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Indifference curve approach (ordinal approach) is superior to utility approach (cardinal approach) because:

A. In ordinal approach we can separate the income effect from the substitution effect of a price change

B. In ordinal approach we can study the consumer behavior more closely

C. In ordinal approach the consumer is assumed more rational

D. In ordinal approach the consumer has more income

Correct Answer :

A. In ordinal approach we can separate the income effect from the substitution effect of a price change


Related Questions

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An indifference curve shows the bundles of two goods among which a consumer remains:

A. Indifferent

B. Different

C. In equilibrium

D. Dominant

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Some farm land can be used to produce either corn or soybeans. If the demand for corn increases then:

A. The demand for soybeans should increase

B. The supply of soybeans should increase

C. The demand for soybeans should decrease

D. The supply of soybeans should decrease

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When total product (TP) is maximum:

A. MP is negative

B. MP is infinite

C. MP is zero

D. None of the above

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4

An economic theory is :

A. An axiom

B. A proposition

C. A hypothesis

D. A tested hypothesis

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The study of economic theory for the sake of certain objective is called:

A. Positive Economics

B. Normative Economics

C. Micro Economics

D. Development Economics

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7.In an economy based on the price system the decision on what shall be produced is made by:

A. Government

B. Consumer

C. Producer

D. Stock holder

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An income demand curve of an inferior good is:

A. Upward sloping

B. Downward sloping

C. Constant in slope

D. None of the above

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Nash equilibrium is applicable in case of:

A. Cournot model

B. Edgeworth model

C. Chamberline model

D. Sweezy model

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Marginal revenue from a given output:

A. The price at which the marginal unit sells

B. Total revenue sale of all units divided by volume of sales

C. Average revenue of total output average revenue of last unit

D. The change in total revenue resulting from the sale of one unit more of output

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Marginal cost is found with the help of changes in:

A. Total cost or total variable cost

B. Total explicit cost

C. Total fixed cost

D. Total implicit cost

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If the factors have to be employed in a fixed ratio, then the elasticity of substitution under Leontief technology is:

A. One

B. Zero

C. Two

D. Five

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If a firm is producing output at a point where diminishing returns have set in, this means that:

A. Each additional unit of output will be more expensive to produce

B. Each additional unit of output will require increasing amount of inputs

C. Marginal product of the variable factor of production decreases as the quantity increases

D. All of the above

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4

The budget constraint can be written as:

A. X.PX + Y.PY = 1

B. X.PX + Y.PY < 1

C. X.PX + Y.PY > 1

D. X.PX + Y.PY = 0

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4

The law of Diminishing Marginal Utility implies that the marginal utility of a good decreases as:

A. It gets more expensive

B. A household consumes more of it

C. Preference changes

D. A households income goes up

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The goods sold by firms under monopolistic competition are technological as well as:

A. Economic complements

B. Economic substitutes

C. Economic inferiors

D. None of the above

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In dominant price leadership model, the dominant firm set the:

A. price

B. output

C. both a and b

D. none of the above

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Average cost curve contains in it:

A. Normal profits

B. No normal profits

C. Sometimes normal profits and sometimes no normal profits

D. Super normal profits

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On a straight line demand curve, elasticity of demand at the midpoint is:

A. Equal to zero

B. Equal to one

C. Equal to infinity

D. More than one

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If the commodity is normal then Income Effect (I.E) is:

A. Negative

B. Positive

C. Zero

D. Infinite

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Marginal Utility (MU) curve is always:

A. Rising

B. Falling

C. Parallel to X-axis

D. Parallel to Y-axis

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Who wrote A Contribution to the Theory of Trade Cycle?

A. N.Kaldor

B. J.R.Hicks

C. A.C.Pigou

D. J.M.Keynes

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4

We can find total utility by:

A. Multiplying the number of unit by its marginal utility

B. Adding up the marginal utility of all units

C. Multiplying price by number of units

D. None of the above

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The firm producing at the minimum point of the AC curve is said to be:

A. Operating under diminishing cost

B. Making optimum use of plant capacity

C. Operating at excess capacity

D. Operating under increasing costs

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If a new production technology for producing compact discs is developed and new firms are attracted to this field:

A. The supply curve will shift down or right

B. The supply curve will shift up or left

C. Both demand and supply curve shifts would occur

D. None of the above

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Consumer surplus is the difference between

A. Price demanded and price paid

B. Price quoted and price actually paid

C. Price that a consumer is willing to pay and the price actually paid

D. None of the above

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Who wrote Mathematical Analysis for Economists?

A. J.P.Lewis

B. R.G.D.Allen

C. Paul A.Samuelson

D. E.D.Domar

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The least cost combination of factors x , y and z will generally be the point at which:

A. Price of x = Price of z Price of y Price of x

B. MP of x = MP of y Price of x Price of x

C. MP of x = MP of y = MP of z Price of x Price of y Price of z

D. MP of x = MP of y = MP of z

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Price discrimination occurs when:

A. Different prices are charged to different consumers for homogenous products

B. Same prices are charged for differentiated products

C. Different prices are charged for homogenous goods for successive units to the same customer

D. Any of the above condition is present

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In an indifference curve diagram, when the price of a product increases, the decline in quantity demanded that results if consumers utility or welfare is kept constant is referred to as the:

A. Utility effect

B. Budget line effect

C. Substitution effect

D. Income effect

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When total revenue (TR) falls in monopoly then elasticity of demand is:

A. E =1

B. E >1

C. E <1

D. E =0