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UNIVERSITY OF CALICUT 1. The demand curve shows the relationship between
```UNIVERSITY OF CALICUT
SCHOOL OF DISTANCE EDUCATION
B Sc. Mathematics (2011 Admission Onwards)
I SEMESTER
Complementary Course
MATHEMATICAL ECONOMICS
QUESTION BANK
1.
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The demand curve shows the relationship between
a. Price and quantity
b. Income and quantity
c. Consumption and quantity
d. Consumption and income
The demand for essential good is
a. Elastic
b. Inelastic
c. Relatively elastic
d. Relatively inelastic
When the elasticity of demand ep is greater than 1 the demand for good is
a. inelastic
b. unitary elastic
c. relatively elastic
d. elastic
Arc price elasticity is calculated over a
a. range of prices
b. price at a point
c. period of time
d. none of the above
The ratio of the percentage change in sales of one product to the percentage
change in price of another product is called
a. arc price elasticity
b. point price elasticity
c. cross price elasticity
d. income elasticity
When the cross price elasticity ec is less than 0, the goods are
a. substitutes
b. complementary
c. independent
d. none of these
The point price elasticity of demand ep is given by
a.
dP P
.
dQ Q
b.
dQ Q
.
dP P
c.
dQ P
.
dP Q
d.
1 dQ
.
P dP
Perfectly elastic supply curve is
a. Parallel to X axis
b. Parallel to Y axis
c. Sloping curve passing through the origin
d. None of the these
In the case of a perfectly inelastic supply curve, the elasticity of supply ηs is
a. infinity
b. one
c. greater than 1
d. zero
MATHEMATICAL ECONOMICS (I Sem BSc. Mathematics) Page 1 School of Distance Education 10.
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At equilibrium, the demand curve and supply curve
a. coincide each other
b. parallel to each other
c. intersect each other
d. none of these
A discussion on demand always referring to purchases made during _____
a. given period of time
b. Specified period of time
c. both a and b
d. None of these
The variables in the demand function which are related to price are
a. own price of the product
b. price of compliment
c. price of substitutes
d. all the above
The law of demand states that
a. the higher the price the lower the demand
b. the lower the price the higher the demand
c. the higher the price the lower the demand and the lower the price the
higher the demand
d. None of these
The variable disposable income yd stands for
a. disposable income
b. the amount of money available to pupil to spend
c. both a and b
d. None of these
When the purchases of goods increase with rising levels of income, such goods
are called:
a. Inferior goods
b. normal goods
c. giffen goods
d. Laxurious goods
When the purchases of goods decrease with rising levels of income, such goods
are called:
a. inferior goods
b. normal goods
c. giffen goods
e. laxurious goods
Credit and rate of interest are _____ to the firm.
a. endogeneous
b. homogeneus
c. exogeneous
d. none
The influence of a change in a product's price on real income is called
a. substitution effect
b. income effect
c. both a and b
d. None
The influence of a reduction in a product's price on quantity demanded is called
a. substitution effect
b. income effect
c. both a and b
d. none
In a demand curve price is measured along the
a. vertical axis
b. horizontal axis
c. both a and b
d. none
In a demand curve quantity demanded is measured along
a. vertical axis
b. horizontal axis
c. both a and b
d. none
MATHEMATICAL ECONOMICS (I Sem BSc. Mathematics) Page 2 School of Distance Education 22.
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The tabular presentation of price and quantity with reference to a demand
function is called
a. demand curve
b. demand line
c. demand schedule
d. none
When the demand curve shifts to right, there occurs
a. an increase in demand
b. decrease in demand
c. demand is constant
d. none
A shift of the whole demand curve to the left indicates
a. an increase in demand
b. decrease in demand
c. demand is constant
d. none
The variable that cause a change in demand are called
a. independent variable
b. shifter variables
c. exogeneous variable
d. none
The broadest measure of income generated in the economy is called
a. GNP
b. NNP
c. GDP
d. Index number
The magnitude of the response of the quantity to a price change is measured by
a. price elasticity
b. income elasticity
c. supply elasticity
d. none
The average responsiveness of the dependent variable to changes in the
independent variable over some interval is measured by
a. point elasticity
b. arc elasticity
c. supply elasticity
d. none
The absolute value of price elasticity of demand ep is greater than 1 indicates
that demand is
a. inelastic
b. unitarily elastic
c. zero
d. elastic
When the coefficient of cross price elasticity for two products is negative, the
products are classified as:
a. substitutes
b. compliments
c. normal
d. none
When the cross price elasticity is positive, the products are:
a. substitutes
b. compliments
c. normal
d. none
When the cross price elasticity ec = 0, the goods are
a. substitutes
b. complements
c. normal
d. independent
The elasticity of demand at different points on the same demand curve is:
a. same
b. zero
c. different
d. none
MATHEMATICAL ECONOMICS (I Sem BSc. Mathematics) Page 3 School of Distance Education 34.
