choose the right option/options (there may be multiple right answers)

1)

At the shut down point

a) Price> average variable costs

b) Revenue > variable costs

c) Total losses of the firm> fixed costs of production

d) None of the above

2)

When the perfectly competitive firm and the industry are in long run equilibrium

a) Price= short run marginal cost=long run marginal cost

b) Price= minimum of long run average cost

c) Price=short run average cost=long run average cost

d) All of the above

3)

If the market demand curve is given by Q = 50 - 2p, then

a) Marginal revenue will be negative for quantities at which demand is elastic

b) Total revenue is maximized when price =25

c) Marginal revenue is positive for any price above 15

d) The price chosen by monopolist is less than 12

4)

If the elasticity of demand is -3 at a a price of 30 , the marginal revenue at the corresponding output is

a) 20

b) 10

c) 5

d) 30

5)

Which of the cases is not possible

a) Income elasticity of demand and price elasticity of demand are both positive

b) Income elasticity of demand and price elasticity of demand are both negative

c) Income elasticity of demand is positive but price elasticity of demand is negative

d) Income elasticity of demand is negative but price elasticity of demand is positive

6)

How many of the following production functions do not satisfy the law of diminishing returns to labor? (1) f(K, l) = K + L ; (2) f(K, L) = KL ;

(3) f(K,L) = min(K, L) ; (4)f(K; L) = max(K, L), where K stands for capital and L stands for labor

a) 1

b) 2

c) 3

d) 4

7)

A reduction in the price of a commodity whose demand curve is a rectangular hyperbola

(P = constant/Q ) causes total expenditure on the commodity to

a) Increase

b) Decrease

c) Remain unchanged

d) Any of the above is possible