The law of demand is most directly a result of:
The law of comparative advantage
The law of diminishing returns
The principle of substitution
Economics of large scale production
Correct Answer :
C. The principle of substitution
The law of demand states negative relationship b/w quantity demanded and price and forms negative sloped demand curve. One of the reasons of negative sloped demand curve is the substitution effect (S.E) which states that as the price of a commodity raises then consumer decreases quantity demanded of that commodity and substitutes it with some other commodity.
Related Questions
The demand curve of a firm in monopolistic competition is:
Negatively sloped
Vertical
Horizontal
Positively sloped
The word ECONOMICS is derived from the Greek terms meanings:
Political economy
Household Management
Production and consumption
Financial Accounting
Which of the following oligopoly models is concerned with the maximization of joint profits?
Price leadership model
Bertrands model
Collusive model
Edgeworths model
Marginal cost is found with the help of changes in:
Total cost or total variable cost
Total explicit cost
Total fixed cost
Total implicit cost
The Input-Output Analysis was originated by:
W.W. Leontief
E.D.Domar
R.G.D.Allen
J.M.Keynes
The number of sellers in oligopoly are:
Two
Many
Four
Very few
An optimum level of a firms output is:
Where marginal cost is minimum
Where average cost is minimum
Where both the marginal and the average cost curves are at their respective minimum
Where the firm earns the maximum profits
A monopolist:
Can not influence the market
Can influence the market
Is a price taker
None of the above
If demand is elastic and supply is inelastic then the burden of a tax on the good will be:
Borne mostly by producers
Borne mostly by consumers
Borne mostly by government
Shared equally by producers and consumers
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
If price exceeds AVC but in smaller than AC at the best level of output, the firm is:
Making a profit
Incurring a loss but should continue to produce in the short-run
Incurring a loss and should stop producing immediately
Making a normal profit
Isocost line shows the combinations of labor and capital where a firms budget is:
Fully spent
Half spent
Partially spent
Nearly spent
AR curve under perfect competition:
Slopes downwards to the right
Slopes upward to the right
Is vertical to the x-axis
Is horizontal to the x-axis
A good tends to have relatively inelastic demand, if:
Close substitutes are available
It has a high price
It is a luxury
It has no very close substitutes
The Cambridge School of Thought refers to the group of English economists who came under the influence of:
Alfred Marshal
J.M.Keynes
Paul A.Samuelson
A.C.Pigou
The short-run periods in monopolistic competition are:
Parallel to each other
Dependent upon each other
Independent of each other
Zero
7.The costs which the firms have to face in order to change the price tags of their products and services are called:
Product costs
Real costs
Menu costs
Nominal costs
Utility is a function of:
Price
Quantity
Supply
Demand
The fixed cost of a firm:
Are fixed even in the long period
When expressed as an average, show a continuous decline with increase of output
Do not reflect diminishing marginal returns
None of the above
The production techniques are technically efficient:
Bellow the lower ridge line
Above the upper ridge line
Between the two ridge lines
On the upper ridge line
Who stated explicitly for the first time the Law of Camparative Costs?
David Ricardo
Adam Smith
James Mill
A.C.Pigou
A budget line shows:
Quantities of commodity X which a consumer could buy with no amount of Y
Quantities of commodity Y which a consumer could buy with no amount of X
The different combinations of X and Y that the consumer could buy
All of the above
Economic laws are:
Conditional
Moral by nature
Predicted
Like laws of sports
Excess capacity is concerned with the:
V-shaped traditional cost curves
S-shaped traditional cost curves
Modern cost curves
U-shaped traditional cost curves
When the consumer is in equilibrium not only his income is fully spent, but the ratio of marginal utility and price is:
Increased
Equalized
Prominent
Zero
If at the unchanged price, the demand for a commodity goes up, or the quantity demanded remains the same when its price goes up, it is called:
Contraction of demand
Decrease in demand
Increase in demand
Extension of demand
Which is the other name that is given to the average revenue curve?
Profit curve
Demand curve
Average cost curve
Indifference curve
If a good is an inferior good then an increase in incomes of the consumers will:
Increase demand for the good
Increase supply of the good
Reduce the equilibrium price of the good
None of the above
An inferior good/ commodity is inferior for:
Every consumer
Most consumers
All consumers
Some consumers and not for others
Who finalized the model of imperfect competition?
Ricardo
Marshal
Chamberlin
Mrs. Robinson