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The range of elasticity of supply is:
a. 0 to 1
b. -1 to +1
c. -∞ to +∞
d. 0 to ∞
The unitary elastic supply curve passes through the
a. origin
b. x axis
c. y axis
d. none
s
When the elasticity of supply ηp = 0, the supply curve will be
a. parallel to x axis
b. passing through origin
c. parallel to y axis
d. none
For a more elastic supply curve, the value of ηps is
a. less than 1
b. more than 1
c. equal to 1
d. zero
s
For a less elastic supply curve, ηp is
a. less than 1
b. more than 1
c. equal to 1
d. zero
s
For a unitary elastic supply curve, ηp is
a. less than 1
b. more than 1
c. equal to 1
d. zero
For a perfectly inelastic supply curve, ηps is
a. less than 1
b. more than 1
c. equal to 1
d. zero
The total of the quantities demanded by all consumers in an economy at each
price is called:
a. market demand curve
b. market supply curve
c. market equilibrium
d. none of these
The price elasticity of demand of the demand function Q = 400 – 4P at P = 10
is
a. 0.11
b. 0.10
c. –0.11
d. –1
When |ep| < 1, the demand is
a. elastic
b. inelastic
c. unitarily elastic
d. none
Cross price elasticity may not always be
a. symmetrical
b.
c. both a and b
d.
Luxury goods are:
a. price inelastic
b.
c. both a and b
d.
MATHEMATICAL ECONOMICS (I Sem BSc. Mathematics) asymmetrical
none
price elastic
none
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If close substitutes are available, then the elasticity of demand will be
a. low
b. moderate
c. high
d. optimum
The relationship between supply and price is
a. negative
b. perfect
c. positive
d. none
The relationship between demand and price is
a. positive
b. negative
c. perfect
d. none
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
When X is the independent variable and Y is the dependent variable their
elasticity E is given by
a. % change in X / % change in Y b. % change in Y / Y
c. % change in X / Y
d. % change in Y / % change in X
The cost function expresses the relationship between
a. price and quantity
b. input and cost
c. output and cost
d. output and input
Profit is equal to total revenue minus
a. explicit costs
b. implicit costs
c. implicit costs and explicit costs d. wages and rents
Total cost function is a _______ function of output
a. linear
b. cubic
d. none of these
MC curve cuts AVC and AC curves at the _____ point
a. minimum
b. maximum
c. both (a) and (b)
d. none of these
Cost elasticity Ec is given by
a.
c.
56.
57.
dc q
.
dq c
b.
MC
AC
∆c/c
∆q/q
d.
All of the above
Elasticity of average cost EAC is equal to:
b. EAC = EC – 1
a. EAC = EC + 1
c. EAC = EC + 1
d. none of these
If total cost elassticity Ec is less than 1, then
a. MC > AC
b. MC = AC
c. MC < AC
d. MC = TC
MATHEMATICAL ECONOMICS (I Sem BSc. Mathematics) Page 5 School of Distance Education 58.
Marginal revenue of the revenue function TR = PQ is
a.
d(TR)
dQ
⎛
QdP ⎞
⎝
⎠
c. P ⎜⎜1 +
⎟
PdQ ⎟
59.
AR - MR
AR
MR
c.
AR - MR
61.
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67.
68.
P+Q
d.
All of the above
The elasticity of demand ηd in terms of AR and MR is
a.
60.
dP
dQ
b.
b.
d.
AR - MR
MR
AR
AR - MR
When demand is unitary elastic, then
a. ηd = 1,MR = 0
b. ηd = 0,MR = 1
c. ηd = -1,MR = 0
d. ηd = 0,MR = -1
Sum of explicit cost and implicit cost gives:
a. total cost
b. average cost
c. marginal cost
d. none of these
A distinction between cost of production and expenses of production is made
by
a. Engel
b. Marshall
c. Keynes
d. none of these
Cost is a function of ________
a. price
b. revenue
c. quantity
d. none of these
An example of fixed inputs of production is _______
a. land
b. organisation
c. both a and b
d. none of these
Total variable cost plus total fixed cost gives
a. total cost
b. average cost
c. marginal cost
d. none of these
Marginal cost of a function c = f(g) is __________
a. dc/dq
b. f'(q)
c. both a and b
d. none of these
The ratio of total cost to the quantity produced is called
a. average cost
b. marginal cost
c. total variable cost
d. none
A firm decide to discontinue production and accept a loss equal to it fixd cost
when
a. loss > FC
b. loss < FC
c. loss = FC
d. none
MATHEMATICAL ECONOMICS (I Sem BSc. Mathematics) Page 6 School of Distance Education 69.
