The substitution effect works to encourage a consumer to purchase more of a product when the price of that good is falling because:
The consumers real income has increased
The consumers real income has decreased
The product is now relatively less expensive than before
Other products are now less expensive than before
Correct Answer :
C. The product is now relatively less expensive than before
Related Questions
When total product (TP) is maximum:
MP is negative
MP is infinite
MP is zero
None of the above
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
The shape of the TC curve is:
U
V
P
S(inverted)
A profit-maximizing monopolist in two separate markets will:
Charge the same price in both markets
Always charge a higher price in the market where he sells more
Always charge a higher price in the market where he sells less
Adjust his sales in the two markets so that his marginal revenue in each market just equals his aggregate marginal cost
With the decrease in marginal valuation of a specific commodity, the price offered by the people:
Decreases
Increases
Become very high
Remain unchanged
In case of monopoly:
MR
MR>AR
MR=AR
AR=0
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
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
The relationship between MC and MP shown by the marginal cost concept is:
Inverse
Direct
Negative
Positive
MRSxy measures:
The amount of Y a consumer is willing to give up to obtain one additional unit of X and still remain on the same indifference curve
The amount of X a consumer is willing to give up to obtain one additional unit of Y and still remain on the same indifference curve
The amount of Y a consumer is willing to give up to obtain one additional unit of X and move to a higher indifference curve
The amount of X a consumer is willing to give up to obtain one additional unit of Y and move to a higher indifference curve
The CES production function shows:
Decreasing return to scale
Increasing return to scale
Constant return to scale
None of the above
The firm is said to be in equilibrium when the difference between revenue and cost is:
Maximum
Minimum
Zero
One
Marginal utility (MU) always:
Increases
Decreases
Remains constant
None of above
The proportionality rule in production requires that the ratios of MP and factor prices are:
Doubled
Equalized
Not equalized
None of the above
In the range of excess capacity, the average costs are:
Maximum
Minimum
Equal to one
Equal to zero
Total Utility (TU) curve:
Always rises
Always falls
First falls and then rises
First rises and then falls
The basic subject matter of economics is:
Money
Capital resources
Scarcity
Inflation
By scarcity the economist means that all goods are scarce relative the peoples:
Desire for them
Purchases
Production
Consumption
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
We can measure consumers surplus with the help of
TU curve
MU curve
Supply curve
None of the above
In the case where two commodities are good substitutes then cross elasticity will be:
Positive
Unitary
Negative
Infinite
According to Cobb-Douglas, in production function the marginal product of labor is:
If a monopolist is producing under decreasing cost conditions, increase in demand is beneficial to the society because:
Consumers get better quality goods
Cost of production falls and hence price will follow
Goods will be sold in many markets
None of the above
The minimization of costs subject to output requires equilibrium at the lowest:
Isoquant line
Isocost line
Indifference curve
Price line
Who wrote Mathematical Analysis for Economists?
J.P.Lewis
R.G.D.Allen
Paul A.Samuelson
E.D.Domar
Who is the author of Choice of Technique?
K.N.Raj
Amartiya Sen
A.C.Pigou
Alfred Marshal
To calculate the elasticity of demand, which of the following formula is used?:
Percentage change in demand Original demand
Proportionate change in demand Proportionate change in price
Change in demand Change in price
None of the above
Some farm land can be used to produce either corn or soybeans. If the demand for corn increases then:
The demand for soybeans should increase
The supply of soybeans should increase
The demand for soybeans should decrease
The supply of soybeans should decrease
Repetition of a game (Repeated Game):
Yields the same outcome over and over
Can result in behavior that is different from what it would be if the game were played once
Is not possible
Makes cooperative games into noncooperative games
Which of the following goods is most likely to be exchanged in a market of local rather than national scope?
University professors
Computer components
Building materials
Jet airplanes