Question 1

If the long run cost curve shifts down wards it is an indication of

Accepted Answer

A) technological progress 
B) lower factor prices 
C) both of these 
D) reserve capacity 
A) technological progress 
B) lower factor prices 
C) both of these 
D) reserve capacity C

Question 2

When price of a product falls, more of it is purchased because of

Accepted Answer

A) the substitution effect 
B) the income effect 
C) neither substitution effect nor income effect 
D) both the substitution and income effects 
A) the substitution effect 
B) the income effect 
C) neither substitution effect nor income effect 
D) both the substitution and income effects D

Question 3

The MC curve cuts the AC curve at

Accepted Answer

A) the maximum point 
B) the initial point 
C) the minimum point 
D) any point 
A) the maximum point 
B) the initial point 
C) the minimum point 
D) any point B

Question 4

Which of the following is called gossans first law

Accepted Answer

A) law of substitution 
B) law of equi marginal utility 
C) law of diminishing marginal utility 
D) none of the above 
A) law of substitution 
B) law of equi marginal utility 
C) law of diminishing marginal utility 
D) none of the above

Question 5

The U shape of the LAC reflects

Accepted Answer

A) law of variable proportions 
B) laws of returns to scale 
C) reserve capacity 
D) none of these 
A) law of variable proportions 
B) laws of returns to scale 
C) reserve capacity 
D) none of these

Question 6

For a giffen good, when price falls

Accepted Answer

A) demand increases at a faster rate 
B) demand decreases 
C) demand remains constant 
D) demand curve has a negative slope 
A) demand increases at a faster rate 
B) demand decreases 
C) demand remains constant 
D) demand curve has a negative slope

Question 7

Which of the following statement is TRUE with regard to total utility

Accepted Answer

A) total utility is the utility derived from last unit 
B) total utility increases at a diminishing range 
C) as consumption increases total utility goes on diminishing 
D) at saturation point total utility is negative 
A) total utility is the utility derived from last unit 
B) total utility increases at a diminishing range 
C) as consumption increases total utility goes on diminishing 
D) at saturation point total utility is negative

Question 8

According to Marshall, The law of diminishing marginal utility

Accepted Answer

A) applies on money in the manner in which it applies on commodity 
B) do not applies on money except bank money 
C) does not applies on bank money but applies on cash 
D) applies on all commodities except money 
A) applies on money in the manner in which it applies on commodity 
B) do not applies on money except bank money 
C) does not applies on bank money but applies on cash 
D) applies on all commodities except money

Question 9

If both the products X & Y are normal goods

Accepted Answer

A) slopes down towards right 
B) slopes up towards right 
C) slopes up towards left 
D) slopes down towards left 
A) slopes down towards right 
B) slopes up towards right 
C) slopes up towards left 
D) slopes down towards left

Question 10

A production possibility curve is concave to the point of origin because of

Accepted Answer

A) increasing marginal rate of transformation (mrt) 
B) increasing marginal opportunity cost (moc) 
C) both of the above 
D) decreasing marginal rate of transformation 
A) increasing marginal rate of transformation (mrt) 
B) increasing marginal opportunity cost (moc) 
C) both of the above 
D) decreasing marginal rate of transformation

Question 11

Indifference curve is always

Accepted Answer

A) concave to the origin 
B) convex to the oringin 
C) l shaped 
D) a straight line 
A) concave to the origin 
B) convex to the oringin 
C) l shaped 
D) a straight line

Question 12

"Utility or satisfaction is a subjective concept; therefore it could only be ranked". The statement supports

Accepted Answer

A) cardinal utility theorist 
B) ordinal utility theorist 
C) behavioral theorist of the firm 
D) none of the above 
A) cardinal utility theorist 
B) ordinal utility theorist 
C) behavioral theorist of the firm 
D) none of the above

