Economics - Study Mode

[#1556] Suppose that output (Y) is a function of capital (K)

then the capital-elasticity of output is given by
Correct Answer

(A) $$frac{{M{P_k}}}{{A{P_k}}}$$

[#1557] Income elasticity of demand for normal goods is always
Correct Answer

(D) Positive

Explanation

Solution: Income elasticity of demand for normal goods is always Positive. A positive income elasticity of demand is associated with normal goods

an increase in income will lead to a rise in demand.

[#1558] Normal goods have
Correct Answer

(A) Positive income elasticity

Explanation

Solution: Normal goods have Positive income elasticity. A positive income elasticity of demand is associated with normal goods

an increase in income will lead to a rise in demand. 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.

[#1559] What should be price elasticity of demand by proportionate method if Q 1 = 20000, Q 2 = 25000
P 1 = Rs. 10
P 2 = Rs. 8?
Correct Answer

(A) 1.25

[#1560] If income elasticity for a good is 2, then it is a
Correct Answer

(C) Luxury item

Explanation

Solution: If income elasticity for a good is 2, then it is a Luxury item. A positive income elasticity of demand is associated with normal goods
an increase in income will lead to a rise in demand.