Substitution effect means a consumer
Shifts away from the commodity the price of which has fallen
Shifts in favour of a commodity the price of which has risen
Shifts away from a commodity the price of which has risen, in favour of a commodity the price of which has fallen
None of the above
Correct Answer :
C. Shifts away from a commodity the price of which has risen, in favour of a commodity the price of which has fallen
Related Questions
Scarcity means:
Nil resources
Limited resources
Many resources
Extra resources
Equilibrium of a discriminating monopolist requires the fulfillment of which one of the following conditions?
It must be profitable to him to sell output in more than one market
Marginal revenue in both markets must be the same
Marginal revenue in both markets must also be equal to the marginal cost of producing the monopolists aggregate output
All 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
The giffen paradox is an exception to law of:
Supply
Demand
Production
Consumption
The general form of Cobb-Douglas production function is:
Who wrote An Introduction to Positive Economics?
R.G.Lipsey
Paul.A.Samuelson
E.D.Domar
J.M.Keynes
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
When elasticity of demand is greater than one (e >1), then following the formula MR=P[1-1/e], the MR will:
Positive
Negative
Zero
None of the above
The alternative of profit maximization theory is:
Cost maximization
Product maximization
Revenue maximization
None of the above
The costs faced by the firm against fixed factors are:
Total costs
Fixed costs
Variable costs
Marginal costs
On all points of budget (price) line:
Total expenditures increases
Total expenditures decreases
Total expenditures are zero
Total expenditures remain same
Under competitive conditions, the industry will be in equilibrium:
When each firm is in equilibrium equating MC with MR
When all the firms are earning only normal profits
When firms outside have no tendency to enter the industry and those within, have no tendency to leave the industry
All of the above
The nominal income of a consumer is income in terms of:
Goods
Goods and services
Goods and services it can purchased
Monetary units
At low prices, demand is likely to be:
More elastic
Less elastic
Unit elastic
Perfectly inelastic
In a perfectly competitive market, suppliers must know:
The incomes of consumers
The price of the good
What other commodities households could substitute for the good
Consumers expectations of the future
When a consumer is in equilibrium then slope of indifference curve is:
Equal to the slope of budget line
Greater than the slope of budget line
Smaller than the slope of budget line
Parallel to the slope of budget line
Who developed the concept of Representative Firm?
A.C.Pigou
Alfred Marshal
J.M.Keynes
D.H.Robertson
If a ten percent increase in price causes a ten percent reduction in quantity demanded, elasticity of demand is:
Perfectly elastic
Elastic
Unitary elastic
Inelastic
A market demand schedule is obtained by adding individual demand schedules:
Horizontally
Vertically
Permanently
Perpetually
Competitors in monopolistic competition have full control over:
The price of their product
Product quality
The shape of the market demand curve
The elasticity of product substitution
The long-run average cost is based on the fact that:
None of the factors are variable in the long-run
All factors are perfectly divisible in the long-run
None of the factors is divisible
Management factor is indivisible while all other factors are divisible and can be varied in long-run
The concept of industry in monopolistic competition has been replaced by:
Firm
Product group
Producers
Shopkeepers
Change in demand refers to:
Movement on the same demand curve
Upward shift of the demand curve
Downward shift of the demand curve
Upward or downward shift of the demand curve
The production possibility curve (PPC) is concerned with:
Resources of the economy
Interests of the economy
Limitations of the economy
Qualities of the economy
Price discrimination is undertaken with the aim of:
Increasing sales and maximizing profits
Reducing sales and raising prices
Minimizing cost and maximizing revenue
Serving the markets without earning profits
The imaginary differentiation is attributed to difference in:
Style
Salesmanship
Locality
All of these
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 the price of product increases and in the result the demand for product B also increases then:
A and B are substitute goods
A and B are complementary goods
A is inferior to B
A is superior to B
Marshallian approach is also known as:
Cardinal approach
Ordinal approach
Consumer approach
Production approach
The short run cost curve is U shaped because of:
The operation of increasing cost
The existence of fixed cost
The existence of variable cost
All of the above