Economic Curves — Set 4
Economics · आर्थिक वक्र · Questions 31–40 of 50
Which curve is known as the 'Planning Curve' of a firm?
Correct Answer: A. Long Run Average Cost Curve
The Long Run Average Cost (LRAC) curve is called the planning curve because it helps a firm decide the scale of its production facility. It shows the lowest possible cost for every level of output in the long term. Firms use it to decide whether to expand or contract operations.
The 'Beveridge Curve' shows the relationship between which two variables?
Correct Answer: A. Unemployment and Job Vacancies
The Beveridge Curve reflects the efficiency of the labor market in matching workers with jobs. A shift outward suggests a decrease in the efficiency of the matching process. It is used to distinguish between cyclical and structural unemployment.
If the Gini Coefficient is zero, the Lorenz Curve will be?
Correct Answer: B. Identical to the line of perfect equality
A Gini Coefficient of zero indicates perfect equality in distribution. In this case, the Lorenz Curve coincides exactly with the 45-degree diagonal line. As inequality increases, the curve bows further away from this diagonal.
Which curve is used to determine the 'Equilibrium Price' in a market?
Correct Answer: A. Intersection of Demand and Supply Curves
Market equilibrium occurs at the price where the quantity demanded by consumers equals the quantity supplied by producers. This point is found at the intersection of the demand and supply curves. At this price, there is no shortage or surplus in the market.
The 'Expansion Path' in production is similar in concept to which consumer theory curve?
Correct Answer: C. Income Consumption Curve
The Expansion Path connects the least-cost input combinations for various output levels as the firm's total outlay increases. It is the producer's version of the Income Consumption Curve (ICC). It shows the long-run trajectory of a firm's growth.
The 'Yield Curve' in finance and economics represents the relationship between?
Correct Answer: D. Interest rates and Time to maturity
The Yield Curve plots interest rates of bonds with equal credit quality but different maturity dates. A normal yield curve slopes upwards, indicating higher rates for longer durations. It is often used as a predictor of future economic activity and recessions.
Which curve shows the tradeoff between the production of 'guns' (defense) and 'butter' (civilian goods)?
Correct Answer: D. Production Possibility Curve
The 'guns vs. butter' model is a classic example of the Production Possibility Curve. it demonstrates the constraint of limited resources and the necessity of choice. Increasing spending on defense requires sacrificing some civilian consumption.
The 'Lorenz Curve' was developed in 1905 by which American economist?
Correct Answer: C. Max O. Lorenz
Max Otto Lorenz developed this graphical representation to describe the distribution of wealth. It has since become a standard tool in welfare economics. He was an American statistician and economist.
What is the slope of the 'Average Revenue' curve for a firm under Monopoly?
Correct Answer: C. Downward sloping
Under a monopoly, the firm is the industry, so it faces the downward-sloping market demand curve. To sell more units, the monopolist must lower the price for all units. Therefore, the AR curve (which is the demand curve) slopes downwards.
Which curve is known as a 'Frontier' because it represents the boundary of what is obtainable?
Correct Answer: C. Production Possibility Curve
The PPC is also called the Production Possibility Frontier (PPF). It defines the limit of feasible production given the current technology and resources. Any point outside the frontier is unattainable with current constraints.