Economic Curves — Set 2
Economics · आर्थिक वक्र · Questions 11–20 of 50
Which curve represents the relationship between the price of a good and the quantity that producers are willing to offer?
Correct Answer: D. Supply Curve
The Supply Curve typically slopes upwards from left to right, showing a direct relationship between price and quantity supplied. Higher prices provide an incentive for producers to increase output. It reflects the firm's marginal cost of production.
The curve which shows the total cost of producing different levels of output is known as the?
Correct Answer: D. Total Cost Curve
The Total Cost Curve represents the sum of fixed and variable costs at each level of production. It starts at the level of total fixed cost when output is zero. The slope of this curve at any point represents the marginal cost.
An 'Isoquant Curve' in production theory represents combinations of inputs that yield?
Correct Answer: B. Same Level of Output
An Isoquant shows all combinations of factors of production, like labor and capital, that produce a constant quantity of output. It is similar to an indifference curve but applies to production rather than consumption. The slope of an isoquant is the marginal rate of technical substitution.
Which curve shows the various combinations of two inputs that a firm can purchase with a given total budget?
Correct Answer: D. Isocost Curve
The Isocost Curve represents the budget constraint of a firm in the production process. Any point on this line represents the same total cost for the firm. Producer equilibrium is reached where the isocost line is tangent to an isoquant.
The 'Offer Curve' in international trade was introduced by which economist?
Correct Answer: B. Alfred Marshall
Alfred Marshall and Edgeworth developed Offer Curves to show the willingness of a country to trade its exports for imports. It indicates the quantity of one product a country will export for specific quantities of another. It is used to determine the international terms of trade.
What happens to the Demand Curve of a normal good when the income of the consumer increases?
Correct Answer: C. Shifts to the right
An increase in consumer income causes the demand for normal goods to rise at every price level, shifting the curve to the right. This represents a change in demand rather than a change in quantity demanded. Conversely, for inferior goods, the curve would shift to the left.
Which curve is derived by connecting the points of equilibrium on an indifference map as income changes?
Correct Answer: C. Income Consumption Curve
The Income Consumption Curve (ICC) traces the consumer's optimal choices as their budget expands while prices remain constant. It provides the basis for deriving the Engel Curve for a specific good. The path indicates whether goods are normal, inferior, or luxury.
The 'Giffen Paradox' refers to a violation of the standard slope of which curve?
Correct Answer: D. Demand Curve
For Giffen goods, the demand curve slopes upwards because demand increases as the price rises. This rare phenomenon occurs when the negative income effect outweighs the substitution effect. It usually applies to very inferior staple foods in low-income scenarios.
Which curve is often described as U-shaped in the short run due to the law of variable proportions?
Correct Answer: A. Average Variable Cost Curve
The Average Variable Cost (AVC) curve is U-shaped because costs per unit initially decrease due to efficiency but later rise due to diminishing returns. It reaches its minimum point before the Average Total Cost curve. This shape is a fundamental assumption in short-run firm theory.
What is the shape of the 'Average Fixed Cost' (AFC) curve?
Correct Answer: B. Rectangular Hyperbola
The AFC curve is a rectangular hyperbola because total fixed cost remains constant while output increases. As a result, the cost per unit continuously declines but never reaches zero. This reflects the spreading of overhead costs over larger production volumes.