Economics - Study Mode

[#1216] The average fixed cost curve of the firm will be like a:
Correct Answer

(D) rectangular hyperbola

[#1217] The average total cost pf producing 50 units is Rs.250 and total fixed cost is Rs.1000. What is the average fixed cost of producing 100 units?
Correct Answer

(A) Rs.10

Explanation

Solution: Average Fixed Cost = Total Fixed Cost / Number of Units. AFC = 1000/100 = Rs. 10.

[#1218] Under Marginal utility analysis, utility is assumed to be a
Correct Answer

(A) Cardinal concept

Explanation

Solution: Under Marginal utility analysis, utility is assumed to be a Cardinal concept. The Cardinal Utility approach is propounded by neo-classical economists, who believe that utility is measurable, and the customer can express his satisfaction in cardinal or quantitative numbers, such as 1,2,3, and so on.

[#1219] The 'substitution effect' takes place due to change in
Correct Answer

(C) Relative prices of the commodities

Explanation

Solution: The 'substitution effect' takes place due to change in Relative prices of the commodities. The substitution effect refers to the change in demand for a good as a result of a change in the relative price of the good in terms of other goods.

[#1220] The degree of monopoly power is measured in terms of difference between
Correct Answer

(A) Marginal cost and the price

Explanation

Solution: The degree of monopoly power is measured in terms of difference between Marginal cost and the price. In a perfectly competitive market, price equals marginal cost and firms earn an economic profit of zero. In a monopoly, the price is set above marginal cost and the firm earns a positive economic profit.