Price elasticity of demand is best defines as:
Change in the tastes of consumers at different prices
The rate of response of demand to a change in supply
The change in costs when output is increased by one unit
The responsiveness of demand to a change in price
Correct Answer :
D. The responsiveness of demand to a change in price
Related Questions
When marginal costs curve cuts average costs curve, average costs are:
Maximum
Zero
Minimum
Equal to one
A firm will be in equilibrium when the lowest isocost is:
Tangent to the lowest isoquant
Tangent to the given isoquant
Above the given isoquant
Below the given isoquant
The game theory is concerned with:
Perfect competition
Imperfect competition
Price discrimination
Duopoly and oligopoly
An economic theory is :
An axiom
A proposition
A hypothesis
A tested hypothesis
When elasticity of demand is one (e=1), then following the formula MR=P[1-1/e], the MR will:
Positive
Negative
Zero
None of the above
The short-run periods in monopolistic competition are:
Parallel to each other
Dependent upon each other
Independent of each other
Zero
The slope of the iso-cost line (budget line) is determined by:
Pricing of two factors
Productivity of the two factors
Degree of substitutability of two factors
None of the above
Who finalized the model of monopolistic competition?
Ricardo
Marshal
Chamberlin
Mrs. Robinson
The number of sellers in duopoly is:
A few
Four
Two
Very large
At a point where a straight line demand curve meets the price axis (Y-axis), the elasticity of demand is:
Equal to one
Less than one
Equal to zero
Equal to infinite
A shift in the demand for a product is likely to result from a change in:
The products price
Expectations
The prices of factors of production used to produced it
Production technology
In respect of which of the following category of goods is consumers surplus highest?
Giffen goods
Necessities
Luxuries
Prestige goods
In case of monopoly, both AR and MR fall, but MR falls:
Double to that of AR
1/2 to that of AR
2/3 to that of AR
Four times to that of AR
Which of the following is called Gossens first law?
Law of production
The Law of Equi-Marginal Utility
The Law of Diminishing Marginal Utility
Law of Variable Proportions
The shape of the TC curve is:
U
V
P
S(inverted)
In measuring price-elasticity:
Price is a dependent variable and quantity is an independent variable
Price is an independent variable and quantity is a dependent variable
Price and quantity both are independent variables
Price and quantity both are dependent variables
Profits of a firm will be calculated taking into account the units produced and the difference between:
Real cost and money cost
Variable cost and fixed cost
Average cost and average revenue
Marginal cost and average cost
If a person behaves against the laws of economics then:
He should be condemned
He may lose his respect from society
He should be punished
He should not be punished or even criticised
The name of the system of direct exchange is:
Price system
Barter system
Islamic economic system
Socialistic system
Elasticity of Substitution (s) is defined as:
Percentage change in capital-labor ratio dividing by percentage change in 
Percentage change in dividing by percentage change in capital-labor ratio
Percentage change in inputs dividing by percentage change in outputs
None of the above
In second degree price discrimination, monopolist takes away :
All of the consumer surplus
All of the producer surplus
Some part of the consumer surplus
None of them
An effective price ceiling usually results in:
Excess demand
Qd > Qs
Shortage of supply
All of the above
According to Chamberlin, the activity of a monopolistic competitive firm:
Get noticed by the rival firms
Get unnoticed by the rival firms
Get noticed by the employees of the rival firms
None of the above
The longer the period of time, the elasticity of supply will be:
Constant
Less elastic
More elastic
Perfectly elastic
The market demand for any commodity is the:
Average requirement for it in any given place
Amount of it wanted at any given price
Amount that people would like to buy during a period at different prices
Quantity needed to maintain a given standard of living
The number of sellers in oligopoly are:
Two
Many
Four
Very few
In price leadership, like leader, the follower firm may:
also maximize its profits
not maximize its profits
maximize its costs
none of the above
Moving along the indifference curve leaves the consumer:
Better off
Worse off
In equilibrium
Neither better off nor Worse off
In arriving at stable equilibrium in cournot model, if one firm decreases output the other firm will:
Also decrease it
Increase it
Remain uneffected
None of the above
If the production function is homogeneous, the expansion path will be a straight line through the origin whose slope determines the optimal:
L/K ratio
K/L ratio
P/L ratio
P/K ratio