Economics

✅ The correct answer is C.
Under Perfect competition market structure, average revenue of a firm is equal to its marginal revenue. For a perfectly competitive firm, average revenue is not only equal to price, but more importantly, it is equal to marginal revenue, all of which are constant.

✅ The correct answer is A.
In the case of two perfect substitutes, the indifference curve will be Straight line. This is because perfect substitutes have a fixed ratio of substitution. An indifference curve is usually concave towards the origin because the two goods are usually not perfect substitutes. This means that the exchange rate varies hence the slope of the line tangent to the curve (exchange rate) varies.

✅ The correct answer is B.
Demand curve is the other name that is given to the average revenue curve. Average revenue curve is often called the demand curve due to its representation of the product’s demand in the market.

✅ The correct answer is D.
Production is not an input. It is an output. Production is the method of turning raw materials or inputs into finished goods or products in a manufacturing process.

✅ The correct answer is B.
MC is given by Slope of TC. Slope tells us how (total) costs change when we change output/quantity produced.

✅ The correct answer is B.
The ‘Diamond water’ controversy is explained by marginal utility. Marginal utility is the additional satisfaction or gain someone gets from using or purchasing an additional unit of a particular good or service. People are willing to pay a higher price for goods with greater marginal utility.
So, let’s go back to water and diamonds. There is plenty of water in most parts of the world (not scarce), which means that, as consumers, we usually have a low marginal utility for water. In a typical situation, we aren’t willing to pay a lot of money for one more drink of water. Diamonds, however, are scarce. Because they are harder to find and attain, our marginal utility (additional satisfaction), for adding a diamond to our collection is much higher than someone offering us one more drink of water. If one is dying of thirst, then this paradox might not make sense, and the marginal utility from another drink of water would be much higher than the additional satisfaction of owning a diamond.

✅ The correct answer is B.
The three broad types of productive resources are Capital, labour and natural resources.

✅ The correct answer is C.
If a good is a luxury, its income elasticity of demand is Positive and greater than 1. If income elasticity of demand of a commodity is less than 1, it is a necessity good. If the elasticity of demand is greater than 1, it is a luxury good or a superior good.

✅ The correct answer is C.
If income elasticity for a good is 2, then it is a Luxury item. A positive income elasticity of demand is associated with normal goods; an increase in income will lead to a rise in demand.

✅ The correct answer is A.
In imperfect competition excess capacity always exists. Excess capacity is a characteristic of natural monopoly or monopolistic competition.