Diminishing returns occur when a firm:
Starts incurring losses
Uses more and more of one input while holding all other inputs constant
Does not utilize its inputs efficiently
Cuts down on the quantity of all inputs it uses
Correct Answer :
B. Uses more and more of one input while holding all other inputs constant
Related Questions
Identify the work of T.W.Schultz:
Transforming Traditional Agriculture
Productivity and Technical Change
Jobs, Poverty and the Green Revolution
Causes of Poverty
The Tit for Tat strategy means cooperation by the 2nd firm if:
1st firm does not cooperate
1st firm cooperates
1st firm collapses
None of the above
When a consumer is satisfied with his spending pattern, he is said to be in:
Balance stat
Equilibrium
Disequilibrium
Authenticated form
If cross-elasticity of one commodity for another turns out to be zero, it means they are:
Close substitutes
Good complements
Completely unrelated (independent goods)
None of the above
A firms profit is equal to:
R-C
R>C
R
R=C
Cartel is associated with:
Collusive oligopoly
Non-collusive oligopoly
Cartel
Perfect competition
When price decreases and with it the total outlay on a commodity also decreases, it is a case of:
Perfect elasticity (infinitely elastic)
Relative elasticity (greater than one elasticity)
Perfect inelasticity (zero elasticity)
Relative inelasticity (less than one elasticity)
Liquidity of Preference Theory was introduced by:
Alfred Marshal
Lord Keynes
Karl Marx
Prof. Robbins
For the given production function, technical efficiency is defined as:
Sets of points relating production function that maximizes output given input (labor) i.e. Q = f(L, K)
Sets of points relating production function that produces less output than possible for a given set of input (labor) i.e. Q < f(L, K)
Use of imported technology
None of the above
If the factors have to be employed in a fixed ratio, then the elasticity of substitution under Leontief technology is:
One
Zero
Two
Five
When elasticity of demand is less than one (e<1), then following the formula MR=P[1-1/e], the MR will:
Positive
Negative
Zero
None of the above
In case of monopoly, when total revenue is maximum:
MR is positive
MR falls
MR rises
MR is zero
Under conditions of perfect competition, price in the long-run is equal to:
Minimum of average variable cost
Minimum of marginal cost
Minimum of average fixed cost
Minimum of average cost
In long run competitive equilibrium:
Every firm will earn economic profit
Every firm will incur losses
Every firm will earn only normal profit
The marginal firm will earn no profit
Under monopolistic competition, the products sold by the firms are:
Economic substitutes
Technical substitutes
Both a and b
None of the above
After reaching the saturation point consumption of additional units of the commodity cause:
Total utility to fall and marginal utility to increase
Total utility and marginal utility both to increase
Total utility to fall and marginal utility to become negative
Total utility to become negative and marginal utility to fall
The products, under monopolistic competition are differentiated, yet they are:
Complements
Close substitutes
Both a and b
None of the above
In Recardian theory of value, the stress has been made on:
Marginal cost
Production cost
Labor cost
Supply cost
The kinked demand curve comes into being where:
Proportional demand curve (PDC) and individual demand curve (IDC) intersect each other
Proportional demand curve (PDC) and individual demand curve (IDC) are parallel to each other
Proportional demand curve (PDC) and individual demand curve (IDC) repel each other
None of the above
If the increase in demand is more than the increase in supply, the price will:
Rise
Fall
Remain the same
None of the above
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
At the point where the straight line from the origin is tangent to the TC curve, AC is:
Maximum
Minimum
Equal
Lower
The slope of the iso-cost line (budget line) is determined by:
Pricing of two factors
Productivity of the two factors
Degree of substitutability of two factors
None of the above
Cross-elasticity of demand or cross-price elasticity between two complements will be:
Negative
Positive
Infinite
Zero
If the demand curve remains unchanged and supply increases, the price will:
Rise
Fall
Remain the same
None of the above
In a competitive market, price is determined primarily by:
Transportation costs
The interplay of demand and supply
Costs of production
The marginal product of labour
The effect of consumer boycotts usually is:
A rise in the price of the product
A decrease in the demand for the product
A decrease in the supply of the product
An increase in the quantity supplied of the product
Micro economics is concerned with:
Product markets
Factor markets
Supply and demand
a, b and c
The entry of new firms in cournot model is:
Banned
Free
Partially free
Allowed
An economic model describing the working of an economy consists of:
Functional relationships
Family relationships
Economic position
Stagnant relationships