Q15 of 30 Page 1

State, with valid reasons, which of the following statement are true or false:

a. Average Revenue curve under the Perfect Competition is a downward sloping curve.


b. AFC curve is a rectangular hyperbola curve.


c. When MR is falling but positive, TR will also be falling and positive

False

The revenue curve under perfect competition is a horizontal straight line parallel to the x-axis. Under perfect competition, a company could sell any number of product at the given price.


b.


True


As output increases and TFC remains fixed, AFC declines continuously. As the same volume of fixed cost is divided by the – larger volume of output, AFC must decline.


c.


False


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a) Apply the geometric method to determine the elasticity of supply at point L on the supply


curve SS given above. (3)


b) Justify the statement, ‘In economics, normal profits are always a part of total cost’. (3)

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A consumer, Mr. Aman is in the state of equilibrium consuming two goods X and Y, with given

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Supply of money refers to the quantity of money

a. As on 31st March


b. During any specified period of time


c. As on any point of time


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Define nominal flow.