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
Correct Answer :
D. In real income because of the fall of price of a commodity
Related Questions
The arc elasticity is the measure of average elasticity at the mid-point of the chord and connects:
Two points on demand curve
Two points on supply curve
Many points on demand curve
Many points on demand curve
Identify the work of Irving Fisher:
Policy on trade
Policy against inflation
The making of index numbers
Labor theory
Increasing returns is not caused by:
Specialization of labor
Technological advancement
Marketing economics
Varying factor proportions
The good will highest income elasticity is:
Beef
Mutton
Bread
Motion-picture tickets
In short-run, in monopolistic competition, a firm earns:
Normal profits
Abnormal profits
No profits
All of the above
In case of complementary factors, the isoquants are:
L-shaped
J-shaped
M-shaped
V-shaped
A straight line, downward-sloping demand curve implies that, as price falls, the elasticity of demand:
Increases
Decreases
Remains the same
Is zero
The spending of money by the producer to influence consumers is an example of:
Derived demand
Joint demand
Demand creation
Compressed demand
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
If the price of a product falls then quantity demanded tends to increase ceteris paribus because:
The MU/P ratio has decreased
Of the income and substitution effects
Consumers tend to feel poorer when prices fall
When price falls the demand curve shifts right
Rational economic behavior on the part of the consumer means that he will:
Save as much of his income as possible
Spend as much of his income as possible
Buy everything at the lowest possible price
Make wise choices among available economic goods
The substitution effect works to encourage a consumer to purchase more of a product when the price of that good is falling because:
The consumers real income has increased
The consumers real income has decreased
The product is now relatively less expensive than before
Other products are now less expensive than before
A firm under perfect competition has:
An AR curve which is a horizontal straight line
An AR curve which slopes downward
An AR curve which has a kink
An AR curve shape of which cannot be predicted
If in the long run, output increases in the same proportion as increase in all the input in the given proportion, this is known as:
Increasing returns to scale
Decreasing returns to scale
Constant returns to scale
Variable returns to scale
Who wrote An Introduction to Positive Economics?
R.G.Lipsey
Paul.A.Samuelson
E.D.Domar
J.M.Keynes
Extension (expansion) of demand means:
More quantity demanded at a lower price
More quantity demanded at a higher price
More quantity demanded at the same price
None of the above
If regardless of changes in its price, the quantity demanded of a commodity remains unchanged, then the demand curve for the commodity will be:
Horizontal
Vertical
Positively sloped
Negatively sloped
Marginal cost is the cost:
Of the last unit of production
Of marginal unit
Of marginal efficient units
Of the average units of production
In economist the term invisible hand is refers to:
Hand of God
Market self regulating system
Hands of invisible people
Regulations of government
Compared to perfect competition, a monopolist will charge:
Charges a high price
Produce more output
Increase economic efficiency
None of the above
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
A market-clearing price:
Is a disequilibrium price
Is an equilibrium price
Means a shortage exists as a market is cleared
Must be set by the government
Efficient allocation of resources is achieved to a greater extent under:
Monopoly
Perfect competition
Monopolistic competition
Oligopoly
Which of the following is not a feature of isoproduct curves?
Are downward sloping to the right
Show different input combination producing the same output
Intersect each other
Are convex to the origin
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
If demand is elastic and supply is inelastic then the burden of a tax on the good will be:
Borne mostly by producers
Borne mostly by consumers
Borne mostly by government
Shared equally by producers and consumers
The point where the supply and demand curves intersect on a graph determines:
Market price
Equilibrium price
Long-term price
Short-term price
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
If the commodity is inferior then Income Effect (I.E) is:
Negative
Positive
Zero
Infinite
If a monopolist is producing under decreasing cost conditions, increase in demand is beneficial to the society because:
Consumers get better quality goods
Cost of production falls and hence price will follow
Goods will be sold in many markets
None of the above