Question:

According to Hicks substitution effect is

A.

the movement to a higher indifference curve

B.

the movement to a lower indifference curve

C.

the movement along an indifference curve

D.

the movement to a decreased consumption

Answer» c. the movement along an indifference curve

Question:

Which of the following statements describes the presence of diminishing returns. Holding at least one factor constant …….

A.

The marginal product of a factor is positive and rising.

B.

The marginal product of a factor is positive but falling.

C.

The marginal product of a factor is falling and negative.

D.

The marginal product of a factor is constant.

Answer» b. The marginal product of a factor is positive but falling.

Question:

The law which states that supply creates its own demand and overproduction is impossible is known as:

A.

The law of supply

B.

Say’s law of market

C.

Law of demand

D.

Law of macro economics

Answer» b. Say’s law of market

Question:

The most important founder of German sociology, __________ , was keenly interested in maintaining the relationship between economics and sociology.

A.

Max Adler

B.

Max Weber

C.

Karl Marx

D.

Joseph W. Eaton

Answer» b. Max Weber

Question:

When Q = f (P), the elasticity coefficient is measured by:

A.

∆Q/∆P / P/Q

B.

∆P/∆Q * Q/P

C.

∆Q/∆P * P/Q

D.

P/∆Q / Q/P

Answer» c. ∆Q/∆P * P/Q

Question:

On a linear demand curve, the coefficient of price elasticity is unity, then the value of MR will be:

A.

Positive

B.

Zero

C.

Negative

D.

One

Answer» b. Zero

Question:

In the fundamental theorem of consumption and to prove the law of demand,Samualson uses

A.

compensating variation in income

B.

the cost difference

C.

the over compensation effect

D.

substituting variation in price

Answer» c. the over compensation effect

Question:

Human capital formation refers to:

A.

The process of increasing the number of people

B.

The process of physical growth of capital

C.

The process of increasing knowledge, skills and capacities of all people

D.

The process of providing more facilities to the people

Answer» c. The process of increasing knowledge, skills and capacities of all people

Question:

When disposable income rises from Rs 500 to Rs 600 and consumption expenditure changes from Rs 470 to Rs 560, MPC will be equal to

A.

900

B.

100

C.

0.9

D.

1

Answer» c. 0.9

Question:

A firm encountering economies of scale over some range of output will have a:

A.

Rising long-run average cost curve.

B.

Falling long-run average cost curve.

C.

Constant long-run average cost curve.

D.

Rising, then falling, then rising long-run average cost curve.

Answer» b. Falling long-run average cost curve.