Question

QUESTION 24

1. Is it rational to spend all your income?

   		It could be
   		It never could be
   		It always is
   		It never is

QUESTION 25

1. Marginal cost can be expressed as the ratio of the price of labor and the marginal product of labor

   		only when labor is held constant
   		only when labor is the only variable input
   		whether labor is held constant or not
   		if all factors are variable

QUESTION 26

1. One reason individuals are willing to pay for information in uncertain situations is that information

   		can reduce uncertainty.
   		is a method of self-insurance.
   		is a way to diversify.
   		is a method of insurance.

Answer 1

Q24. D. Never it is - as there must always be a proportion to be saved for any uncertain situation that might occur and risk that may require money to invest.

Q25. A. Only when labour is held constant - when the price of labour is kept constant then the level of production done by it can be calculated well and hence the cost too. If both price and output are variable them marginal cost cannot be calculated as no fixed variable present to know the earlier data.

Q.26. a. Can reduce uncertainty- as it give the individual an idea for what might happen ahead and accordingly the further steps can be taken in the times of uncertainty.