Question 1

If marginal revenue is Rs. 25/- and elasticity of demand w. r. t price is 2, then the average revenue is
A) 50
B) 25
C) 75
D) 100

Accepted Answer

The relationship between marginal revenue (MR), elasticity of demand (E), and average revenue (AR) is given by the formula MR = AR (1 - 1/E). Given MR = 25 and E = 2, we can rearrange the formula to solve for AR: 25 = AR (1 - 1/2), which simplifies to AR = 50.

Question 2

Cost is a function of
A) price
B) revenue
C) quantity
D) none of these

Accepted Answer

Cost is primarily a function of quantity, as it typically varies with the amount of goods or services produced or consumed.

Question 3

An example of fixed inputs of production is
A) land
B) organisation
C) both a and b
D) none of these

Accepted Answer

Fixed inputs of production are those that cannot be easily increased or decreased in a short period of time. Land and organization (as in the structure or setup of a business) are examples of such inputs, as they typically remain constant regardless of the level of output.

Question 4

Total variable cost plus total fixed cost gives
A) total cost
B) average cost
C) marginal cost
D) none of these

Accepted Answer

Total cost is the sum of total variable cost and total fixed cost.

Question 5

The ratio of total cost to the quantity produced is called
A) average cost
B) marginal cost
C) total variable cost
D) none

Accepted Answer

Average cost is defined as the total cost divided by the quantity produced, which directly matches the description given.

Question 6

Sum of explicit cost and implicit cost gives:
A) total cost
B) average cost
C) marginal cost
D) none of these

Accepted Answer

The sum of explicit and implicit costs gives the total cost, as it encompasses all costs associated with production, including both out-of-pocket expenses and the opportunity costs of all resources involved.

Question 7

For a unitary elastic supply curve, p s is
A) less than 1
B) more than 1
C) equal to 1
D) zero

Accepted Answer

A unitary elastic supply curve means that the percentage change in quantity supplied is equal to the percentage change in price, which gives an elasticity of 1.

Question 8

Cross price elasticity may not always be
A) symmetrical
B) asymmetrical
C) both a and b
D) none

Accepted Answer

Cross price elasticity may not always be symmetrical because the change in the price of one good may have a different effect on the demand for another good depending on whether the goods are substitutes or complements.

Question 9

Luxury goods are:
A) price inelastic
B) price elastic
C) both a and b
D) none

Accepted Answer

Luxury goods are price elastic because their demand changes significantly with changes in price.

Question 10

If close substitutes are available, then the elasticity of demand will be
A) low
B) moderate
C) high
D) optimum

Accepted Answer

When close substitutes are available for a product, consumers can easily switch to another product if the price of the original product increases. This makes the demand for the original product more sensitive to price changes, or in other words, more elastic. Hence, the elasticity of demand will be high.

Question 11

The relationship between supply and price is
A) negative
B) perfect
C) positive
D) none

Accepted Answer

The relationship between supply and price is generally positive, meaning that as the price of a good or service increases, the quantity supplied also increases, assuming other factors are constant. This is because higher prices can make it more profitable for producers to supply more.

Question 12

The relationship between demand and price is
A) positive
B) negative
C) perfect
D) none

Accepted Answer

The relationship between demand and price is generally negative, meaning as price increases, demand tends to decrease, and vice versa. This is a fundamental concept in economics known as the law of demand.

Question 13

A given percentage change in price results in an equal percentage change in sales, indicates:
A) unitary price elasticity
B) inelastic price elasticity
C) elastic price elasticity
D) none

Accepted Answer

Unitary price elasticity occurs when a percentage change in price results in an equal percentage change in quantity demanded or sold, indicating that the total revenue remains unchanged.

Question 14

What is the order of differential equation = 10x + 5
A) first
B) second
C) third
D) fourth

Accepted Answer

The given expression, 10x + 5, does not contain any derivatives; hence, it is not a differential equation. However, if it were to be considered in the context of differential equations, it would imply a differential equation of order zero. Since that option is not available, the closest correct choice, considering the nature of the question, is first order, assuming the question implies the simplest non-trivial differential equation involving this expression.

Question 15

A line for linear equation should begin from
A) origin
B) x axis
C) y axis
D) any of the above

Accepted Answer

A line for a linear equation can begin from any point on the coordinate plane, not necessarily from the origin, x-axis, or y-axis. It depends on the equation of the line.

Question 16

Functional relationship between input and output is called
A) isoquants
B) isocost
C) input function
D) production function

Accepted Answer

The functional relationship between input and output in the context of production is called the production function. It describes how different combinations of inputs (like labor, capital, materials) are transformed into outputs (goods or services).

Question 17

Law of variable proportion explainsfor
A) short run
B) long run
C) medium run
D) none

Accepted Answer

The Law of Variable Proportions, also known as the Law of Diminishing Returns, primarily applies to the short run, where at least one factor of production is fixed.

Question 18

In CES production function, the elasticity of substitution is
A) unity
B) zero
C) negative
D) constant

Accepted Answer

The CES (Constant Elasticity of Substitution) production function is characterized by having a constant elasticity of substitution between input factors, which is not necessarily equal to unity, zero, or negative, but is a constant value.

Question 19

The highest power to which the derivative of highest order is raised in differential equation is called.
A) trace
B) order
C) degree
D) transpose

Accepted Answer

The degree of a differential equation is the highest power to which the highest order derivative is raised.

Question 20

MRTS is the slope of
A) production function
B) priceline
C) isocostline
D) isoquant

Accepted Answer

MRTS, or the Marginal Rate of Technical Substitution, is the slope of an isoquant. An isoquant represents combinations of inputs that produce the same level of output in production theory, and the MRTS indicates how much of one input can be substituted for another while keeping output constant.

Quiz 1: Economics and Production Functions

If marginal revenue is Rs. 25/- and elasticity of demand w. r. t price is 2, then the average revenue is

Cost is a function of

An example of fixed inputs of production is

Total variable cost plus total fixed cost gives

The ratio of total cost to the quantity produced is called

Sum of explicit cost and implicit cost gives:

For a unitary elastic supply curve, p s is

Cross price elasticity may not always be

Luxury goods are:

If close substitutes are available, then the elasticity of demand will be

The relationship between supply and price is

The relationship between demand and price is

A given percentage change in price results in an equal percentage change in sales, indicates:

What is the order of differential equation = 10x + 5

A line for linear equation should begin from

Functional relationship between input and output is called

Law of variable proportion explainsfor

In CES production function, the elasticity of substitution is

The highest power to which the derivative of highest order is raised in differential equation is called.

MRTS is the slope of