Short Answer TypeWhat is the relation between Average Variable Cost and Average Total Cost, if Total Fixed Cost is zero?
A firm is able to sell any quantity of a good at a given price. The firm's marginal revenue will be:
(Choose the correct alternative):
(a) Greater than Average Revenue
(b) Less than Average Revenue
(c) Equal to Average Revenue
(d) Zero
Differentiated products is a characteristic of: (Choose the correct alternative):
(a) Monopolistic competition only
(b) Oligopoly only
(c) Both monopolistic competition and oligopoly
(d) Monopoly
Demand curve of a firm is perfectly elastic under:(Choose the correct alternative)
(a) Perfect competition
(b) Monopoly
(c) Monopolistic competition
(d) Oligopoly
A consumer consumes only two goods X and Y. Marginal utilities of X and Y is 3 and 4 respectively. Prices of X and Y are Rs 4 per unit each. Is consumer in equilibrium? What will be further reaction of the consumer? Give reasons.
What will be the effect of 10 percent rise in price of a good on its demand if price elasticity of demand is (a) Zero, (b)-1, (c)-2.
(a) When Ed(Elasticity of demand) is zero
Therefore, Percentage change in quantity demand = 0, so it has no effect on demand
(b) Ed = -1, Percentage change in price = 10
Therefore, Percentage change in quantity demand = -10.
(c) Ed = -2, Percentage change in price = 10
Therefore, Percentage change in quantity demanded= -20
If the prevailing market price is above the equilibrium price, explain its chain of effects.
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