11. The backward bending supply curve of labour indicates?
- A. an abnormal supply situation
- B. the law of supply
- C. that labour supply and wage are directly related
- D. that the elasticity of supply is uniform
12. A supply curve parallel to the X- axis indicates?
- A. fairly elastic supply
- B. infinitely elastic supply
- C. fairly inelastic supply
- D. perfectly inelastic
13. If the marginal utility of a commodity is equal to its price then
- A. the consumer is in equilibrium
- B. more of the commodity can be consumed
- C. total utility is also equal to its price
- D. the market is not in equilibrium
14. A price floor is usually fixed
- A. at the equilibrium and causes shortage
- B. above the equilibrium and causes shortage
- C. below the equilibrium and causes shortage
- D. above the equilibrium and causes surplus
15. A market is in equilibrium when?
- A. there is no government intervention
- B. the demand is the same as the supply
- C. buyers and sellers are free to sell more goods
- D. there is no free entry and exit
16. A firm average cost decreases in the longrun because?
- A. increasing returns to scale
- B. diminishing average returns
- C. decreasing marginal returns
- D. decreasing average fixed cost
17. The larger a firm, the lower its cost of production
this statement explains the?
- A. law of diminishing marginal returns
- B. concept of economies of scale
- C. law of comparative cost advantage
- D. theory of division of labour
18. In the the longrun, a firm must shut down if its average revenue is?
- A. greater than average cost
- B. less than average variable cost
- C. equal to the minimum average cost
- D. equal to the average cost
19. Public limited liability companies are democratic in nature because?
- A. government appointees are members of the board
- B. they are run by elected public officers
- C. electoral principles are adopted in the day-to-day management
- D. shareholders elect the board of directors
20. In the event of bankruptcy owners of joint-stock companies lose?
- A. their private properties
- B. both company and private properties
- C. only the capital invested
- D. only their dividends