Temporary Economics P3 Thread

[studentno1]

Post your MCQs here, and help others for the paper on 10th. ​

Someone please have a look at this- why is the answer C?


The relative prices of goods reflect their marginal utilities rather than their total utilities.
What is explained by this statement?

A the law of diminishing returns
B the limitations of marginal utility theory
C the paradox of value
D the role of prices as a rationing mechanism​

 

[Bioshock]

Post your MCQs here, and help others for the paper on 10th. ​

Someone please have a look at this- why is the answer C?


The relative prices of goods reflect their marginal utilities rather than their total utilities.
What is explained by this statement

A the law of diminishing returns
B the limitations of marginal utility theory
C the paradox of value
D the role of prices as a rationing mechanism​

Hey guys correct me if I am wrong but I thinnk this is explanation. The paradox of value stems from diamond-water paradox. The total utility of water is higher then diamond but still diamonds are expensive. However it was established that marginal utility of diamond was much higher then water but it diminished quickly hence it was decided that value depends on marginal rather than total utility.

 

[Dewdrop95]

^You're right. That's how my teacher explained it too.
However, you can also look at this through elimination.
A can not be right because here we're talking about utilities and not returns. B; limitations of marginal utility theory are usually the assumptions that have been made in its derivation like the consumer is a rational consumer or that utility can be measured. D would be incorrect too because rationing mechanism (correct me if im wrong) is concerned with prices when goods are in shortage and there's no suuch implication in the qs.

 

[studentno1]

Thanks a lot both of you. That really helped.

I always tend to get this AD slope questions wrong

An aggregate demand curve slopes downwards from left to right.
One reason for this is that a reduction in the average price level will lead to

A an increase in the real value of money balances.
B an increase in interest rates.
C a decline in the country’s international competitiveness.
D the expectation of further price falls.

 

[Dewdrop95]

Umm I think the answer would be B. Cause an increase in interest rates causes a decline in quantity demanded. (Savings increase and borrowings decrease)

 

[studentno1]

Umm I think the answer would be B. Cause an increase in interest rates causes a decline in quantity demanded. (Savings increase and borrowings decrease)

That makes sense, but the answer is A :/ This question is being repeated twice and the answer is same. Khair hai

 

[studentno1]

6 A manufacturing firm has one plant of optimum size.
The firm builds a second plant identical to its first plant. The firm then finds that its long-run
average cost has risen.
What could account for the change in its long-run average cost?
A diminishing returns
B external diseconomies of scale
C managerial diseconomies of scale
D technical diseconomies of scale