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If the commodity is inferior then:

A. Income effect is positive but substitution effect is negative

B. Income effect is negative but substitution effect is positive

C. Both income effect and substitution effect are negative

D. Both income effect and substitution effect are positive

Correct Answer : C.


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  1. The Hicksian indirect utility function in the form of equation is:
  2. Efficient allocation of resources is achieved to a greater extent under:
  3. Neutral Technological Progress can be defined as:
  4. Labor Saving Technological Progress can be defined as:
  5. General Equilibrium deals with the equilibrium of the:
  6. In joint-profit maximization cartel, central agency sets the:
  7. Indifference curve represents:
  8. Other things remaining the same, when a consumers income increases his equilibrium point moves to:
  9. If there are many producers, each of whom has an individual production possibility curve, then the lowest…
  10. Nash equilibrium says:
  11. In perfectly competitive markets, the profit maximization rule can be represented by:
  12. Price discrimination is possible:
  13. In the short-run, in which one of the following situations would a competitive seller close down (shut-down)?
  14. In price leadership, like leader, the follower firm may:
  15. The elasticity of demand is equal to slope of demand function divided by:
  16. A monopolist will fix the equilibrium output of his product where the elasticity of his average revenue…
  17. The Chamberline model recognizes mutual:
  18. The budget constraint equation of the firm is:
  19. One common definition of a luxury good is a good with income elasticity:
  20. The effects according to which people use those goods which are concerned with distinctive standard…
  21. In which case the elasticity shown by the different points of a curve is the same?
  22. In monopolistic competition, because of difference in choices, the firm charges:
  23. In monopolistic competition, the firms face:
  24. The Lambda or Langrange Multiplier is a:
  25. Rational economic behavior on the part of the consumer means that he will:
  26. The proportionality rule in production requires that the ratios of MP and factor prices are:
  27. The arc elasticity is the measure of average elasticity at the mid-point of the chord and connects:
  28. When income of the consumer increases then demand curve of an inferior good:
  29. Of the following commodities, which has the lowest price-elasticity of demand?
  30. Average cost curve contains in it: