Classical

June 2015 - Paper 2

11:  

A rectangular hyperbola shaped demand curve on all its points has:

A.

Equal slopes of the price demand curve

B.

Price elasticity equal to unity

C.

Varying price elasticity

D.

Both slope and price elasticity equal

 
 

Option: B

Explanation :

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12:  

In case of short-run equilibrium, a perfectly competitive firm while earning abnormal profits operates at an output level where:

A.

Marginal cost is the minimum

B.

Average cost is me minimum

C.

Both marginal cost and average cost are equal

D.

Marginal cost is higher than average cost

 
 

Option: D

Explanation :

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13:  

Which one of the following statements is false?

A.

Normally, a price demand curve slopes downward from left to right.

B.

Economies of scale and economies of scope are the same.

C.

For optimization, equality between marginal cost and marginal revenue is a necessary condition but it is not a sufficient one.

D.

Law of variable proportions denotes input-output relationship during short-run.

 
 

Option: B

Explanation :

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14:  

Match the items of List-I with the items of List-II:

List-I

(a) Law of diminishing marginal utility

(b) Relationship between price of one commodity and demand for other commodity

(c) Skimming the cream policy

(d) Price rigidity

List-II

(i) Cross demand

(ii) Oligopoly

(iii) Cardinal approach

(iv) Pioneer pricing

Codes:           

A.

(a)  (b)  (c)  (d)

(i) (ii) (iii) (iv)

B.

(a)  (b)  (c)  (d)

(iii) (i) (ii) (iv)

C.

(a)  (b)  (c)     (d)

(ii) (iv)    (i)     (iii)

D.

(a)  (b)  (c)  (d)

(iv) (iii) (ii) (i)

 
 

Option: C

Explanation :

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15:  

The following are the demand and supply equations in a perfectly competitive market:

P = 12 + 0.3 Qs

P = 40 - 0.4 Qd

The equilibrium market price would be:

A.

24

B.

10

C.

40

D.

20

 
 

Option: A

Explanation :

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