A. price is greater than short run average total cost
B. price is between short run average total cost and short run average variable cost
C. price is less than short run average variable cost
D. profit is zero
Economics Mcqs
The change in consumption that results when a price change moves the consumer along a given indifference curve is known as the ?
A. inferior effect
B. normal effect
C. substitution effect
D. complementary effect
E. income effect
For a competitive firm, its short run supply curve is …… and its long run supply curve is …..?
A. SMC, LMC
B. SMC above SAVC, LMC above LAC
C. SMC below SAVC, LMC above LAC
D. SMC below SAVC, LMC bellow LAC
If leisure is a normal good, an increase in the wage ?
A. will always increase the quantity of labor supplied
B. will increase the amount of labor supplied if the substitution effect outweighs the income effect
C. will increase the amount of labor supplied if the income effect outweighs the substitution effect
D. will always decrease the amount of labor supplied
A change in the relative prices of which of the following pair of goods would likely cause the smallest substitution effect ?
A. right shoes and left shoes
B. petrol from BP and petrol from shell
C. kit-Kat chocolate snacks and Twix chocolate snacks
D. coke and Pepsi
Which of the following is not true regarding the outcome of a consumer’s optimization process ?
A. The marginal utility per dollar spent on each good is the same
B. The marginal rate of substitution between goods is equal to the ratio of the prices between goods
C. The consumer’s indifference curve is tangent to his budget constraint
D. The consumer has reached his highest indifference curve subject to his budget constraint
E. The consumer is indifferent between any two points on his budget constraint
The slope at any point on an indifference curve is known as ?
A. the marginal rate of substitution
B. the marginal rate of trade-off.
C. the trade-off rates
D. the marginal rate of indifference
The consumer’s optimal purchase of any two goods is the point where ?
A. the budget constraint crosses the indifference curve
B. the two highest indifference curves cross
C. the consumer reaches the highest indifference curve subject to remaining on the budget constraint
D. the consumer has reached the highest indifference curve
Suppose we measure the quantity of good X on the horizontal axis and the quantity of good Y on the vertical axis If indifference curves are bowed inward, as we move from having an abundance of good X to having an abundance of good Y, the marginal rate of substitution of good Y for good X (the slope of the indifference curve) ?
A. rises
B. stays the same
C. could rise or fall depending on the relative prices of the two goods.
D. falls
If an increase in a consumer’s income causes the consumers to decrease her quantity demanded of a good, then the good is ?
A. a substitute good
B. a normal good
C. a complementary good
D. an inferior good