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Minimum cost of producing each output level when the plant size can be freely
varied is called
a. short run total cost
b. long run total cost
c. total cost
d. none of these
The ratio of the proportionate change in average cost to the proportionate
change in output is called elasticity of
a. marginal cost
b. total cost
c. average cost
d. none
When marginal cost is greater than average cost, the total cost elasticity will be:
a. greater than 1
b. less than 1
c. equal to 1
d. none
The product of the price p and quantity demanded q is called
a. average revenue
b. marginal revenue
c. total cost
d. total revenue
The ratio of the total revenue to the quantity demanded is
a. price
b. average revenue
c. TR/Q
d. all the above
The expression of P + Q(dP/dQ) w.r.t. total revenue function TR = PQ gives
a. average revenue
b. marginal revenue
c. elasticity
d. none
The equation η p =
AR
indicates that marginal revenue as a function of
AR − MR
a. elasticity of demand
b. average revenue
c. both a and b & None
d. None
The profounder of the Law of equimarginal unity is
a. Fisher
b. Clark
c. Marshall
d. Carl Menger
The indifference curves for perfect substitutes are
a. Straight lines
b. L-shaped
c. Curves
d. Concave from above
The equilibrium of a consumer purchasing one commodity is attained when
a.
du
<P
dQ
b.
du
=P
dQ
b.
du
>P
dQ
d.
du
=0
dQ
Combination of goods on a lower indifference curve yield a _____ utility.
a. Lower
b. Higher
c. No utility
d. None of these
MATHEMATICAL ECONOMICS (I Sem BSc. Mathematics) Page 7 School of Distance Education 80.
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Which of the following is correct:
a. Indifference curves slopes downward to the right
b. Indifference curves do not intersect
c. Indifference curves are convex to the origin
d. All the above.
Indifference curve approach is based on
a. Cardinal number
b. Ordinal number
c. Lagragian multiplier
d. None of the above
The first order condition for utility maximization gives:
a.
MU1 P1
=
MU 2 P2
b.
MU1 MU1
=
P2
P1
c.
MU 2 P1
=
MU1 P2
d.
None of the above
An attribute possessed by a commodity to satisfy a human want, to yield
satisfaction to consumer is termed as
a. utility
b. preference
c. want
d. None of these
Total utility is the aggregate of _______
a. average utilities
b. marginal utilities
c. cardinal utilities
d. None of these
The point at which the marginal utility first increases, reaches the maximum,
then diminishes is called
a. point of inflexion
b. minimum point
c. saturation point
d. None of these
The second order condition for maximising utility is
a.
du
=0
dq 1
b.
c.
d2u
<0
d 2 q1
d.
d2u
>0
dq 12
d2u
=0
da 12
The locus of the curve joining all commodity combinations giving the
consumer the same level of satisfaction is called
a. marginal utility
b. indifference curve
c. cost curve
d. None of these
An indifference map is a collection of
a. indifference curves
b. cost curve
c. revenue curve
d. None of these
Indifference curves are ______ to the origin
a. concave
b. increasing
c. convex
d. None of these
MATHEMATICAL ECONOMICS (I Sem BSc. Mathematics) Page 8 School of Distance Education 90.
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The rate at which the consumer trades off one commodity for another is called
a. Marginal rate of technical substitution
b. Marginal rate of substitution
c. equi-marginal utility
d. None of these
The concept of indifference curves was developed by
a. J.R. Hicks
b. R.G.D. Allen
c. J.R. Hicks and Allen
d. None of these
When marginal rate of substitution is equal to the slope of the price line ____ is
attained
a. equilibrium
b. maximum
c. minimum
d. None of these
,
In the function V=f(q1, q2 λ), λ is called
a. Income multiplier
b. Lagrange's multiplier
c. Impact multiplier
d. None of these
According to whom the indifference curve analysis can be transformed into the
utility analysis
a. J.R. Hicks
b. R.G.D. Allen
c. Prof. Leftwich
d. None
The function v = f(q1, q2) + λ(y–p1q1 – p2q2) is used for maximising utility
according to
a. Lagrange
c. Allen
c. Hicks
d. None of these
2
Let 100 + 10k – k be a production function, where k represents capital. Then
the marginal productivity when k = 2 is
a. 116
b. 6
c. 58
d. 232
The inflexion points of the function y = x3 – 3x2 + 5 is at
a. 3
b. 6
c. 1
d. 0
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
The problem of constrained optimisation of function in several variables,
generally uses
a. The Lagrangean function
b. The linear function
d. The exponential function
MATHEMATICAL ECONOMICS (I Sem BSc. Mathematics) Page 9 School of Distance Education 100.
