If Cobb-Douglas production function is homogeneous of degree less than one (n<1), then it shows:
Constant returns to scale
Increasing returns to scale
Decreasing returns to scale
None of the above
Correct Answer :
C. Decreasing returns to scale
The decreasing returns to scale means if we doubled the inputs, the output will less than doubled.}
Related Questions
If the price of product increases and in the result the demand for product B also increases then:
A and B are substitute goods
A and B are complementary goods
A is inferior to B
A is superior to B
Who is the founder of classical school of thought?
David Ricardo
Adam Smith
T.R.Malthus
J.S.Mill
Marshalls definition of economics was strongly criticised by:
Adam Smith
Prof.Pigno
Prof. Robbins
J.B.Clark
An indifference curve normally slopes downward from:
Left to right
Right to left
Both of them
None of them
In Bertrand model, the entry of new firms is:
banned
allowed
partially allowed
none of the above
Extension (expansion) of demand means:
More quantity demanded at a lower price
More quantity demanded at a higher price
More quantity demanded at the same price
None of the above
Regarding economic decisions, economics of uncertainty identifies:
No risks
Risks
Safety
None of the above
The marshallian demand curve includes:
Substitution Effect
Income Effect
Both substitution and income effect
None of them
In substitution effect and income effect:
The substitution effect is more certain
The income effect is more certain
The substitution effect is uncertain
The income effect is always positive
Cross-elasticity of demand or cross-price elasticity between two independent goods will be:
Negative
Positive
Infinite
Zero
A monopolist has control over the price he charges for his product. He will be able to maximize his profit by:
Lowering the price, if the demand curve is elastic
Lowering the price, if the demand curve is inelastic
Rising the price, if the demand curve is elastic
None of the above is applicable
In sweezy model (kinked demand curve model), the overall increase in costs of production:
Do not effect equilibrium
Affect equilibrium
Both a and b
None of the above
A monopoly producer usually earns:
Abnormal profits
Only normal profits
Neither profits nor losses
Profits and losses which are uncertain
Income-elasticity of demand is expressed as:
% change in quantity demanded % change in income
% change in income % change in quantity demanded
Change in income Change in quantity demanded
None of the above
Under which of the following forms of the market structure does a firm have no control over the price of its product?
Monopoly
Monopolistic competition
Oligopoly
Perfect competition
Income -elasticity of demand will be zero when a given change in income brings about:
A less than proportionate change in quantity demanded
A more than proportionate change in quantity demanded
The same proportionate change in quantity demanded
No change in quantity demanded
For a few products such as insulin for diabetics,:
The demand curve can be upward sloping
The price elasticity of demand could be zero
The price elasticity of demand could be greater than one
None of the above
The engineering production function and engineering costs curves are concerned with the:
Production cost
Collection cost
Raw material costs
Distribution costs
Microeconomics deals with the:
Allocation of resources of the economy as between production of different goods and services
Determination of prices of goods and services
Behavior of industrial decision makers
All of the above
The slope of an iso-quant represents:
MRS
MRT
MRTS
MRPS
The Law of Equi-Marginal Utility refers to:
Marginal utility of commodity X
Marginal utility of commodity Y
Marginal utility per rupee spent on X and Y commodities
None of the above
In the case of complements, the cross demand curve slopes:
Downwards to the right
Upwards to the right
Backwards to the top
Inwards at the bottom
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
Identify the factor, which generally keeps the price elasticity of demand for a commodity low:
Variety of uses for that commodity
Its low price
Close substitutes for that commodity
High proportion of the consumers income spent on it
Elasticity of Substitution (s) is defined as:
Percentage change in capital-labor ratio dividing by percentage change in 
Percentage change in dividing by percentage change in capital-labor ratio
Percentage change in inputs dividing by percentage change in outputs
None of the above
The cobweb model will divergent when the slope of:
Demand curve is more than supply curve
Supply curve is more than demand curve
Supply curve is equal to demand curve
None of the above
If a ten percent increase in price causes a ten percent reduction in quantity demanded, elasticity of demand is:
Perfectly elastic
Elastic
Unitary elastic
Inelastic
In Revealed Preference Theory, Samuelson proves P.E = S.E + I.E :
With using indifference curves
With using MRS
Without using indifference curve
None of the above
In monopolistic competition, the firms follow:
Exotic behavior
Sympathetic behavior
Myopia behavior
Regular behavior
In case of complementary factors, the isoquants are:
L-shaped
J-shaped
M-shaped
V-shaped