30 Nov
May 11, 2020 Exam main

Multi-choice 6

Question

1) Isoquants shown in the below diagram exhibit

 

  1. Perfect substitutability of factors
  2. Perfect complementarily of factors
  3. Fixed proportion production function
  4. Variable proportion production function

Answers

A) 1 and 2 only

B) 1 and 3 only

C) 3 and 4 only

D) 2 and 3 only

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Question

2) An isoquant for perfect substitutes would be_____

Answers

A) Right angled shape

B) Negatively sloped straight line

C) straight line parallel to the x-axis

D) straight line parallel to the y- axis 

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Question

3) Which off the following is not true about isoquants ?

Answers

A) An isoquant slopes downward to the origin

B) Isoquants are concave to the origin

C) Isoquants are convex to the origin

D) Isoquants cannot intersect each other

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Question

4) Which off the following is not a reason off diminishing returns to a factor ?

Answers

A) Scarcity of fixed factor

B) Scarcity of variable factor

C) Indivisibility for the fixed factor

D) Imperfect substitutability of factor

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Question

5) Total product will be maximum when ___

Answers

A) MP is maximum

B) AP is maximum

C) MP is zero

D) MP negative 

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Question

6) In the following diagram, when price of the commodity decrease from P1 to P2,the gain in consumer surplus is equal to

Answers

A) A P1 B

B) A P2 C

C) P1 P2 C B

B) B S C

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Question

7) In following diagram, consumer's surplus is show by __

Answers

A) OPEX

B) ODEX

C) PDE

D) None of these

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Question

8) The total effect of a price change of a commodity is _

Answers

A) Substitution effect+Price effect

B) Substitution effect+Income effect

C) Substitution effect+Demonstration effect

D) Substitution effect-income effect

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Question

9) The substitution effect works to encourage a consumer to purchase more of a product when the price of that good is falling because_____

Answers

A) The consumer real income has increased

B) Other products are now less expensive than before

C) The consumer real income has decreased

D) The product is now relatively less expensive than before

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Question

10) In the case off an inferior good,the income effect______

Answers

A) Partially off sets the substitution effect

B) Reinforces die substitution effect

C) Is equal to the substitution effect

D) More than off sets the substitution effect

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This practice type exam is prepared by UAH