[1] In the law of demand, the statement "Other things remain constant" means -
A.
income of consumer should not change
B.
price of other goods should not change
C.
taste of consumer should not change
D.
All of the above
Ans:
All of the above
Explanation :
In economics, the law of demand is an economic law, which states that consumers buy more of a good when its price is lower and less when its price is higher (ceteris paribus). The Law of demand states that the quantity demanded and the price of a commodity are inversely related, other things remaining constant. That is, if the income of the consumer, prices of the related goods, and preferences of the consumer remain unchanged, then the change in quantity of good demanded by the consumer will be negatively correlated to the change in the price of the good.
[2] A firm is in equilibrium when its
A.
marginal cost equals the marginal revenue
B.
total cost is minimum
C.
total revenue is maximum
D.
average revenue and marginal revenue are equal
Ans:
marginal cost equals the marginal revenue
Explanation :
A consumer is in a state of equilibrium when he achieves maximum aggregate satisfaction on the expenditure that he makes depending on the set of conditions relating to his tastes and preferences, income, price and supply of the commodity etc. Producers' equilibrium occurs when he maximizes his net profit subject to a given set of economic situations. A firm's equilibrium point is when it has no inclination in changing its production. In short run Marginal revenue = Marginal Cost is the condition of equilibrium.
[3] The excess of price a person is to pay rather than forego the consumption of the commodity is called -
A.
Price
B.
Profit
C.
Producers' surplus
D.
Consumer's surplus
Ans:
Producers' surplus
Explanation :
Producer Surplus' is an economic measure of the difference between the amount that a producer of a good receives and the minimum amount that he or she would be willing to accept for the good. The difference, or surplus amount, is the benefit that the producer receives for selling the good in the market.
[4] When the price of a commodity falls, we can expect -
A.
the supply of it to increase
B.
the demand for it to fall
C.
the demand for it to stay constant
D.
the demand for it to increase
Ans:
the demand for it to increase
Explanation :
In economics, the law of demand is an economic law, which states that consumers buy more of a good when its price is lower and less when its price is higher. The Law of demand states that the quantity demanded and the price of a commodity are inversely related, other things remaining constant. That is, if the income of the consumer, prices of the related goods, and preferences of the consumer remain unchanged, then the change in quantity of good demanded by the consumer will be negatively correlated to the change in the price of the good
[5] A situation of large number of firms producing similar goods is termed as :
A.
Perfect competition
B.
Monopolistic competition
C.
Pure competition
D.
Oligopoly
Ans:
Perfect competition
Explanation :
The fundamental condition of perfect competition is that there must be a large number of sellers or firms. Homogeneous Commodity is the second fundamental condition of a perfect market. The products of all firms in the industry are homogeneous and identical.
[6] The difference between the price the consumer is prepared to pay for a commodity and the price which he actually pays is called -
A.
Consumer's Surplus
B.
Producer's Surplus
C.
Landlord's Surplus
D.
Worker's Surplus
Ans:
Consumer's Surplus
Explanation :
Consumer surplus is the difference between the maximum price a consumer is willing to pay and the actual price they do pay. If a consumer would be willing to pay more than the current asking price, then they are getting more benefit from the purchased product than they spent to buy it.
[7] For an inferior good, demand falls when -
A.
price rises
B.
income rise
C.
price falls
D.
income falls
Ans:
income rise
Explanation :
In economics, income elasticity of demand measures the responsiveness of the demand for a good to a change in the income of the people demanding the good. An Inferior good is a good that decreases in demand when consumer income rises, unlike normal goods, for which the opposite is observed. Normal goods are those for which consumers' demand increases when their income increases.
[8] Wage fund theory was propounded by -
A.
J.B. Say
B.
J.S. Mill
C.
J.R. Hicks
D.
J.M. Keynes
Ans:
J.S. Mill
Explanation :
J.S. Mill developed the wages-fund theory. This theory of wage was an attempt to show that in certain circumstances wages could rise above subsistence level. According to this theory a fund of capital has to he accumulated in advance before wage could be paid. This fund of capital is called wages-fund out of which wages are paid to labourers.
[9] Cross demand expresses the functional relationship between -
A.
demand and prices of related commodities
B.
demand and income
C.
demand and prices
D.
demand and supply
Ans:
demand and prices of related commodities
Explanation :
Other things being constant, cross demand expresses the relation between demand for good ‘A’ due to change in the price of its related good 'B’. It shows that at different prices of good ‘B’ what different quantities of good A’ will be demanded.
