AP (Advanced Placement) Microeconomics: Questions 339 - 342 of 398

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Question 339

Question

MCQ▾

The Law of Diminishing Marginal Returns is responsible for

Choices

Choice (5)Response

a.

ATC that first rises, but eventually falls, as output increases.

b.

MP that first falls, but eventually rises, as output increases.

c.

AVC that first rises, but eventually falls, as output increases.

d.

MC that first falls, but eventually rises, as output increases.

e.

AFC that first rises, but eventually falls, as output increases.

Question 340

Question

MCQ▾

A small business estimates price elasticity for the product to be 3. To raise total revenue, owners should

Choices

Choice (5)Response

a.

Increase price as demand is elastic.

b.

Decrease price as demand is inelastic.

c.

Do nothing; they are already maximizing total revenue.

d.

Increase price as demand is inelastic

e.

Decrease price as demand is elastic.

Question 341

Question

MCQ▾

Elastic demand can be termed as

Choices

Choice (5)Response

a.

Unitary responsive.

b.

Very less responsive to the change in its price.

c.

Very high responsive to the change in its price.

d.

Cannot be determined.

e.

Fully unresponsive to the change in its price.

Question 342

Question

MCQ▾

The apple market is in equilibrium. Suppose we observe that apple growers are using more pesticides to increase apple production. At the same time, we hear that the price of pears, a substitute for apples, is rising. Which of the following is a reasonable prediction for the new price and quantity of apples?

Choices

Choice (5)Response

a.

Price rises, but quantity is ambiguous.

b.

Price is ambiguous, but quantity rises.

c.

Price falls, but quantity is ambiguous.

d.

Price is ambiguous, but quantity falls.

e.

None of the above

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