In perfect competition, the slope of the total revenue curve of a firm is equal to the:
Market price
AVC
TFC
AFC
Correct Answer :
A. Market price
A competitive firm faces a perfectly elastic demand curve meaning that total revenue is proportional to output. A competitive firm can sell all the output it desires at the market price. The total revenue curve for a competitive firm is a ray with a slope equal to the market price.} The slope of the TR = MC= P}
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
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
Ceteris paribus clause in the law of demand means:
The price of substitute does not change
The taste of the consumer does not change
The income of the consumer does not change
All of the above
Whenever a group of monopolistic competitors attains equilibrium, the firms in this group usually:
Charge different prices, but produce identical outputs
Produce different outputs, but charge identical prices
Charge different prices, and produce different outputs
None of the above
If we measure the elasticity of demand with the help of the average and marginal revenue, the formula is:
Ed = AR/ (AR- MR)
Ed = MR/ (AR-MR)
Ed = AR/(MR-AR)
Ed = AR/ MR
In non-collusive oligopoly firms enter into:
Secret agreements
No secret agreements
Bad habits
None of the above
In short run, a firm would remain in business as long as which one of the following of cost is covered?
Total costs
Fixed costs
Variable costs
Constant costs
Some farm land can be used to produce either corn or soybeans. If the demand for corn increases then:
The demand for soybeans should increase
The supply of soybeans should increase
The demand for soybeans should decrease
The supply of soybeans should decrease
For the given production function, technical inefficiency is defined as:
Sets of points relating production function that maximizes output given input (labor) i.e. Q = f(L, K)
Sets of points relating production function that produces less output than possible for a given set of input (labor) i.e. Q < f(L, K)
Use of imported technology
None of the above
If X and Y are close substitutes, a fall in price of X will lead to:
Increase in demand for Y
Decrease in demand for Y
Increase in demand for both X and Y
Increase in demand for Y
Perfect competition implies:
Differentiated goods
Homogeneous goods
Advertised goods
Distress sale of goods
Each SAC represents a particular level of:
Input
Output
Both of them
None of them
Theory of revealed preference is based on:
Weak orderings
Neutral orderings
Partial orderings
Strong orderings
A mixed economy is characterized by the coexistence of:
Modern and traditional industries
Public and private sectors
Foreign and domestic investments
Commercial and subsistence farming
The main contribution of Malthus is in the field of:
Consumption expenditure
Theory of population
Division of labor
Theory of demand
The good will highest income elasticity is:
Beef
Mutton
Bread
Motion-picture tickets
Which one of the following is also known as Plant Curves:
Long-run average cost (LAC) curves
Short-run average cost (SAC) curves
Average variable cost (AVC) curves
Average total cost (ATC) curves
Of the following commodities, which has the lowest price-elasticity of demand?
Car
Salt
Tea
House
The greater the percentage of income spent on a commodity:
The greater its elasticity is likely to be
The weaker its elasticity is likely to be
The unchanged its elasticity is likely to be
None of the above
7.In an economy based on the price system the decision on what shall be produced is made by:
Government
Consumer
Producer
Stock holder
The supply curve would probably shift to the right if:
Resource( factors of production) used in production became more costly
The technology of production improves
Consumers income increased
Some sellers left the market
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
Income effect operates through an increase
In nominal income
In money income
In wages
In real income because of the fall of price of a commodity
4.The Law of Diminishing Returns according to the modern view, applies to:
Agriculture
All fields of production
Industry
Services
Marginal cost is found with the help of changes in:
Total cost or total variable cost
Total explicit cost
Total fixed cost
Total implicit cost
For the given production function, technical efficiency is defined as:
Sets of points relating production function that maximizes output given input (labor) i.e. Q = f(L, K)
Sets of points relating production function that produces less output than possible for a given set of input (labor) i.e. Q < f(L, K)
Use of imported technology
None of the above
The standard form of demand function is:
Q = a- bP
Y = a- bP
Q = a+ bP
MRSxy measures:
The amount of Y a consumer is willing to give up to obtain one additional unit of X and still remain on the same indifference curve
The amount of X a consumer is willing to give up to obtain one additional unit of Y and still remain on the same indifference curve
The amount of Y a consumer is willing to give up to obtain one additional unit of X and move to a higher indifference curve
The amount of X a consumer is willing to give up to obtain one additional unit of Y and move to a higher indifference curve
Because of selling costs, the demand curve of a firm shifts:
Downward
Upward
Horizontal
Straight line
Economics is a:
Physical science
Social science
Natural science
Basic science