Question

Match List - I with List - II and select the correct code for the answer:

List - I	List - II
(a) Cross elasticity is zero	1. $Price=AVC$
(b) Shut-down point	2. Two commodities are independent
(c) Slutsky theorem	3. Transformation line
(d) Production Possibility Curve	4. Substitution effect

• A. $\left(a\right)-2,\left(b\right)-4,\left(c\right)-1,\left(d\right)-3$
• B. $\left(a\right)-3,\left(b\right)-2,\left(c\right)-4,\left(d\right)-1$
• C. $\left(a\right)-1,\left(b\right)-3,\left(c\right)-2,\left(d\right)-4$
• D. $\left(a\right)-2,\left(b\right)-1,\left(c\right)-4,\left(d\right)-3$

Answer 1

Answer: (D)

$\left(a\right)-2,\left(b\right)-1,\left(c\right)-4,\left(d\right)-3$

a) Cross elasticity is zero when the two commodities are independent.

b) Shut-down point is that point when price of the commodity is equal to the average variable cost of producing it.

c) Slutsky theorem states substitution effect.

d) Production possibility curve is also known as transformation line since production possibility curve projects the different combination of goods which can be produced with given resources and technology.