Classical

June 2015 - Paper 3

11:  

When a consumer increases units of X - commodity by giving up some units of Y- commodity and even to attain the same level of satisfaction, the marginal rate of substitution, will be calculated by :

A.

Change in X - Commodity divided by change in Y - Commodity

B.

Change in X - Commodity divided by marginal utility of Y - Commodity

C.

Change in Y - Commodity divided by change in X - Commodity

D.

Change in Y - Commodity divided by marginal utility of X - Commodity

 
 

Option: C

Explanation :


12:  

The following is the demand function in the small market :

Q = 50-5P

Where 'Q' denotes quantity in physical units and 'P denotes price of the commodity. At price Rs 5, the point price elasticity of demand would be:

A.

Zero

B.

Equal to unity

C.

Highly elastic

D.

Highly inelastic

 
 

Option: B

Explanation :


13:  

Match the items of List - I with the items of List - II and find out the correct matching.

List – I

List – II

Production functions

Name of the shapes of returns to scale

(a) Q = 10.2 K0-19 L0.88

(i) Constant Returns to scale

(b) Q = 1.01 L0.75 K0.25

(ii) Diminishing Returns to scale

(c) Q = 0.84 L0.63 K0.3

(iii) Increasing Returns to scale

Codes:

 

 

A.

(i) (ii) (iii)

B.

(ii) (i) (iii)

C.

(ii) (iii) (i)

D.

(i) (iii) (ii)

 
 

Option: C

Explanation :


14:  

In the short-run, when a simple monopoly firm attains equilibrium and earns only normal profit, its level of output will correspond to :

A.

Lowest average cost

B.

Average cost above optimum level of output

C.

Average cost equals marginal cost

D.

Marginal cost much below average cost

 
 

Option: D

Explanation :


15:  

Which one of the following is a false statement ?

A.

Ramsey pricing rates to the methodology of pricing to situations where firms are regulated and the maximization of allocative efficiency is the objective of pricing together with the objective of profit - maximization.

B.

Peak-load pricing is a pricing practice where price varies with time of the day.

C.

Value-pricing is the practice of pricing where the price is set based on its value to the customer.

D.

Two - part tariff refers to a price structure which has two parts - a lump sum charge and a variable charge.

 
 

Option: A

Explanation :




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