Economics - Study Mode

[#1056] In perfect competition, the firm's _____ above AVC has the identical shape of the firm's supply curve
Correct Answer

(B) Marginal cost curve

Explanation

Solution: In perfect competition, the firm's Marginal cost curve above AVC has the identical shape of the firm's supply curve. Under perfect competition average revenue is equal to marginal revenue, so the firm will produce up to that point where marginal revenue and marginal cost are equal. Short run supply curve of a perfectly competitive firm is that portion of marginal cost curve which is above average variable cost curve.

[#1057] Suppose the total cost of producing commodity X is Rs.125000. Out of this cost, implicit cost is Rs.35000 and normal profit is Rs.25000. What will be the explicit cost of commodity X?
Correct Answer

(B) Rs.65000

Explanation

Solution: 125000-25000-35000 = 65000 = explicit cost. Total cost = implicit cost + explicit cost.

[#1058] When indifference curve is L shaped, then two goods will be
Correct Answer

(C) Perfect complementary goods

Explanation

Solution: If two goods are perfect complements then the indifference curves will be L-shaped.

[#1059] One characteristic not typical of oligopolistic industry is
Correct Answer

(C) Horizontal demand curve

Explanation

Solution: One characteristic not typical of oligopolistic industry is Horizontal demand curve. The horizontal demand curve indicates that the elasticity of demand for the good is perfectly elastic. This means that if any individual firm charged a price slightly above market price, it would not sell any products.

[#1060] If all inputs are trebled and the resultant output is doubled, this is a case of
Correct Answer

(C) Diminishing returns to scale

Explanation

Solution: If all inputs are trebled and the resultant output is doubled, this is a case of Diminishing returns to scale.