Deck 2: Economic Concepts and Principles

Question 1

The MC curve cuts the AC curve at

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

Answer 1

the initial point

Question 2

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

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

Answer 2

left

Question 3

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

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

Answer 3

both of these

Question 4

The U shape of the LAC reflects

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

Question 5

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

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 6

The deductive method is also called

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

Question 7

An Essay on the Nature and Significance of Economic Science was written by

A)adamsmith
B)alfred marshall
C)lord robbins
D)samuelson

Question 8

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

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 9

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

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

Question 10

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

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

Question 11

The basic doctrine of consumers surplus is based on

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

Question 12

According to Marshall, The law of diminishing marginal utility

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 13

Indifference curve is always

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

Question 14

Price effect is

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

Question 15

For a giffen good, when price falls

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

Question 16

Inferior goods are the goods with

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

Question 17

Which of the following is called gossans first law

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

Question 18

According to Marshall consumer surplusis:

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

Question 19

If both the products X & Y are normal goods

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

Question 20

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

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 21

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

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