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.
If the prevailing market price is above the equilibrium price, explain its chain of effects.
Define demand. Name the factors affecting market demand.
Demand of a commodity is ability and desire to purchase a certain quantity of goods at a given price.
(i) Income of consumers: When the income of a consumer rises, the demand of normal good also rises while the demand for inferior goods decrease with an increase in income.
(ii) Tastes and Preferences: Other factors being constant, if any change prevails in the tastes and Preferences of a consumer, then the demand for such goods will increase leading to shift in demand curve for those goods as compared to goods have no preference.
(iii) Substitute Goods: When there is an increase in the price of a good like - coffee, then demand curve for its substitute tea shifts to the right as people will start consuming more tea than coffee.
(iv) Complementary goods: Those goods which are together used to satisfy the demand are called complementary goods such as Pen & Refill, Petrol and Scooter, An increase in the price of petrol leads to fall in the demand of scooter.
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