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4

Market allocation fundamentally relies upon:

A. A system of relative prices

B. A belief that employees work for the good of society

C. Government ownership of the means of production

D. Moral incentives to encourage productive efficiency

Correct Answer :

A. A system of relative prices


Market allocation relies upon the information provided by relative prices that is conveyed to both consumers and producers

Related Questions

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Which of the following is an implicit cost of production?

A. Wages of the labor

B. Charges of electricity

C. Interest on owned money capital

D. Payment for raw materials

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If cross-elasticity of one commodity for another turns out to be zero, it means they are:

A. Close substitutes

B. Good complements

C. Completely unrelated (independent goods)

D. None of the above

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4

In Revealed Preference Theory, a consumer reveals preference for bundle of:

A. Two goods

B. A few goods

C. One good

D. Many goods

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In modern theory, LAC = LMC after the attainment of:

A. Maximum optimal scale

B. Average optimal scale

C. Minimum optimal scale

D. None of the above

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Moving along the indifference curve leaves the consumer:

A. Better off

B. Worse off

C. In equilibrium

D. Neither better off nor Worse off

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4

An inferior commodity is one whose quantity demand decreases when income of the consumer:

A. Decreases

B. Increases

C. Remains constant

D. Zero

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4

We can obtain consumers demand curve from:

A. Income Consumption Curve (ICC)

B. Engels Curve

C. Price Consumption Curve (PCC)

D. Production Possibility Curve (PPC)

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4

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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4

A monopolist has control over the price he charges for his product. He will be able to maximize his profit by:

A. Lowering the price, if the demand curve is elastic

B. Lowering the price, if the demand curve is inelastic

C. Rising the price, if the demand curve is elastic

D. None of the above is applicable

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4

The name of the system of direct exchange is:

A. Price system

B. Barter system

C. Islamic economic system

D. Socialistic system

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4

AR curve under perfect competition:

A. Slopes downwards to the right

B. Slopes upward to the right

C. Is vertical to the x-axis

D. Is horizontal to the x-axis

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4

Under monopolistic competition, in long-run there is:

A. Ban on exit

B. Ban on entry

C. Free entry

D. Free entry and exit

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Indifference curves reflect:

A. Preferences

B. Income

C. Prices

D. Consumption

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In a perfectly competitive market, suppliers must know:

A. The incomes of consumers

B. The price of the good

C. What other commodities households could substitute for the good

D. Consumers expectations of the future

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4

The difference between average cost and average revenue is:

A. Total profit

B. Average profit

C. Net profit

D. Marginal profit

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4

In case of perfect competition, TR curve rises at a:

A. Constant rate

B. Decreasing rate

C. Increasing rate

D. None of the above

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General equilibrium is concerned with simultaneous equilibrium of:

A. Few economic agents

B. All the economic agents

C. Two economic agents

D. Many economic agents

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In Bertrand model, the entry of new firms is:

A. banned

B. allowed

C. partially allowed

D. none of the above

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The difference between accounting profits and economic profits is:

A. Implicit costs

B. Explicit costs

C. Fixed costs

D. Variable costs

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Identify the author of The Principles of political Economy and Taxation:

A. Alfred Marshal

B. J.S.Mill

C. David Ricardo

D. A.C.Pigou

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4

A loss bearing firm will continue to produce in the short run so long as the price at least covers:

A. Average variable cost

B. Average fixed cost

C. Average variable cost + average fixed cost

D. Marginal costs

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4

The marshallian indirect utility function in the form of equation is:

A. x =a-bp

B. x =b-ap

C.

D. x = f(P)

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The consumer is in equilibrium at the where:

A. Budget line and indifference curve intersect each other

B. Budget line and indifference curve are tangent to each other

C. Budget line and indifference curve are opposite to each other

D. Budget line and indifference curve are parallel to each other

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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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4

Whish of the following represents the average revenue curve of a firm?

A. The curve representing the cost per unit of output

B. The demand curve of consumers for the firms product

C. Total receipts realized by the firm

D. All of the above

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For the equilibrium of the firm and the industry in the short period in a competitive market, the condition is:

A. P = AC

B. P = MC

C. AC = MC

D. MC = TR

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If two households have identical preferences but different incomes then:

A. They must consume the same amounts of all goods

B. The wealthier one will have lower marginal utility for most goods

C. The wealthier one will have higher marginal utility for most goods

D. They will enjoy the same level of utility

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We can measure consumers surplus with the help of

A. TU curve

B. MU curve

C. Supply curve

D. None of the above

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Which form of market structure is characterized by interdependence in decision-making as between the different competing firms?

A. Oligopoly

B. Perfect competition

C. Imperfect competition

D. None of the above

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In dominant strategies I am doing the best, I can no matter:

A. What you do

B. What you are doing

C. What you not do

D. None of them