Competitive Exams: Economics MCQs (Practice-Test 44 of 122)

  1. The total area under the demand curve of a goods, measures

    1. marginal utility

    2. total utility

    3. consumers'surplus

    4. producers'surplus

  2. If the price-consumption curve is horizontal, the price elasticity of demand for x (the price of which falls) would be

    1. zero

    2. one

    3. greater than one

    4. less than one

  3. If two demand curves intersect, then at the point of intersection.

    1. they are equally elastic

    2. the steeper curve is more elastic

    3. the flatter curve is more elastic

    4. their elasticity cannot be compared

  4. The production function Y = LK is

    1. homogeneous of degree 2

    2. Homogeneous of degree 1

    3. homogeneous of degree zero

    4. non-homogeneous

  5. Suppose that output (Y) is a function of capital (KI); then the capital-elasticity of output is given by

    1. MP/APK

    2. APk/MPK

    3. Y

    4. none of these

  6. Assume a production function Y = La K1 − a (Y = output, L = labour and K = capital) for a firm in a purely competitive market. Which one of the following would measure the share of labour in output?

    1. a

    2. L (a)

    3. La

    4. a/L

  7. A supply curve will have a price-elasticity equal to 1 only when it is

    1. a straight line with a positive intercept

    2. a straight line with a negative intercept

    3. a straight line passing through the origin

    4. horizontal

  8. If tow factors are perfect substitutes, the isoquant will be

    1. a straight line

    2. a parabola

    3. a rectangular hyperbola

    4. an L-shaped curve

  9. Under perfect competition (when input prices are fixed and there are no external economics or diseconomies), the industry supply curve in derived by

    1. vertically adding the average cost curves'horizontally adding the average cost curves

    2. vertically adding the marginal cost curve

    3. horizontally adding the marginal cost curves

  10. Starting for a monopoly equilibrium without any policy intervention, market efficiency can be improved by imposing a

    1. per-unit production tax

    2. per-unit sales tax

    3. profit tax

    4. price ceiling below the existing equilibrium price

  11. Application of the ‘Marginal-cost pricing’ principle in a decreasing cost industry would lead to

    1. surpluses

    2. losses needing subsidies

    3. neither surpluses nor losses

    4. a decline in output

  12. In monopolistic competition a fir is longrun equilibrium

    1. at the minimum point of the long-run average cost curve

    2. in the declining segment of the longrun average cost curve.

    3. in the rising segment of the long-run average cost curve

    4. when the price is equal to marginal cost

  13. If in a purely competitive market with downward-sloping demand and upward6 of 11 sloping supply curves, a specific excise tax per unit of output is imposed, then

    1. price rises by the amount of the tax

    2. the price-rise is less than the amount of the tax

    3. the price-rise grater than the amount of the tax

    4. the price remains the same.

  14. Rent earned by a factor of production equals

    1. what this factor can earn in its next best use

    2. the sum of what this factor earns in its current use and what is can earn in its next best use

    3. its current earnings

    4. the difference between what this factor is currently earning and what is can earn in its next best use

  15. the Adding Up Theorem under constant returns to scale holds when the factors of production are paid according to their

    1. marginal productivities

    2. average productivities

    3. total productivities

    4. ratio of marginal productivities to average productivities