In the case of an inferior good, the income effect:
Partially offsets the substitution effect
Reinforces the substitution effect
Is equal to the substitution effect
More than offsets the substitution effect
Correct Answer :
A. Partially offsets the substitution effect
Related Questions
A good tends to have relatively inelastic demand, if:
Close substitutes are available
It has a high price
It is a luxury
It has no very close substitutes
Which of the following is not a U shaped curve:
Marginal cost curve
Average variable cost curve
Fixed cost curve
Average cost curve
The spending of money by the producer to influence consumers is an example of:
Derived demand
Joint demand
Demand creation
Compressed demand
Indifference curve represents:
Only two commodities
Only three commodities
More than three commodities
Any number of commodities
The marginal revenue of a perfectly competitive firm is:
Equal to the prices of its products
Positively related to output
Negatively related to output
Always higher than marginal cost
In the long run average costs curve, a firm can change:
Labour
Capital
Both of them
None of them
The firms in non-cooperative games:
Enforce contracts
Make contracts
Make negotiations
Do not make negotiations
Ordinal approach includes arranging:
The different combinations of X and Y in any way the consumer wants
The different combinations of X and Y higher and lower and measuring the difference of utility between them
The different combinations of X and Y higher and lower and not measuring the difference of utility between them
None of above
The difference between average total cost and average fixed cost shows:
Normal profits
Implicit costs
Variable costs
Opportunity costs
A monopolist is:
Price winner
Price searcher
Price taker
Price leaver
At the shut-down point in perfect competition:
P = AVC
TR =TVC
The total losses of the firm equal TFC
All of the above
In 1776, a famous book An enquiry into the nature and causes of the wealth of nation was written by:
J.S.Mill
Adam Smith
Robert Malthus
David Ricardo
On an indifference map higher indifference curves show:
The same level of price
The same level of satisfaction
The higher level of satisfaction
The lower level of satisfaction
The concept of industry in monopolistic competition has been replaced by:
Firm
Product group
Producers
Shopkeepers
If the increase in demand is more than the increase in supply, the price will:
Rise
Fall
Remain the same
None of the above
7.The costs which the firms have to face in order to change the price tags of their products and services are called:
Product costs
Real costs
Menu costs
Nominal costs
The shape of the TC curve is:
U
V
P
S(inverted)
If as a result of an increase in prices, total outlay (expenditures) on a commodity decreases, its price-elasticity of demand is:
Perfect elastic (infinitely elastic)
Relatively elastic (greater than one elasticity)
Unit elastic
Relatively inelastic (less than one elasticity)
If Cobb-Douglas production function is homogeneous of degree less than one (n<1), then it shows:
Constant returns to scale
Increasing returns to scale
Decreasing returns to scale
None of the above
Necessary condition for consumer equilibrium is:
In constant sum game (zero sum game), if there are two parties then:
Both parties make better-off
Both parties make worse-off
Both parties become Neutral
One party can become better off only if another is made worse off
The name of the system of direct exchange is:
Price system
Barter system
Islamic economic system
Socialistic system
Identify the author of The Principles of political Economy and Taxation:
Alfred Marshal
J.S.Mill
David Ricardo
A.C.Pigou
An indifferent curve shows:
That how many utils are obtained from consuming different bundles of commodities
Different collections of two commodities the consumer considers to be of equal value
That if price increases there will be an increases in demand
None of the above
In terms of price, the indirect utility function may be:
Concave
Quasi-convex
Straight line
Convex
The central problem of economics is:
Declining productivity
Increasing consumption
Limited material wants
Limited resources and unlimited wants
To get more revenue, a Finance Minister impose tax on that commodity which has:
Inelastic demand
Elastic demand
Unit elasticity
Zero elasticity
In monopolistic competition, the individual demand curve is also known as:
Planned products curve
Planned material curve
Planned costs curve
Planned sales curve
From the resource allocation view point, perfect competition is preferable because:
The firms operate at excess capacity levels
There is a whole variety of output produced
There is no restriction on entry and exit of firms
There is no idle capacity
Utility means:
The want- satisfying power of a commodity
Usefulness of commodity
Eating of commodity
None of these