[10] Third stage of Law of Variable Proportion is called -
A.
negative returns
B.
positive returns
C.
constant returns
D.
increasing returns
Ans:
negative returns
Explanation :
The stages of Law of Variable Proportion are: Stage 1: Increasing return: Stage 2: Diminishing return; and Stage 3: Negative Return. In the third stage Marginal Product of variable factor is zero. In this stage the Total Product starts diminishing.
[11] Other things being equal, a decrease in quantity demanded of a commodity can be caused by –
A.
a rise in the price of the commodity
B.
a rise in the income of the consumer
C.
a fall in the price of a commodity
D.
a fall in the income of the consumer
Ans:
a rise in the price of the commodity
Explanation :
In economics, the law states that, all else being equal, as the price of a product increases, quantity demanded falls; likewise, as the price of a product decreases, quantity demanded increases.
[12] The Psychological law of consumption states that –
A.
Proportionate increase in consumption is less than proportionate increase in income
B.
Increase in income is equal to increase in consumption
C.
Increase in consumption is greater than increase in income
D.
Consumption does not change with a change in income
Ans:
Proportionate increase in consumption is less than proportionate increase in income
Explanation :
According to Keynes’ psychological law of consumption, increased aggregate consumption due to increased aggregate income — aggregate consumption increases with increase in aggregate income but the increase in consumption is less than the increase in the income. This is because when the basic necessities or demand of the people are already fulfilled, they start saving the extra additional income.
[13] Subsidies are payment by government to –
A.
Consuming units
B.
Producing units
C.
Banking units
D.
Retired persons
Ans:
Producing units
Explanation :
A subsidy is essentially a payment by the government to suppliers/producers that reduce their costs of production and encourages them to increase output.
[14] Tha Law of Demand is based on -
A.
Manufacturer's preference
B.
Seller's preference
C.
Supplier's preference
D.
Consumer's preference
Ans:
Consumer's preference
Explanation :
The Law of Demand states that, all else being equal, as the price of a product increases, quantily demanded lowers; likewise, as the price of a product decreases, quantity demanded increases. Demand is derived from consumers’ tastes and preferences, and it is bound by income. In other words, given a limited income, the consumer must decide what goods and services to purchase. Each consumer will purchase different things because individual preferences and incomes differ.
[15] A supply function expresses the relationship between -
A.
price and output
B.
price and selling cost
C.
price and demand
D.
price and consumption
Ans:
price and output
Explanation :
The supply function expresses the relationship between the Lotal quantily supplied and the price received by all suppliers per unit of time, holding other factors constant. It illustrates the relation between price and supply.
[16] The expenses on advertising is called -
A.
Implicit cost
B.
Surplus cost
C.
Fixed cost
D.
Selling cost
Ans:
Selling cost
Explanation :
Selling cost is total cost of marketing, advertising, and selling a product. It differs from the production cost which is incurred to produce goods. Selling cost influences the commercial desire to purchase a commodity,
[17] Name the curve which shows the quantity of products a seller wishes to sell at a given price level.
A.
Demand curve
B.
Cost curve
C.
Supply curve
D.
None of these
Ans:
Supply curve
Explanation :
The supply curve shows the relationship between the price of a good and the quantity supplied, holding constant the values of all other variables that affect supply. Each point on the curve shows the quantity that sellers would choose to sell at a specific price.
[18] Under Perfect Competition -
A.
Marginal Revenue is less than the Average Revenue
B.
Average Revenue is less than the Marginal Revenue
C.
Average Revenue is equal to the Marginal Revenue
D.
Average Revenue is more than the Marginal Revenue
Ans:
Average Revenue is equal to the Marginal Revenue
Explanation :
Perfect competition describes markets such that no participants are large enough to have the market power to set the price of a homogeneous product. In the short run, perfectly-competitive markets are not productively efficient as output will not occur where marginal cost is equal to average cost (MC=AC). They are allocatively efficient, as output will always occur where marginal cost is equal to marginal revenue (MC=MR).
