Economics - Study Mode

[#271] The AR curve and industry demand curve are same in case of
Correct Answer

(A) Monopoly

Explanation

Solution: The AR curve and industry demand curve are same in case of Monopoly. In a monopoly, the price is set above marginal cost and the firm earns a positive economic profit. Perfect competition produces an equilibrium in which the price and quantity of a good is economically efficient.

[#272] When the price of a substitute of X commodity falls, the demand for X
Correct Answer

(B) Falls

Explanation

Solution: When the price of a substitute of X commodity falls, the demand for X Falls.

[#273] The law of variable proportions come into being when
Correct Answer

(B) There is a fixed factor and a variable factor

Explanation

Solution: The law of variable proportions come into being when there is a fixed factor and a variable factor. The law of variable proportions states that as the quantity of one factor is increased, keeping the other factors fixed, the marginal product of that factor will eventually decline.

[#274] _____ is an implicit cost of production
Correct Answer

(C) Interest on owned money capital

Explanation

Solution: Interest on owned money capital is an implicit cost of production. The costs in which there is no cash outlay, is known as Implicit Cost.

[#275] Excess capacity is not found under
Correct Answer

(C) Perfect competition

Explanation

Solution: Excess capacity is not found under Perfect competition. Under perfect competition, each firm produces at the minimum point on its LAC curve and its horizontal demand curve is tangent to it at that point. Its output is ideal and there is no excess capacity in the long-run.