Question 13

Inferior goods are the goods with

Accepted Answer

A) falling income effect 
B) rising income effect 
C) negative income effect 
D) positive marshallian effects 
A) falling income effect 
B) rising income effect 
C) negative income effect 
D) positive marshallian effects

Question 14

The basic doctrine of consumers surplus is based on

Accepted Answer

A) indifference curve analysis 
B) revealed preference theory 
C) law of substitution 
D) law of diminishing marginal utility 
A) indifference curve analysis 
B) revealed preference theory 
C) law of substitution 
D) law of diminishing marginal utility

Question 15

If negative income effect is less than positive substitution effect : the product will be

Accepted Answer

A) a normal good 
B) an inferior good 
C) a giffen good 
D) a complementary good 
A) a normal good 
B) an inferior good 
C) a giffen good 
D) a complementary good

Question 16

The deductive method is also called

Accepted Answer

A) abstract 
B) analytical 
C) priori method 
D) all the above 
A) abstract 
B) analytical 
C) priori method 
D) all the above

Question 17

Price effect is

Accepted Answer

A) income effect - substitution effect 
B) substitution effect - income effect 
C) income effect + substitution effect 
D) income effect + substitution effect- negative effects 
A) income effect - substitution effect 
B) substitution effect - income effect 
C) income effect + substitution effect 
D) income effect + substitution effect- negative effects

Question 18

The minimum point of ATC is at.............. position of the minimum point of AVC

Accepted Answer

A) right 
B) left 
C) same 
D) all of above can be 
A) right 
B) left 
C) same 
D) all of above can be

Question 19

Other things being equal a decrease in demand can be caused by

Accepted Answer

A) a fall in price of the commodity 
B) a fall in income of the consumer 
C) a rise in price of the substitute 
D) none of these 
A) a fall in price of the commodity 
B) a fall in income of the consumer 
C) a rise in price of the substitute 
D) none of these

Question 20

According to Marshall consumer surplusis:

Accepted Answer

A) total utility - marginal utility 
B) total utility + marginal utility 
C) total utility derived - price 
D) price - marginal utility 
A) total utility - marginal utility 
B) total utility + marginal utility 
C) total utility derived - price 
D) price - marginal utility

If the long run cost curve shifts down wards it is an indication of

When price of a product falls, more of it is purchased because of

The MC curve cuts the AC curve at

Which of the following is called gossans first law

The U shape of the LAC reflects

For a giffen good, when price falls

Which of the following statement is TRUE with regard to total utility

According to Marshall, The law of diminishing marginal utility

If both the products X & Y are normal goods

A production possibility curve is concave to the point of origin because of

Indifference curve is always

"Utility or satisfaction is a subjective concept; therefore it could only be ranked". The statement supports

Inferior goods are the goods with

The basic doctrine of consumers surplus is based on

If negative income effect is less than positive substitution effect : the product will be

The deductive method is also called

Price effect is

The minimum point of ATC is at.............. position of the minimum point of AVC

Other things being equal a decrease in demand can be caused by

According to Marshall consumer surplusis:

Cost and Demand Analysis in Economics

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Exam 2: Economic Concepts and Principles

If the long run cost curve shifts down wards it is an indication of

When price of a product falls, more of it is purchased because of

The MC curve cuts the AC curve at

Which of the following is called gossans first law

The U shape of the LAC reflects

For a giffen good, when price falls

Which of the following statement is TRUE with regard to total utility

According to Marshall, The law of diminishing marginal utility

If both the products X & Y are normal goods

A production possibility curve is concave to the point of origin because of

Indifference curve is always

"Utility or satisfaction is a subjective concept; therefore it could only be ranked". The statement supports

Inferior goods are the goods with

The basic doctrine of consumers surplus is based on

If negative income effect is less than positive substitution effect : the product will be

The deductive method is also called

Price effect is

The minimum point of ATC is at.............. position of the minimum point of AVC

Other things being equal a decrease in demand can be caused by

According to Marshall consumer surplusis:

Cost and Demand Analysis in Economics

Filters