[19] It is prudent to determine the size of the output when the industry is operating in the stage of -
A.
increasing returns
B.
constant returns
C.
diminishing returns
D.
negative returns
Ans:
diminishing returns
Explanation :
In economics, diminishing returns (also called diminishing marginal returns) is the decrease in the marginal (per-unit) output of a production process as the amount of a single factor of production is in- creased, while the amounts of all other factors of production stay constant. This law plays a central role in production theory.
[20] The most distinguishing feature of oligopaly is -
A.
number of firms
B.
interdependence
C.
negligible influence on price
D.
price leadership
Ans:
interdependence
Explanation :
An oligopoly is a market form in which a market or industry is dominated by a small number of sellers (oligopolists). Because there are few sellers, each oilgopolist is likely to be aware of the actions of the others. The decisions of one firm influence, and are influenced by, the decisions of other firms. Some of its characteristics are: Profit maximization conditions; Number of firms; Product differentiation; Interdependence; Non-Price Competition, etc. The distinctive feature of an oligopoly is interdependence. Oligopolies are typically composed of a few large firms.
[21] 'Law of demand' implies that when there is excess demand for a commodity, then -
A.
price of the commodity falls
B.
price of the commodity remains same
C.
price of the commodity rises
D.
quantity demanded of the commodity falls
Ans:
price of the commodity rises
Explanation :
The Law of demand states that the quantity demanded and the price of a commodity are inversely related, other things remaining constant. That is, if the income of the consumer, prices of the related goods, and preferences of the consumer remain unchanged, then the change in quantity of good demanded by the consumer will be negatively correlated to the change in the price of the good. When there is excess demand of the commodity the price starts rising and it continues to rise till equilibrium price is reached.
[22] Given the money wages, if the price level in an economy increases, then the real wages will -
A.
increase
B.
decrease
C.
remain constant
D.
become flexible
Ans:
decrease
Explanation :
If workers receive a higher nominal wage and the price level does not change, then the real purchasing power of their wages is higher and they are inclined to increase the quantity of labor supplied.
[23] In Economics, production means -
A.
manufacturing
B.
making
C.
creating utility
D.
farming
Ans:
creating utility
Explanation :
All factors of production like land, labour, capital and entrepreneur are required in combination at a time to produce a commodity. Production means creation or an addition of utility. Factors of production (or productive 'inputs' or 'resources') are any commodities or services used to produce goods and services.
[24] What is included in the Tetiary sector?
A.
Banking
B.
Manufacturing
C.
Forestry
D.
Mining
Ans:
Banking
Explanation :
The led 'my industry is the segment of the economy that provides services to its consumers. It includes a wide range or activities that service based and give non-tangible value to customers such as provision of trading, insurance, banking, etc. The other sectors are the secondary sector (manufacturing), and the primary sector (agriculture and allied activities).
[25] Minimum payment to factor of production is called -
A.
Quasi Rent
B.
Rent
C.
Wages
D.
Transfer Payment
Ans:
Transfer Payment
Explanation :
In economics, factors of production are the inputs to the production process. There are three basic factors of production: land, labour, capital. The payment for use and the received income of a land owner is rent. The payment for someone else's labor and all income received from one's own labor is wages. The modern theory of rent is that it is the difference between the actual earning of a factor unit over its transfer earnings. So the Transfer earnings are the minimum payment required to keep a factor of production in its present use. It is also known as opportunity cost.
Explanation :
In economics, the law of demand is an economic law, which states that consumers buy more of a good when its price is lower and less when its price is higher (ceteris paribus). The Law of demand states that the quantity demanded and the price of a commodity are inversely related, other things remaining constant. That is, if the income of the consumer, prices of the related goods, and preferences of the consumer remain unchanged, then the change in quantity of good demanded by the consumer will be negatively correlated to the change in the price of the good.
[2] A firm is in equilibrium when its
A.
marginal cost equals the marginal revenue
B.
total cost is minimum
C.
total revenue is maximum
D.
average revenue and marginal revenue are equal
Ans:
marginal cost equals the marginal revenue
Explanation :
A consumer is in a state of equilibrium when he achieves maximum aggregate satisfaction on the expenditure that he makes depending on the set of conditions relating to his tastes and preferences, income, price and supply of the commodity etc. Producers' equilibrium occurs when he maximizes his net profit subject to a given set of economic situations. A firm's equilibrium point is when it has no inclination in changing its production. In short run Marginal revenue = Marginal Cost is the condition of equilibrium.
