State whether the following statements are TRUE or FALSE. Give the reason, If a statement is...

State whether the following statements are TRUE or FALSE. Give the reason, If a statement is true, explain why; if it is false, identify the mistake and try to correct it. Use the diagram for explanation if needed. (NOTE: Marks are based on your reasoning, not only for T/F marking)

(i). Change in quantity demanded and change in demand are the same things.

(ii). If the demand curve for good A is flatter, and if the demand curve for good B is highly

steeper, then for any same amount of price change for both goods, the total revenue for good A

will be more than total revenue for good B.

(iii). When the price ceiling and price flooring are imposed than both consumer and producer surplus

are Maximized.

(iv). The value of elasticity does not change along the demand curve when it vertical or horizontal.

(v). From a budget line, the change in real income is only affected due to change in nominal income,

keeping other things constant.

(vi). When marginal cost is above average total cost, average total cost must be falling.

Solutions

Expert Solution

False

in both cases consumer and pruducer surplus differs.

4) true

Value in both situation is same

5) tries keeping other things constant change in real income is only affected by change in nominal income as it takes account of changes in price level.

6 false

AC must increasing if MC>AC

Rahul Sunny answered 1 year ago

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