The demand curve of giffen goods will be:
Negatively sloped
Positively sloped
Parallel to X-axis
None of the above
Correct Answer :
B. Positively sloped
A special type of a highly inferior good may exist known as giffen good. When the price of a giffen good increases then the demand for that good also increases and so demand curve will be upward sloping. Although, there is no exact exmaple is exist of giffen good but according to Mr. Giffen when price of cheap bread (giffen good here) rises then poor people who used to eat cheap bread and expensive meat will now no longer afford to supplement cheap bread with better food (meat), so they decrease the consumption of meat which is more expensive and increase the demand of bread which is still the cheapest food which they can get}
Related Questions
In Edgeworth model, if price falls below competitive price, the demand is:
More than maximum output
More than minimum output
Less than maximum output
Less than minimum output
Which form of market structure is characterized by interdependence in decision-making as between the different competing firms?
Oligopoly
Perfect competition
Imperfect competition
None of the above
An indifference curve shows the bundles of two goods among which a consumer remains:
Indifferent
Different
In equilibrium
Dominant
The nominal income of a consumer is income in terms of:
Goods
Goods and services
Goods and services it can purchased
Monetary units
In economic term water is a:
Free good
Economic good
Both of the above
None of the above
Income -elasticity of demand will be zero when a given change in income brings about:
A less than proportionate change in quantity demanded
A more than proportionate change in quantity demanded
The same proportionate change in quantity demanded
No change in quantity demanded
Production function relates:
Cost to input
Wages to profits
Cost to output
Inputs to output
If the marginal utility is divided by the price of the commodity then it is called:
Real Marginal Utility
Gross Marginal Utility
Weighted Marginal Utility
Money Marginal Utility
Firms average and marginal revenues are equal under:
Monopoly
Perfect competition
Oligopoly
Monopolistic competition
Any straight line supply which cuts the x-axis will have:
Zero elasticity
An elasticity greater than one
Unitary elasticity of supply
An elasticity less than one
Discriminating monopoly implies that the monopolist charges different prices for his commodity:
From different groups of consumers
For different uses
At different places
Any of the above
An economic model describing the working of an economy consists of:
Functional relationships
Family relationships
Economic position
Stagnant relationships
In the case of an inferior good, the income effect:
Partially offsets the substitution effect
Reinforces the substitution effect
Is equal to the substitution effect
More than offsets the substitution effect
Under price discrimination, the buyers must:
Be similar
Not be similar
Equal
None of the above
By reducing the prices of its products below those of its competitors, a perfectly competitive seller:
Reduces its revenues
Increases its revenues
Can sell nothing
None of the above
When price increases and with it the total outlay on a commodity also increases, it is a case of:
Perfect elasticity (infinitely elastic)
Relative elasticity (greater than one elasticity)
Perfect inelasticity (zero elasticity)
Relative inelasticity (less than one elasticity)
The kink demand curve faced by an oligopolist is based on the assumption that:
Competitors will follow a price increase but not a price cut
Competitors will follow a price increase as well as a price cut
Competitors will ignore both a price increase and a price cut
Competitors will ignore a price increase but will follow a price cut
At high prices, demand is likely to be:
More elastic
Less elastic
Unit elastic
Perfectly inelastic
Total fixed costs are:
The reaction curve of a firm is attained by joining the:
Isoprofit curve
Super profit curve
Normal profit curve
Indoprofit curve
Market demand curve is:
Vertical summation of individual demand curves
Upward summation of individual demand curves
Downward summation of individual demand curves
Horizontal summation of individual demand curves
All of the following are capital resources except:
Warehouses
Buildings
Dams
Share of stock
Conditions of perfect competition ensure:
That each firm can influence the price
No single firm can influence the price
Any single firm can influence the supply condition in the market
Any single firm can influence both supply and price in the market
In context of oligopoly, the kinky demand curve (kinked demand curve) hypothesis is designed to explain:
Price and output determination
Price rigidity (price stickness)
Price leadership
Collusion among rivals
Demand is consumers:
Ability to get a commodity
Willingness to get a commodity
Willingness and ability to get a commodity
Desire for a commodity
Total profits are maximized at the point where:
TR equals TC
The TR curve and the TC curve intersect such that TR and TC lie at the same point
The TR curve and the TC curve are parallel and TC exceeds TR
The TR curve and the TC curve are parallel and TR exceeds TC
With the expansion of output, the short run average cost curve, beyond a point, starts rising because:
Average fixed cost increases sharply
More production yields lower per unit price
The law of variable proportions applies to short run production
Sales expenses become much larger
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
In monopolistic competition, the aim of the firm is to:
Maximize output
Minimize output
Minimize cost
Maximize profit
The production function of homogeneous of degree one (n=1) is also called:
Linearly homogeneous
Zero homogeneous
Infinite homogeneous
None of the above