16. The horizontal demand curve parallel to x-axis implies that the elasticity of demand is –
A. Zero
B. Infinite
C. Equal to one
D. Greater than zero but less than infinity
17. An individual demand curve slopes downward to the right because of the –
A. Working of the law of diminishing the marginal utility
B. The substitution effect of a decrease in price
C. Income effect of fall in Price
D. All of the above
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18. The economist’s objections to monopoly rest on which of the following grounds?
A. There is a transfer of income from consumers to the monopolist
B. There is welfare loss as resources tend to be misallocated under monopoly
C. Only A is correct
D. Both A and B are correct
19. In which of the following market structure is the degree of control over the price of its product by a firm very large?
A. Imperfect competition
B. Perfect competition
C. Monopoly
D. A and B both
20. In the short run, when the output of a firm increases, its average fixed cost –
A. Remains constant
B. Decreases
C. Increases
D. First decreases and then rises
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