If two households have identical preferences but different incomes then:
They must consume the same amounts of all goods
The wealthier one will have lower marginal utility for most goods
The wealthier one will have higher marginal utility for most goods
They will enjoy the same level of utility
Correct Answer :
B. The wealthier one will have lower marginal utility for most goods
Related Questions
In Edgeworth model, if price falls below competitive price, the demand is:
More than maximum output
More than minimum output
Less than maximum output
Less than minimum output
Under pure monopoly, there will be:
No distinction between firm and industry
One firm and no industry
No firm and no industry
None of the above
The difference between laws of return and laws of return to scale is:
In case of laws of return, one factor of production is constant and other is variable while in laws of return to scale both factors of production are variable
In case of laws of return to scale, one factor of production is constant and other is variable while in laws of return, both factors of production are variable
Both a and b
None of the above
Total profits are maximized at the point where:
TR equals TC
The TR curve and the TC curve intersect such that TR and TC lie at the same point
The TR curve and the TC curve are parallel and TC exceeds TR
The TR curve and the TC curve are parallel and TR exceeds TC
Implicit costs are the costs:
Which are not incurred by the firm and may accrue to the community
Of resources the cost of factors owned by the firm
Of resources supplied by the household
Of government externalities
Efficient allocation of resources is achieved to a greater extent under:
Monopoly
Perfect competition
Monopolistic competition
Oligopoly
A high value of cross-elasticity indicates that the two commodities are:
Very good substitutes
Poor substitutes
Good complements
Poor complements
If the commodity is normal then price effect is:
Negative
Inverse
Positive
Both (a) and(b)
If Cobb-Douglas production function is homogeneous of degree greater than one (n>1), then it shows:
Constant returns to scale
Increasing returns to scale
Decreasing returns to scale
None of the above
Stable cobweb model is a:
Simple model
Dynamic model
Both of them
None of them
When the slope of a demand curve is infinite (also known as horizontal demand curve) then elasticity will be:
Zero (perfectly inelastic)
Equal to one (unitary elastic)
Infinite (perfectly elastic)
None of the above
The right of individuals to control productive resources is known as:
Monopoly
Private property
Workable competition
Oligopoly
The difference between the average total cost and average variable cost as output increases will:
Increases
Remains the same
Diminishes
Zero
Which of the following is assumed to be constant when drawing a demand curve?
Consumer tastes
Prices of inputs
Technology
Number of sellers
A firm is a sum of persons who convert:
Goods into services
Output into inputs
Inputs into outputs
None of the above
In short-run, in monopolistic competition, a firm earns:
Normal profits
Abnormal profits
No profits
All of the above
Supply and demand changes have their most rapid impact in:
Auction market
Contract markets
Market for commercial office space
Natural gas market
Utility is:
A subjective concept
An ethical concept
An objective concept
A historical concept
Indifference curve represents:
Only two commodities
Only three commodities
More than three commodities
Any number of commodities
Any straight line supply which cuts the x-axis will have:
Zero elasticity
An elasticity greater than one
Unitary elasticity of supply
An elasticity less than one
When the slope of a demand curve is zero (also known as vertical demand curve) then elasticity will be:
Zero (perfectly inelastic)
Equal to one (unitary elastic)
Infinite (perfectly elastic)
None of the above
In non-collusive oligopoly firms enter into:
Secret agreements
No secret agreements
Bad habits
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
For monopolistic competitive firm:
P=AR and P>MR
P
P=MC and MC=AC
None of the above
The necessary condition of firms equilibrium requires:
dR/dQ + dC/dQ = 0
dR/dQ - dC/dQ = 0
dC/dQ - dR/dQ = 0
dR/dQ > dC/dQ > 0
We get constant returns to scale when:
a = ½
� = ½
Both of them
None of them
The equilibrium conditions, MC = MR = AR = AC, will happen:
In the short-run under perfect competition
In the long-run under perfect competition
In the short-run under monopolistic competition
In the long-run under monopolistic competition
At the point where a straight line demand curve meets the quantity axis (x-axis), elasticity of demand is:
Equal to zero
Equal to one
Equal to infinite
More than one
Marginal utility is only meant for:
Half utility
Full utility
Additional utility
Multiplied utility
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