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Q.1
"Rent is a creation of value, not of wealth". Who made this observation?
Adam Smith
David Ricardo
Alfred Marshall
A.C.Pigou
Q.2
Consumer's surplus left with the consumer under price discrimination is
Maximum
Minimum
Zero
Not predictable
Q.3
In short run, a firm in monopolistic competition
Always earns profits
Incurs losses
Earns normal profit only
May earn normal profit, super normal profit or incur losses
Q.4
In long-run, all firms in monopolistic competition
Earn supernormal profits
Earn normal profits
Incur losses
May earn normal profit, super normal profit or incur losses
Q.5
In a perfectly competitive market
Firm is the price giver and industry the price taker
Firm is the price taker and industry the price giver
Both are price takers
None of the above
Q.6
Which one is the assumption of law of demand
Price of the commodity should not change
Quantity demanded should not change
Prices of substitutes should not change
Demand curve must be linear
Q.7
What is the shape of the demand curve faced by a firm under perfect competition?
Horizontal
Vertical
Positively sloped
Negatively sloped
Q.8
Which of the following is not an essential condition of pure competition?
Large number of buyers and sellers
Homogeneous product
Freedom of entry
Absence of transport cost
Q.9
In market equilibrium, supply is vertical line. The downward sloping demand curve shifts to the right. Then
Price will fall
Price remains same
Price will rise
Quantity rises
Q.10
In market equilibrium, supply is vertical line. The downward sloping demand curve shifts to the right. Then
Price will fall
Price remains same
Price will rise
Quantity rises
Q.11
If the price of Pepsi decreases relative to the price of Coke and 7-Up, the demand for
Coke will rise
7-Up will decrease
Coke and 7-Up will increase
Coke and 7-Up will decrease
Q.12
Ten rupees is the equilibrium price for good X. If government fixes the price at Rs.5, there is
A shortage
A surplus
Excess supply
Loss
Q.13
A rise in supply and demand in equal proportion will result in
Increase in equilibrium price and equilibrium quantity
Decrease in equilibrium price and increase in equilibrium quantity
No change in equilibrium price and increase in equilibrium quantity
Increase in equilibrium price and no change in equilibrium quantity
Q.14
Zubair has a special taste for college canteen's hotdogs. The owner of the canteen doubles the prices of hotdogs. Zubair did not respond to the increase in prices and kept on demanding the same quantity of hotdogs. His demand for hotdogs is
Perfectly elastic
Perfectly inelastic
Elastic
Less elastic
Q.15
If demand is inelastic, a change in the price
Will change the quantity in same direction
Will change total revenue in same direction
Will change total revenue in the opposite direction
Will not change total revenue
Q.16
Which one of the following pairs of commodities is an example of substitutes?
Tea and sugar
Tea and coffee
Pen and ink
Shirt and trousers
Q.17
Elasticity of supply refers to the degree of responsiveness of supply of a commodity to changes in its
Demand
Price
Cost of production
State of technology
Q.18
When demand is perfectly inelastic, an increase in price will result in
A decrease in total revenue
An increase in total revenue
No change in total revenue
A decrease in quantity demanded
Q.19
The cost on one thing in terms of the alternative given up is known as
Production cost
Physical cost
Real cost
Opportunity cost
Q.20
The average total cost pf producing 50 units is Rs.250 and total fixed cost is Rs.1000. What is the average fixed cost of producing 100 units?
Rs.10
Rs.30
Rs.20
Rs.5
Q.21
Under Marginal utility analysis, utility is assumed to be a
Cardinal concept
Ordinal concept
Indeterminate concept
None of the above
Q.22
When equilibrium price rises but equilibrium quantity remains unchanged, the cause is
Supply and demand both increase equally
Supply and demand both decrease equally
Supply decreases and demand increases
Supply increases and demand decreases
Q.23
If demand is unitary elastic, a 25% increase in price will result in
25% change in total revenue
No change in quantity demanded
1% decrease in quantity demanded
25% decrease in quantity demanded
Q.24
Which of the following cost curves is never U-shaped?
Average cost curve
Marginal cost curve
Average variable cost curve
Average fixed cost curve
Q.25
The classical theory explained interest as a reward for
Parting with liquidity
Abstinence
Saving
Inconvenience
Q.26
The 'substitution effect' takes place due to change in
Income of the consumers
Prices of the commodity
Relative prices of the commodities
All of the above
Q.27
The degree of monopoly power is measured in terms of difference between
Marginal cost and the price
Marginal cost and average revenue
Marginal cost and average cost
Marginal revenue and average cost
Q.28
Discriminating monopoly is possible if two markets have
Rising cost curves
Rising and declining cost curves
Different elasticity of demand
Equal elasticity of demand
Q.29
Contraction of demand is the result of
Decrease in the number of consumers
Increase in the price of the commodity concerned
Increase in the prices of other goods
Decrease in the income of purchasers
Q.30
According to M. Kalecki, the true measure of the degree of monopoly power is the
Ratio between price and marginal cost
Extent of monopolistic profit enjoyed by the monopolist
Cross-elasticity of demand for the product of the monopolist
Price charged by the monopolist minus marginal cost of production
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