PME 1

WHAT IS RELATIVE PRICE INELASTICITY?

• E>1

• E<1

• E=0

• E = 1

WHAT DOES IT MEAN IF A PRODUCT HAS HIGH PRICE ELASTICITY?

• Demand is sensitive to price changes

• Demand is not sensitive to price changes

• Demand remains constant regardless of price

• Demand decreases as price decreases

HOW DOES INCOME ELASTICITY OF DEMAND AFFECT LUXURY GOODS?

• It is always negative

• It is always positive

• It can be zero

• It varies based on the good

WHAT IS THE IMPACT OF SUBSTITUTES ON PRICE ELASTICITY?

• It decreases elasticity

• It increases elasticity

• It has no effect

• It makes demand perfectly inelastic

LAW OF DEMAND STATES THAT THERE IS A ________ RELATIONSHIP BETWEEN PRICE AND DEMAND?

• POSITIVE

• NEGATIVE

• NEUTRAL

• NO EFFECT

HOW DOES CROSS ELASTICITY OF DEMAND AFFECT COMPLEMENTARY GOODS?

• It is always negative

• It is always positive

• It can be zero

• It varies based on the good

ACCORDING TO CARDINAL UTILITY,UTLITY CAN BE MEASURED IN TERMS OF

• NUMBERS

• RANK

• BOTH

• NONE

ISOQUANT GRAPH IS

• UPWARD SLOPING

• DOWNWARD SLOPING

• STRAIGHT

• SWING

THE ADDITIONAL UTILITY DERIVED FROM THE ADDING ONE EXTRA UNIT IS CALLED

• AVERAGE UTILITY

• UTILTIY

• TOTAL UTILITY

• MARGINAL UTILITY

AS THE MORE AND MORE QUANTITY OF A GOOD IS CONSUMED ,ITS MU WILL

• REMAIN COSTANT

• INCREASES

• NO EFFECT

• FIRST INCREASES AND THEN DECREASES