In the case of a normal goods, the income effect:
Is always equal to the substitution effect
Completely offsets the substitution effect
Partially offsets the substitution effect
Reinforces the substitution effect
Correct Answer :
D. Reinforces the substitution effect
Related Questions
Repetition of a game (Repeated Game):
Yields the same outcome over and over
Can result in behavior that is different from what it would be if the game were played once
Is not possible
Makes cooperative games into noncooperative games
Which one of the following has been the most influential work of F.H.Knight?
Freedom and Reform
The Green Revolution
Economic Integration
Risk ,Uncertainty and Profit
If the supply curve is not a straight line but curvilinear, the elasticity on all points of the supply curve is:
Equal
Different
Zero
Infinity
Microeconomics is also known as:
Price theory
Demand theory
Supply theory
Income theory
In monopolistic competition, the firm compete on the basis of:
Price
Entry
Both a and b
None of the above
In cournot model, each firm expects a reaction from his rival but the expected reaction is not:
important
materialized
accepted
rejected
In monopolistic competition, the firms have to face:
Same cost conditions
Different cost conditions
Same price conditions
Same products conditions
The reserve capacity in administration is advocated on the ground that demand for a product will:
Decrease in the future
Increase in the future
Remain constant
None of the above
The main contribution of David Ricardo is in the field of:
Wages of labor
Factor pricing
Theory of rent
Determination of the rate of interest
If a consumer buys a product that costs Rs.3 and provides an additional 18 units of satisfaction, then for this purchase:
Total utility will increase by 6 units
The marginal utility per rupee is 6
The consumer will buy more because marginal utility is positive
The consumer obtained an extra54 units
Which of the following oligopoly models is concerned with the maximization of joint profits?
Price leadership model
Bertrands model
Collusive model
Edgeworths model
In dominant price leadership model, the dominant firm set the:
price
output
both a and b
none of the above
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
A firm enjoys maximum control over the price of its product under:
Monopoly
Perfect competition
Oligopoly
Imperfect competition
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
Robbins definition of economics was criticised by:
Alfred Marshal
Adam Smith
J.B.Clark
Hicks, Longe and Durbin
The budget constraint can be written as:
X.PX + Y.PY = 1
X.PX + Y.PY < 1
X.PX + Y.PY > 1
X.PX + Y.PY = 0
Indifference curves reflect:
Preferences
Income
Prices
Consumption
Change in quantity demanded (expansion and contraction of demand) is:
Due to change in price while other factors remain constant
Due to change in factors other than price
Both a and b
None of the above
If the commodity is inferior then Income Effect (I.E) is:
Negative
Positive
Zero
Infinite
The least cost combination of factors x , y and z will generally be the point at which:
Price of x = Price of z Price of y Price of x
MP of x = MP of y Price of x Price of x
MP of x = MP of y = MP of z Price of x Price of y Price of z
MP of x = MP of y = MP of z
In Revealed Preference Theory, a consumer reveals preference for bundle of:
Two goods
A few goods
One good
Many goods
If two goods have same marginal utility for a consumer then:
He will consume only one of them
He will consume equal quantities of them
He will be willing to pay the same price for each of them
The total utility gained from each of them is equal
In perfect competition, the slope of the total revenue curve of a firm is equal to the:
Market price
AVC
TFC
AFC
MC = MR = AC = AR shows the long run equilibrium position of the:
Competitive firm
Oligopolistic firm
Monopolist firm
None of the above
In 1890, Principles of Economics was written by:
Prof. Robbins
Alfred Marshal
Prof. Senior
Adam Smith
The demand curve of a firm in monopolistic competition is:
Negatively sloped
Vertical
Horizontal
Positively sloped
Scarcity means:
Nil resources
Limited resources
Many resources
Extra resources
The equilibrium of a firm is determined by the equality of MC and MR in only:
Under perfect competition
Under monopoly
Under imperfect competition
Under all the above market forms
Elasticity (E) expressed by the term, 8 >E>1, is:
Perfectly elastic (infinitely elastic)
Relatively elastic (greater than one elasticity)
Unitary elastic
Relatively inelasticity (less than one elasticity)