Q. Which cost increases continuously with the increase in production? A. Average cost B. Marginal cost C. Fixed cost D. Variable cost Answer: Variable cost
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Q. The supply of a commodity refers to: A. Actual production of the commodity B. Total existing stock of the commodity C. Stock available for sale D. Amount of the commodity offered for sale at a particular price per unit of time Answer: Amount of the commodity offered for sale at a particular price per
Q. A vertical supply curve parallel to the price axis implies that the elasticity of supply is: A. Zero B. Indinity C. Equal to one D. Greater than zero but less than infinity Answer: Zero
Q. An ISO-product curve slopes: A. Downward to the left B. Downward to the right C. Upward to the left D. Upward to the right Answer: Downward to the right
Q. Production is a function of: A. Profits B. Costs C. Inputs D. Price Answer: Profits
Q. The Revealed Preference Theory deduces the inverse price-quantity relationship from: A. Assumption of indifference B. Postulate of utility maximization C. Observed behaviour of the consumer D. Introspection Answer: Observed behaviour of the consumer
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Q. An indifference curve slopes down towards right since more of one commodity and less of another result in: A. Same satisfaction B. Greater satisfaction C. Maximum satisfaction D. Decreasing Expenditure Answer: Same satisfaction
Q. The consumer is in equilibrium at a point where the budget line: A. Is above an indifference curve B. Is below an indifference curve C. Is tangent to an indifference curve D. Cuts an indifference curve Answer: Is tangent to an indifference curve
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Q. The elasticity of substitution between two perfect substitutions is: A. Zero B. Greater than zero C. Less than infinity D. Infinity Answer: Infinity
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Q. Which one is not a assumption of the theory of demand based on analysis of indifference curves? A. Given scale of preferences as between different combinations of two goods B. Diminishing marginal rate of substitution C. Constant marginal utility of money D. Consumers would always prefer more of a particular good to less
