If the production function is homogeneous, the expansion path will be a straight line through the origin whose slope determines the optimal:
L/K ratio
K/L ratio
P/L ratio
P/K ratio
Correct Answer :
B. K/L ratio
Related Questions
Price elasticity of demand can be measured in the following way:
Percentage change in quantity demanded of a commodity divided by percentage change in price of that commodity
Change in quantity demanded of a commodity divided by change in price of that commodity
Percentage change in price of a commodity divided by percentage change in quantity demanded of that commodity
None of that commodity
Neutral Technological Progress can be defined as:
Technological progress that causes to raise the marginal product of capital and labor in the same proportion
Technological progress that causes the marginal product of capital to increase relative to the marginal product of labor
Technological progress that causes the marginal product of labor to increase relative to the marginal product of capital
None of the above
If a firm produces zero output in the short period then which statement is true?
Its total cost will be zero
Its variable cost will be positive
Its fixed cost will be positive
Its average cost will be zero
If the commodities X and Y are perfect complements then:
None of the above
In economist the term invisible hand is refers to:
Hand of God
Market self regulating system
Hands of invisible people
Regulations of government
The game theory concentrates on:
Gaming
Strategic decisions
Both a and b
None of the above
According to Marginalists, the price of any commodity is determined by:
Marginal usefulness
Marginal cost
Both of them
None of them
Under monopolistic competition, the products sold by the firms are:
Economic substitutes
Technical substitutes
Both a and b
None of the above
Excess capacity is concerned with the:
V-shaped traditional cost curves
S-shaped traditional cost curves
Modern cost curves
U-shaped traditional cost curves
The cost curves of the firm shift due to changes in:
Input prices
Technological innovations
Both of them
None of them
Increasing returns is not caused by:
Specialization of labor
Technological advancement
Marketing economics
Varying factor proportions
When marginal costs curve cuts average costs curve, average costs are:
Maximum
Zero
Minimum
Equal to one
Inputs or Factors of production are defined as:
Productive resources such as labor and capital equipment that firms use to manufacture goods and services are called inputs or factors of production
Unproductive resources that do not take part in production process are called inputs or factors of production
Firms own resources are called inputs or factors of production
None of the above
The Cambridge School of Thought refers to the group of English economists who came under the influence of:
Alfred Marshal
J.M.Keynes
Paul A.Samuelson
A.C.Pigou
Which is not a central problem of an economy?
What to produce
How to produce
How to maximize private profit
For whom to produce
In 1890, Principles of Economics was written by:
Prof. Robbins
Alfred Marshal
Prof. Senior
Adam Smith
The advertisement and other selling activities:
Lessen the differentiation
Widen the differentiation
Does not effect the differentiation
All of the above
Excess capacity is not found under:
Monopoly
Monopolistic competition
Perfect competition
Oligopoly
Average cost curve contains in it:
Normal profits
No normal profits
Sometimes normal profits and sometimes no normal profits
Super normal profits
Which of the following is called Gossens first law?
Law of production
The Law of Equi-Marginal Utility
The Law of Diminishing Marginal Utility
Law of Variable Proportions
The average cost curve is a geometrical illustration of:
Hydraulic function
Cubic function
Pentagonic function
Quadratic function
The general markets results from the imposition of price ceilings has been:
Higher prices
Increased prices
Increased consumption
Shortage of products
Marginal utility is only meant for:
Half utility
Full utility
Additional utility
Multiplied utility
Rational economic behavior on the part of the consumer means that he will:
Save as much of his income as possible
Spend as much of his income as possible
Buy everything at the lowest possible price
Make wise choices among available economic goods
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
Even in the long-run equilibrium, the pure monopolist can make abnormal profits because of:
Advertising
His low LAC
Blocked entry
High price he charges
In a perfectly competitive market, suppliers must know:
The incomes of consumers
The price of the good
What other commodities households could substitute for the good
Consumers expectations of the future
Total variable cost curve:
Steps downwards at first and then upwards
Steps upwards, then remains constant and then falls
Steps downwards
None of the above
The Latin term citeris paribus means:
Other things being equal
Because of this
Due to this
All the factors changes at the same rate
Cross-demand curve shows:
The effect of a change in price of X on its demand
The effect of a change in price of X on the demand for Y
The effect of a change in price of Y on its demand
None of the above