[3] The excess of price a person is to pay rather than forego the consumption of the commodity is called -
A.
Price
B.
Profit
C.
Producers' surplus
D.
Consumer's surplus
Ans:
Producers' surplus
Explanation :
Producer Surplus' is an economic measure of the difference between the amount that a producer of a good receives and the minimum amount that he or she would be willing to accept for the good. The difference, or surplus amount, is the benefit that the producer receives for selling the good in the market.
[4] When the price of a commodity falls, we can expect -
A.
the supply of it to increase
B.
the demand for it to fall
C.
the demand for it to stay constant
D.
the demand for it to increase
Ans:
the demand for it to increase
Explanation :
In economics, the law of demand is an economic law, which states that consumers buy more of a good when its price is lower and less when its price is higher. The Law of demand states that the quantity demanded and the price of a commodity are inversely related, other things remaining constant. That is, if the income of the consumer, prices of the related goods, and preferences of the consumer remain unchanged, then the change in quantity of good demanded by the consumer will be negatively correlated to the change in the price of the good
[5] A situation of large number of firms producing similar goods is termed as :
A.
Perfect competition
B.
Monopolistic competition
C.
Pure competition
D.
Oligopoly
Ans:
Perfect competition
Explanation :
The fundamental condition of perfect competition is that there must be a large number of sellers or firms. Homogeneous Commodity is the second fundamental condition of a perfect market. The products of all firms in the industry are homogeneous and identical.
[6] The difference between the price the consumer is prepared to pay for a commodity and the price which he actually pays is called -
A.
Consumer's Surplus
B.
Producer's Surplus
C.
Landlord's Surplus
D.
Worker's Surplus
Ans:
Consumer's Surplus
Explanation :
Consumer surplus is the difference between the maximum price a consumer is willing to pay and the actual price they do pay. If a consumer would be willing to pay more than the current asking price, then they are getting more benefit from the purchased product than they spent to buy it.
[7] For an inferior good, demand falls when -
A.
price rises
B.
income rise
C.
price falls
D.
income falls
Ans:
income rise
Explanation :
In economics, income elasticity of demand measures the responsiveness of the demand for a good to a change in the income of the people demanding the good. An Inferior good is a good that decreases in demand when consumer income rises, unlike normal goods, for which the opposite is observed. Normal goods are those for which consumers' demand increases when their income increases.
[8] Wage fund theory was propounded by -
A.
J.B. Say
B.
J.S. Mill
C.
J.R. Hicks
D.
J.M. Keynes
Ans:
J.S. Mill
Explanation :
J.S. Mill developed the wages-fund theory. This theory of wage was an attempt to show that in certain circumstances wages could rise above subsistence level. According to this theory a fund of capital has to he accumulated in advance before wage could be paid. This fund of capital is called wages-fund out of which wages are paid to labourers.
[9] Cross demand expresses the functional relationship between -
A.
demand and prices of related commodities
B.
demand and income
C.
demand and prices
D.
demand and supply
Ans:
demand and prices of related commodities
Explanation :
Other things being constant, cross demand expresses the relation between demand for good ‘A’ due to change in the price of its related good 'B’. It shows that at different prices of good ‘B’ what different quantities of good A’ will be demanded.
[10] Third stage of Law of Variable Proportion is called -
A.
negative returns
B.
positive returns
C.
constant returns
D.
increasing returns
Ans:
negative returns
Explanation :
The stages of Law of Variable Proportion are: Stage 1: Increasing return: Stage 2: Diminishing return; and Stage 3: Negative Return. In the third stage Marginal Product of variable factor is zero. In this stage the Total Product starts diminishing.
[11] Other things being equal, a decrease in quantity demanded of a commodity can be caused by –
A.
a rise in the price of the commodity
B.
a rise in the income of the consumer
C.
a fall in the price of a commodity
D.
a fall in the income of the consumer
Ans:
a rise in the price of the commodity
Explanation :
In economics, the law states that, all else being equal, as the price of a product increases, quantity demanded falls; likewise, as the price of a product decreases, quantity demanded increases.
[12] The Psychological law of consumption states that –
A.
Proportionate increase in consumption is less than proportionate increase in income
B.
Increase in income is equal to increase in consumption
C.
Increase in consumption is greater than increase in income
D.
