Question:

The shape of TVC and TC are

A.

rectangular hyperbola

B.

inverse ‘s’ shape

C.

horizontal straight line

D.

l shaped

Answer» a. rectangular hyperbola

Question:

If negative income effect is greater than positive substitution effect : theproduct will be

A.

a normal good

B.

an inferior good

C.

a giffen good

D.

a complementary good

Answer» c. a giffen good

Question:

The marginal propensity to save is defined as:

A.

1-∆C/∆Y

B.

S/Y

C.

Y/S

D.

Y/∆S

Answer» a. 1-∆C/∆Y

Question:

Who considered Political Economy as “an enquiry into the nature and causes of the wealth of nations”?

A.

Adam Smith

B.

J.B.Say

C.

Marshall

D.

Keynes

Answer» a. Adam Smith

Question:

The curve showing the quantity of a good that would be purchased at various income levels:

A.

Income Consumption Curve

B.

Price Consumption Curve

C.

Engel Curve

D.

Indifference Curve

Answer» c. Engel Curve

Question:

Which is not a fixed cost?

A.

Monthly rent of Rs. 1,000 contractually specified in a one-year lease

B.

An insurance premium of Rs. 50 per year, paid last month

C.

An attorney\s retainer of Rs. 50,000 per year

D.

A worker\s wage of Rs. 15 per hour

Answer» d. A worker\s wage of Rs. 15 per hour

Question:

In economic theory the costs of a firm

A.

Tend to be less than the everyday use of the term costs would suggest

B.

Includes implicit as well as explicit outlays

C.

Always decline as more output is produced

D.

Are usually defined in such a way that profits will be larger than the

Answer» b. Includes implicit as well as explicit outlays

Question:

If the income elasticity of demand is greater than one, then the commodity is:

A.

Necessity

B.

Luxury

C.

Inferior

D.

Non-related commodity

Answer» a. Necessity

Question:

Keynes considered subjective and objective factors:

A.

Important determinants of consumption

B.

Unimportant determinants of consumption

C.

Determinants of investment

D.

Determinants of business’s willingness to pay

Answer» b. Unimportant determinants of consumption

Question:

If the long run average cost curve for a typical firm in an industry is downward sloping to the right it becomes difficult to sustain the assumption of

A.

Diminishing returns

B.

Perfect competition

C.

Ceteris paribus

D.

Rising marginal costs in the short run

Answer» b. Perfect competition