A "LOT" of doubts !

[Anjali]

1. The difference between average cost and average revenue is
A. Total Profit
B. Average Profit
C. Net profit
D. Marginal profit

Is it B or C ?

2.  According to Marshall , the minimum price which will induce the firm to produce in short period is one which just equal its :
A. MC
B. AVC
C. AFC
D. ATC

Is it B ?

3. Price consumption curve for a normal commodity has
A. vertical slope
B. negative slope
C. Backward slope
D. Positive slope

Is it b ?

4. Which of the following is not an assumption of the revealed preference ?
A. The choice of the consumer reveals his prefernce.
B. The income of the consumer and the price of the commodities should remain constant throughout the period of analysis.
C. The consumer may choose a number of combinations in any given income price situation
D. The tastes of the consumer are given and remain unchanged.

Is it D ??

5. Wage differential are not affected by
A. Existence of non competing group
B. Market Imperfections
C. Geographical differences
D. Demand for and supply of Labour

I guess they all affect wage differential :-(

6. What does the game theory assume ?
A. The rival form mostly adopts a strategy which is unfavourable for the other
B. The rival firm makes effort for sales maximisation
C. No alternative choices are available to the firms
D. The firms aim at profit maximisation

Is it D ?

7. The revealed preference analysis is based on
A. Need measurement
B. Utility measurement
C. Desire measurement
D. Observed consumer behaviour

Is it D ?

8. For what types of goods the income and the substitution effect work in the same direction ?
1. Superior goods
2. Inferior goods
3. Only luxury goods
4. Only comfort goods

[Akshay Jain]

1st average profit (thanx @Ditro for reminding me... )
2nd is AVC
3rd is positive slope
4th is B (without changes in income or prices we cant go in comparative static analysis)
5th
6th is D
7th is D

[Anjali]

Explanation for ques 3 ?
And for the revealed preference one , we keep the income and price constant and then study the behaviour of consumer. Please recheck.

[Homer Simpson]

1(B) most likely - net profit is what you get after deducting taxes. I think 8 is (A)

for 3, PCC is plotted for x1 and x2 while changing price of x1 - so if its a normal good, usually the price effect will be negative, signifying an inverse relation between p1 and x1. So when p1 falls for example, more of x1 is demanded and usually a bit more of x2 as well (assuming x2 is a normal good). In that sense, i should get a positive graph.

[Akshay Jain]

net profit=total revenue-total cost
divide the above expression by Q
we get
average profit=average rev-avg cost

[Anjali]

@tsuki , I did not understand PCC ! :-(
And what is the explanation for ques 8th ?

[arzoo mahajan]

I think, for 8th the answer should be (a) because superior goods are a type of normal good and for normal good P.E & S.E. work in the same direction!!

[Anjali]

Tsuki for ques 3 , what if the good is inferior ?