Monopolistic competition features ___ differentiation.
- product
- working
- lender of last resort
- purchasing (or buying)
Answer: product
Products are similar but differentiated by brand/features.
Economics – Medium Level – GK Questions
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Unitary elasticity means total revenue remains ___.
- balance (or sum to zero)
- constant
- indifference
- Total variable cost
Answer: constant
Total revenue is maximized and constant at Ed=1.
Consumer equilibrium is where budget line is ___ to IC.
- tangent
- Total receipts excluding borrowings
- low (or zero / no)
- crowding out
Answer: tangent
Tangency ensures MRS equals the price ratio.
Slope of indifference curve is?
- MRS
- MRT
- MPC
- MPS
Answer: MRS
Marginal Rate of Substitution represents the slope.
Ordinal utility is associated with ___ curve.
- technological
- John Maynard Keynes
- Pareto Efficiency (or Pareto Optimality)
- indifference
Answer: indifference
Indifference curve shows ordinal ranking of preferences.
Marginal utility is zero when total utility is?
- Zero
- Minimum
- Maximum
- Negative
Answer: Maximum
Total utility peaks when marginal utility becomes zero.
Income elasticity for inferior goods is ___.
- Total variable cost
- negative
- decrease (or reduce / lower)
- dumping
Answer: negative
Demand falls as income rises for inferior goods.
Complementary goods have positive cross elasticity.
- True
- False
Answer: False
Complements have negative cross elasticity.
Cross elasticity of demand for substitutes is?
- Positive
- Negative
- Zero
- Infinite
Answer: Positive
If the price of one rises, demand for the other rises.
Exception to law of demand?
- Normal goods
- Giffen goods
- Luxuries
- Substitutes
Answer: Giffen goods
Giffen goods have an upward sloping demand curve.