Individual Demand Curve

Q. Which is the optimum or most preferred bundle?

1. None of the above
2. The one where the budget line is tangent to the indifference curve
3. The one where the budget line intersects the indifference curve
4. The one below the budget line

Q. A firm is said to be of optimum size when __________________.

1. marginal cost is equal to marginal revenue
2. the firm is maximizing its profits
3. long run marginal cost is at a minimum
4. long run average total cost is at a minimum

Q. Which of the following statements are true or false ? Give valid reasons in support of your answer.
(a) Average cost curve cuts Average variable cost curve, at its minimum level.
(b) Average product curve and Marginal product curve are ‘U-shaped’ curves.
(c) Under all market conditions, Average revenue and Marginal revenue are equal to each other.
(d) Total cost curve and Total variable cost curve are parallel to each other.

Q. The kinked demand curve is used to rationalise __________.

1. price rigidity
2. price leadership
3. collusion
4. price competition