Consumption does not change with a change in income
Ans:
Proportionate increase in consumption is less than proportionate increase in income
Explanation :
According to Keynes’ psychological law of consumption, increased aggregate consumption due to increased aggregate income — aggregate consumption increases with increase in aggregate income but the increase in consumption is less than the increase in the income. This is because when the basic necessities or demand of the people are already fulfilled, they start saving the extra additional income.
[13] Subsidies are payment by government to –
A.
Consuming units
B.
Producing units
C.
Banking units
D.
Retired persons
Ans:
Producing units
Explanation :
A subsidy is essentially a payment by the government to suppliers/producers that reduce their costs of production and encourages them to increase output.
[14] Tha Law of Demand is based on -
A.
Manufacturer's preference
B.
Seller's preference
C.
Supplier's preference
D.
Consumer's preference
Ans:
Consumer's preference
Explanation :
The Law of Demand states that, all else being equal, as the price of a product increases, quantily demanded lowers; likewise, as the price of a product decreases, quantity demanded increases. Demand is derived from consumers’ tastes and preferences, and it is bound by income. In other words, given a limited income, the consumer must decide what goods and services to purchase. Each consumer will purchase different things because individual preferences and incomes differ.
[15] A supply function expresses the relationship between -
A.
price and output
B.
price and selling cost
C.
price and demand
D.
price and consumption
Ans:
price and output
Explanation :
The supply function expresses the relationship between the Lotal quantily supplied and the price received by all suppliers per unit of time, holding other factors constant. It illustrates the relation between price and supply.
[16] The expenses on advertising is called -
A.
Implicit cost
B.
Surplus cost
C.
Fixed cost
D.
Selling cost
Ans:
Selling cost
Explanation :
Selling cost is total cost of marketing, advertising, and selling a product. It differs from the production cost which is incurred to produce goods. Selling cost influences the commercial desire to purchase a commodity,
[17] Name the curve which shows the quantity of products a seller wishes to sell at a given price level.
A.
Demand curve
B.
Cost curve
C.
Supply curve
D.
None of these
Ans:
Supply curve
Explanation :
The supply curve shows the relationship between the price of a good and the quantity supplied, holding constant the values of all other variables that affect supply. Each point on the curve shows the quantity that sellers would choose to sell at a specific price.
[18] Under Perfect Competition -
A.
Marginal Revenue is less than the Average Revenue
B.
Average Revenue is less than the Marginal Revenue
C.
Average Revenue is equal to the Marginal Revenue
D.
Average Revenue is more than the Marginal Revenue
Ans:
Average Revenue is equal to the Marginal Revenue
Explanation :
Perfect competition describes markets such that no participants are large enough to have the market power to set the price of a homogeneous product. In the short run, perfectly-competitive markets are not productively efficient as output will not occur where marginal cost is equal to average cost (MC=AC). They are allocatively efficient, as output will always occur where marginal cost is equal to marginal revenue (MC=MR).
[19] It is prudent to determine the size of the output when the industry is operating in the stage of -
A.
increasing returns
B.
constant returns
C.
diminishing returns
D.
negative returns
Ans:
diminishing returns
Explanation :
In economics, diminishing returns (also called diminishing marginal returns) is the decrease in the marginal (per-unit) output of a production process as the amount of a single factor of production is in- creased, while the amounts of all other factors of production stay constant. This law plays a central role in production theory.
[20] The most distinguishing feature of oligopaly is -
A.
number of firms
B.
interdependence
C.
negligible influence on price
D.
price leadership
Ans:
interdependence
Explanation :
An oligopoly is a market form in which a market or industry is dominated by a small number of sellers (oligopolists). Because there are few sellers, each oilgopolist is likely to be aware of the actions of the others. The decisions of one firm influence, and are influenced by, the decisions of other firms. Some of its characteristics are: Profit maximization conditions; Number of firms; Product differentiation; Interdependence; Non-Price Competition, etc. The distinctive feature of an oligopoly is interdependence. Oligopolies are typically composed of a few large firms.
[21] 'Law of demand' implies that when there is excess demand for a commodity, then -
A.
price of the commodity falls
B.
price of the commodity remains same
C.
price of the commodity rises
D.
quantity demanded of the commodity falls
Ans:
price of the commodity rises
Explanation :
The Law of demand states that the quantity demanded and the price of a commodity are inversely related, other things remaining constant. That is, if the income of the consumer, prices of the related goods, and preferences of the consumer remain unchanged, then the change in quantity of good demanded by the consumer will be negatively correlated to the change in the price of the good. When there is excess demand of the commodity the price starts rising and it continues to rise till equilibrium price is reached.
