Economics - Study Mode

[#1066] If a good is a luxury, its income elasticity of demand is
Correct Answer

(C) Positive and greater than 1

Explanation

Solution: If a good is a luxury, its income elasticity of demand is Positive and greater than 1. If income elasticity of demand of a commodity is less than 1, it is a necessity good. If the elasticity of demand is greater than 1, it is a luxury good or a superior good.

[#1067] When ____, we know that the firms must be producing at the minimum point of the average cost curve and so there will be productive efficiency.
Correct Answer

(B) MC = AC

Explanation

Solution: When MC = AC, we know that the firms must be producing at the minimum point of the average cost curve and so there will be productive efficiency.

[#1068] Suppose the demand for meals at a medium-priced restaurant is elastic. If the management of the restaurant is considering rasiing prices, it can expect a relatively
Correct Answer

(A) Large fall in quantity demanded

Explanation

Solution: Suppose the demand for meals at a medium-priced restaurant is elastic. If the management of the restaurant is considering rasiing prices, it can expect a relatively large fall in quantity demanded.

[#1069] Which of the following is not a characteristic of a 'price taker'?
Correct Answer

(C) Negatively sloped demand

Explanation

Solution: Negatively sloped demand is not a characteristic of a 'price taker'. A price taker lacks enough market power. The objective of market to influence the prices of goods or services.

[#1070] With regard to socialist economy, which of the following statement is correct? (1) The factors of production are privately owned (2) Economy is not regulated by the government Select the correct answer
Correct Answer

(D) Neither 1 nor 2