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
Correct Answer :
B. The interplay of demand and supply
Related Questions
Necessary condition for consumer equilibrium is:
A high value of cross-elasticity indicates that the two commodities are:
Very good substitutes
Poor substitutes
Good complements
Poor complements
In the long-run:
Fixed cost will be greater than variable cost
Variable costs will be greater than fixed costs
All costs are variable costs
All costs are fixed costs
Which is the correct statement?
The U shape of long-run cost curve is less pronounced than the short-run cost curves
The U shape of the short-run cost curves is less pronounced than the long-run cost curves
The U shape of the long-run cost curve is more pronounced than the short-run cost curves
The long-run cost curves are never U shaped
The alternative of profit maximization theory is:
Cost maximization
Product maximization
Revenue maximization
None of the above
The consumer is in equilibrium at the where:
Budget line and indifference curve intersect each other
Budget line and indifference curve are tangent to each other
Budget line and indifference curve are opposite to each other
Budget line and indifference curve are parallel to each other
The difference between accounting profits and economic profits is:
Implicit costs
Explicit costs
Fixed costs
Variable costs
Cross-elasticity of demand or cross-price elasticity between two perfect substitutes will be:
Negative
Positive
Infinite
Zero
In respect of which of the following category of goods is consumers surplus highest?
Giffen goods
Necessities
Luxuries
Prestige goods
Price discrimination is undertaken with the aim of:
Increasing sales and maximizing profits
Reducing sales and raising prices
Minimizing cost and maximizing revenue
Serving the markets without earning profits
If the demand for good is more elastic and government levied a tax per unit of output, the price per unit for the firm would:
Rise by the amount of the tax
Rise by more than the amount of the tax
Rise by less than the amount of the tax
Remain the same
Marginal cost is always:
Less than the average cost
More than the average cost
Equal to the average cost at minimum point
Never equal to the average cost
In cournot model, at equuilibrium when MC = MR, the elasticity of demand is:
equal to one
zero
negative
equal to 2
The isoquant which are generated by CES (constant elasticity of substitution) production function are always:
Positively sloped
Negatively sloped
Concave to the origin
None of the above
In the perfect competition, there is a process of:
Restricted entry and exit of the firms
Semi free exit but absolute free entry
Free entry but restricted exit of the firms
Free entry and free exit of the firms
Suppose income increases by 10% and demand for commodity increases by 5% then the income elasticity of demand is:
Negative
Positive
Zero
Infinity
When income of the consumer increases then demand curve of an inferior good:
Shifts rightward
Shifts leftward
Does not shift
None of the above
The factors of production in perfect competition are:
Stagnant
Mobile
Immobile
Rare
The non-price competition cartel is a:
stable cartel
unstable cartel
prominent cartel
special cartel
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
The slope of marshallian demand curve is:
Upward
Vertical
Downward
Horizontal
In the long run:
All factors can be used in different proportions
Management can be re-organized
A firm can experience returns to scale
All of the above
If the commodity is normal then the Income Effect (I.E) and the Substitution Effect (S.E):
Both move together and reinforce each other
One moves and the other remains constant
Move in the opposite direction and neutralize each other
Both remain constant
The average product is given as:
Q.L
Q- L
Q+ L
Q/L
In economic term water is a:
Free good
Economic good
Both of the above
None of the above
An indifference curve shows the bundles of two goods among which a consumer remains:
Indifferent
Different
In equilibrium
Dominant
In monopolistic competition, the aim of the firm is to:
Maximize output
Minimize output
Minimize cost
Maximize profit
The firm in cournot model:
face costs
face taxes
donot face taxes
donot face costs
The long-run average cost is based on the fact that:
None of the factors are variable in the long-run
All factors are perfectly divisible in the long-run
None of the factors is divisible
Management factor is indivisible while all other factors are divisible and can be varied in long-run
If a person behaves against the laws of economics then:
He should be condemned
He may lose his respect from society
He should be punished
He should not be punished or even criticised