand for computers will fall
Current demand for computers will rise
Current demand will change unpredictably
Current supply of computers will rise
In the case of superior (normal) commodity, the income elasticity of demand is:
Positive
Unitary
Negative
Infinite
In dominant price leadership model, the small firms are like:
monopolistic firms
monopoly
competitive firms
none of the above
The production possibility curve (PPC) is concerned with:
Resources of the economy
Interests of the economy
Limitations of the economy
Qualities of the economy
If the commodities X and Y are perfect substitutes then:
>
None of the above
The Hicksian indirect utility function in the form of equation is:
x =f(P)
x =a-bp
For the equilibrium of the firm and the industry in the short period in a competitive market, the condition is:
P = AC
P = MC
AC = MC
MC = TR
If in the long run, output increases in the same proportion as increase in all the input in the given proportion, this is known as:
Increasing returns to scale
Decreasing returns to scale
Constant returns to scale
Variable returns to scale
In economics, Externality means:
An externality is a cost or benefit which is not transmitted through prices
An externality is a cost or benefit which is transmitted through prices
An externality is a production received through external resources
None of the above
Law of Returns to Scale shows:
Technical relationship between input of a variable factor and the resulting output
Any economic relationship between input and output
An output maximizing relationship
A relationship with input changing and corresponding changes in output
If X and Y are close substitutes, a rise in the price of X will lead to:
Increase in demand for Y
Decrease in demand for Y
Decrease in demand for both X and Y
No change in demand for Y
The law of variable proportions comes into being when:
All factors are variable
There is a fixed factor and variable factor
All factors are non-variable
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
If two goods have same marginal utility for a consumer then:
He will consume only one of them
He will consume equal quantities of them
He will be willing to pay the same price for each of them
The total utility gained from each of them is equal
Who first formulated the Marginal Productivity Theory of Distribution?
J.B.Clark
L.Euler
J.A.Schumpeter
Alfred Marshal
In price leadership, like leader, the follower firm may:
also maximize its profits
not maximize its profits
maximize its costs
none of the above
Because the price elasticity of demand for OPEC oil is approximately .08, in order to increase revenues OPEC should:
Lower price in order to increase revenues
Lower price in order to decrease the amount of oil sold
Rise price in order to increase the amount of oil sold
Raise price in order to increase revenues
Under monopolistic competition, the firms compete alongwith:
Supreme powers
Discretionary powers
Low powers
None of the above
Under monopoly and imperfect competition MC is:
More than the price
Less than the price
Equal to the price
Less than or equal to the price
The slope of an iso-quant represents:
MRS
MRT
MRTS
MRPS
A significant property of the Cobb-Douglas production function is that the elasticity of substitution between inputs is:
Greater than one
Less than one
Zero
Equal to one
Monopolistic firm can fix:
Both price and output
Either price or output
Neither price nor output
None of the above
The cost of production is faced by a:
Producer
Consumer
Seller
Firm
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
Perfect competition implies:
Differentiated goods
Homogeneous goods
Advertised goods
Distress sale of goods
A decrease in demand lowers the price the most:
In the immediate run
In the short run
When the supply is perfectly elastic
When producers have sufficient time to fully adjust to the demand change
According to Saint Thomas Aquinas value is determined by God, but prices by:
Consumers
Employees
People
Labor