All the following are methods of determining prices except?
Maximum pricing
Rationing
Minimum pricing
Auctioning
Correct answer is D
A maximum price occurs when a government sets a legal limit on the price of a good or service – with the aim of reducing prices below the market equilibrium price.
Minimum Prices. It is known as minimum price or pricefloor when the government sets a minimum legal limit of a price of a particular good or service.
In economics, rationing refers to an artificial control of the supply and demand of commodities.
Which of the following will not affect the market price of a commodity?
Increase in demand
Change in taste
Intersection of demand and supply
Increase in supply
Correct answer is C
6 Factors Affecting Price Determination of...
In order to calculate total utility (TU) from given levels of marginal utility (MU), one has to
Subtract MU from TU
Add MU from the various levels
Multiply MU by the initial TU
Divide current MU by previous MU
Correct answer is B
Marginal utility is addition made to total utility by consuming one more unit of a commodity.
Total Utility is Summation of Marginal Utilities: in order to get the total utility, you will have to sum up the additional/extra utility (MU) from the given levels of consumption.
If the price of a commodity Z falls and a consumer buys less of it, then commodity Z is a
Necessity
Good of ostentation
Normal good
Giffen good
Correct answer is B
An ostentatious good is a good where demand is often greater when the price of it is higher. These are goods we buy in order to 'keep up with the Jones'. The good may give little actual utility apart from the pride of owning something very few other people own.
Government revenue will increase if taxes are levied on goods with
Perfectly elastic demand
Fairly elastic demand
Perfectly inelastic demand
Unitary elastic demand
Correct answer is C
A good with a perfectly inelastic demand will always sell irrespective of the change in the price of the product. This is one way the government can increase revenue generation through taxation.
An example of perfectly inelastic demand would be a lifesaving drug that people will pay any price to obtain.