Question:

‘Stagflation’ is a situation where the economy faces

A.

Inflation

B.

Stagnation

C.

Inflation as well as stagnation

D.

None of the above

Answer» b. Stagnation

Question:

If price is greater than average cost, in the short-run, thecompetitive firm can earn

A.

Normal profit

B.

Super normal profit

C.

Loss

D.

All of the above

Answer» b. Super normal profit

Question:

Which of the following statements describes increasing returns to scale:

A.

Doubling the inputs used leads to double the output.

B.

Increasing the inputs by 50% leads to a 25% increase in output.

C.

Increasing inputs by 1/4 leads to an increase in output of 1/3.

D.

None of the above.

Answer» c. Increasing inputs by 1/4 leads to an increase in output of 1/3.

Question:

The demand curve of a firm under perfect competition is :

A.

Inelastic

B.

Perfectly inelastic

C.

Infinitely elastic

D.

Unitary elastic

Answer» c. Infinitely elastic

Question:

“Utility or satisfaction is a subjective concept; therefore it could only beranked”. The statement supports

A.

cardinal utility theorist

B.

ordinal utility theorist

C.

behavioral theorist of the firm

D.

none of the above

Answer» b. ordinal utility theorist

Question:

In the case of perfect complementaries, the MRS between goods is:

A.

Zero

B.

Positive

C.

Negative

D.

None

Answer» a. Zero

Question:

Economic cost include both

A.

explicit cost and implicit cost

B.

fixed cost and variable cost

C.

explicit cost and prime cost

D.

money cost and sunk cost

Answer» a. explicit cost and implicit cost