Economics - Study Mode

[#1416] According to Schumpeter
Correct Answer

(B) Monopoly profit acts as incentives for innovation

[#1417] The demand for life-saving drugs is
Correct Answer

(B) Inelastic

[#1418] Which of the following markets comes closest to perfect market?
Correct Answer

(A) Wheat market

Explanation

Solution: Wheat market comes closest to perfect market. A perfectly competitive firm is called a price taker, because the pressure of competing firms forces them to accept the prevailing equilibrium price in the market. When a wheat grower wants to know what the going price of wheat is, he or she has to go to the computer or listen to the radio to check.

[#1419] Mr. Raees Ahamd bought 50 litres of petrol when his monthly income was Rs.25000. Now his monthly income has risen to Rs.50,000 and he purchases 100 litres of petrol. His income elasticity of demand for petrol is
Correct Answer

(A) 1

Explanation

Solution: Mr. Raees Ahamd bought 50 litres of petrol when his monthly income was Rs.25000. Now his monthly income has risen to Rs.50,000 and he purchases 100 litres of petrol. His income elasticity of demand for petrol is 1.

[#1420] Under which of the following forms of market structure does a firm have no control over the price of its product?
Correct Answer

(D) Perfect competition

Explanation

Solution: Under Perfect competition forms of market structure does a firm have no control over the price of its product. All goods in a perfectly competitive market are considered perfect substitutes, and the demand curve is perfectly elastic for each of the small, individual firms that participate in the market. These firms are price takers–if one firm tries to raise its price, there would be no demand for that firm's product