Economics

✅ The correct answer is C.
A necessity is defined as a good having an income elasticity of demand between zero and 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. A zero income elasticity of demand occurs when an increase in income is not associated with a change in the demand of a good.

✅ The correct answer is A.
When marginal revenue is zero, total revenue is Maximum. The profit maximizing quantity and price can be determined by setting marginal revenue equal to zero, which occurs at the maximal level of output. Marginal revenue equals zero when the total revenue curve has reached its maximum value.

✅ The correct answer is C.
A firm under perfect competition is Price taker. In perfect market conditions (also called perfect competition) a firm is a price taker because other firms can enter the market easily and produce a product that is indistinguishable from every other firm’s product. This makes it impossible for any firm to set its own prices.

✅ The correct answer is A.
MC curve cuts AVC and AC curves at their minimum points. As long as MC is less than ATC, ATC will go down with each extra unit made. At some point, MC rises to the point that it equals ATC and the curves intersect.

✅ The correct answer is D.
Demand for intermediate consumption arises in all producing sectors of the economy. Intermediate consumption is a national accounts concept which measures the value of the goods and services consumed as inputs by a process of production.

✅ The correct answer is B.
An ISO-product slopes downward to the right. They slope downward because MTRS of labour for capital diminishes. When we increase labour, we have to decrease capital to produce a given level of output.

✅ The correct answer is D.
An individual firm can influence the price is not a characteristic of perfect competition. All goods in a perfectly competitive market are considered perfect substitutes, and the demand curve is perfectly elastic for each of the small, individual firms that participate in the market. These firms are price takers–if one firm tries to raise its price, there would be no demand for that firm’s product.

✅ The correct answer is B.
Diminishing marginal utility is the basis of Law of demand. When the price of a goods falls, downward sloping marginal utility curve implies that the consumers must buy more of the good so that its marginal utility falls and becomes equal to the new price.

✅ The correct answer is A.
When AC = AR, we know that the firms are earning just normal profits.

✅ The correct answer is B.
The period is long enough to allow firms to change plant size and capacity. The long run is a period of time in which all factors of production and costs are variable. In the long run, firms are able to adjust all costs.