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102
103
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The output of a firm, with given prices of factors of production is decided so
that the total cost is
a. Maximum
b. Balanced
c. Minimum
d. Positive
4
The minimal value of the function y = x – 4x3 + 16x is at
a. -1
b. 2
c. -2
d. 1
For two goods 1 and 2, if E12 > 0 implies that the two goods are
a. Complementary
b. Substitutes
c. Supplementary
d. Giffen goods
2
If fxxfyy < (fxy) when fxx and fyy are of the same sign, then the function is at
a. Minimum point
b. Maximum point
c. Inflexion point
2
If fxxfyy < (fxy) whe fxx and fyy are of the different signs, then the function is at
a. Minimum point
b. Maximum point
c. Inflexion point
The theory of investment multiplier was developed by
a. R.F. Khan
b. J.M. Keynes
c. Lagrange
d. None of these
The ratio of marginal function to average function is called
a. elasticity
b. equilibrium
c. rate of change
d. None
dq
is negative, the elasticity is
dp
107.
When the slope of the demand
108.
a. positive
b. negative
c. zero
d. None
2
For the demand function q = 30-4p-p the elasticity of demand when p=3 is
9
8
8
c.
9
a.
109.
110.
b.
1
d.
None of these
When Q = g(L) and R =f(Q), the marginal revenue product of labour MRP is
b. MR x MPP
a. f1(Q) x g1(L)
1
1
d. both a and b
c. f (L) x g (Q)
The ratio of marginal cost of variable factor to marginal product is
a. Marginal physical product
b. Marginal product
c. Marginal cost
d. None of these
MATHEMATICAL ECONOMICS (I Sem BSc. Mathematics) Page 10 School of Distance Education 111.
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For a function Q =f(L),
dQ
is called
dL
a. marginal product of labour
b. marginal product
c. marginal physical product
d. None of these
A change in consumption expenditure due to an infiniterminal change in the
level of income is called
a. MPS
b. MPC
c. MPP
d. None of these
The situation in which a manufacturer will try to increase his production is
a. slope >0 and MC < AC
b. Slope <0 and MC > AC
c. slope <0 and MC < AC
d. slope >0 and MC > AC
The ratio of capital to labour is called
a. average product of labour
b. average product of capital
c. factor intensity
c. None of these
When the average revenue function is AR = 10-0. 5q, the marginal revenue is
b. 10-q
a. 0.5q2
c. 10q – 0.5
d. None
For a function y=f(x), x1>x2 ⇒f(x)1> f(x2) says that the function is
a. increasing
b. decreasing
c. constant
d. None of these
The points at which a curve is neither increasing not decreasing is called
a. turning point
b. stationery points
c. both a and b
d. None of these
For maximum of a function y = f(x), De must have
a.
dy
d2 y
=0 ;
<0
dx
dx 2
b.
dy
d2y
= 0; 2 > 0
dx
dx
c.
dy
d2y
< 0; 2 = 0
dx
dx
d.
None of these
For profit maxmisation we must have
a. MR = MC
b. MC Curve cut MR curve from below
c. both a and b
d. None of these
For the function one condition for getting points of inflexion is
b. f''(x) = 0
a. f1(d) = 0 / x
c. f'''(x) = 0
d. None of these
For the function y = 4x1x2 +x13. + 2x22, the partial derivative
a. 4x2 + 3x12
c. 4x1 +4x2
MATHEMATICAL ECONOMICS (I Sem BSc. Mathematics) b.
d.
∂y
is
∂x1
4x1 + 3x12
None of these
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For the function y = 10 + 2x12x2 + 3x22x33, the value of f22 is
b. 6x33
a. 6x23
d. None
c. 2x12 +6x2
For a function y = f(x1,x2), the total differential is given by
b. dy = f1dx2 + f2dx1
a. dy = f1dx1 + f2dx2
c. both a and b
d. None of these
The nature of tax multiplier is
a. positive
b. zero
c. negative
d. None
2
For the production function Q = 6x + 3xy+2y2 the value of M PPx is
a. 3x+4y
b. 12x + 4y
c. 12x + 3y
d. None
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108. c
112. b
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120. b
124. b