[22] Given the money wages, if the price level in an economy increases, then the real wages will -
A.
increase
B.
decrease
C.
remain constant
D.
become flexible
Ans:
decrease
Explanation :
If workers receive a higher nominal wage and the price level does not change, then the real purchasing power of their wages is higher and they are inclined to increase the quantity of labor supplied.
[23] In Economics, production means -
A.
manufacturing
B.
making
C.
creating utility
D.
farming
Ans:
creating utility
Explanation :
All factors of production like land, labour, capital and entrepreneur are required in combination at a time to produce a commodity. Production means creation or an addition of utility. Factors of production (or productive 'inputs' or 'resources') are any commodities or services used to produce goods and services.
[24] What is included in the Tetiary sector?
A.
Banking
B.
Manufacturing
C.
Forestry
D.
Mining
Ans:
Banking
Explanation :
The led 'my industry is the segment of the economy that provides services to its consumers. It includes a wide range or activities that service based and give non-tangible value to customers such as provision of trading, insurance, banking, etc. The other sectors are the secondary sector (manufacturing), and the primary sector (agriculture and allied activities).
[25] Minimum payment to factor of production is called -
A.
Quasi Rent
B.
Rent
C.
Wages
D.
Transfer Payment
Ans:
Transfer Payment
Explanation :
In economics, factors of production are the inputs to the production process. There are three basic factors of production: land, labour, capital. The payment for use and the received income of a land owner is rent. The payment for someone else's labor and all income received from one's own labor is wages. The modern theory of rent is that it is the difference between the actual earning of a factor unit over its transfer earnings. So the Transfer earnings are the minimum payment required to keep a factor of production in its present use. It is also known as opportunity cost.
Explanation :
Producer Surplus' is an economic measure of the difference between the amount that a producer of a good receives and the minimum amount that he or she would be willing to accept for the good. The difference, or surplus amount, is the benefit that the producer receives for selling the good in the market.
[4] When the price of a commodity falls, we can expect -
A.
the supply of it to increase
B.
the demand for it to fall
C.
the demand for it to stay constant
D.
the demand for it to increase
Ans:
the demand for it to increase
Explanation :
In economics, the law of demand is an economic law, which states that consumers buy more of a good when its price is lower and less when its price is higher. The Law of demand states that the quantity demanded and the price of a commodity are inversely related, other things remaining constant. That is, if the income of the consumer, prices of the related goods, and preferences of the consumer remain unchanged, then the change in quantity of good demanded by the consumer will be negatively correlated to the change in the price of the good
[5] A situation of large number of firms producing similar goods is termed as :
A.
Perfect competition
B.
Monopolistic competition
C.
Pure competition
D.
Oligopoly
Ans:
Perfect competition
Explanation :
The fundamental condition of perfect competition is that there must be a large number of sellers or firms. Homogeneous Commodity is the second fundamental condition of a perfect market. The products of all firms in the industry are homogeneous and identical.
[6] The difference between the price the consumer is prepared to pay for a commodity and the price which he actually pays is called -
A.
Consumer's Surplus
B.
Producer's Surplus
C.
Landlord's Surplus
D.
Worker's Surplus
Ans:
Consumer's Surplus
Explanation :
Consumer surplus is the difference between the maximum price a consumer is willing to pay and the actual price they do pay. If a consumer would be willing to pay more than the current asking price, then they are getting more benefit from the purchased product than they spent to buy it.
[7] For an inferior good, demand falls when -
A.
price rises
B.
income rise
C.
price falls
D.
income falls
Ans:
income rise
Explanation :
In economics, income elasticity of demand measures the responsiveness of the demand for a good to a change in the income of the people demanding the good. An Inferior good is a good that decreases in demand when consumer income rises, unlike normal goods, for which the opposite is observed. Normal goods are those for which consumers' demand increases when their income increases.
[8] Wage fund theory was propounded by -
A.
J.B. Say
B.
J.S. Mill
C.
J.R. Hicks
D.
J.M. Keynes
Ans:
J.S. Mill
Explanation :
J.S. Mill developed the wages-fund theory. This theory of wage was an attempt to show that in certain circumstances wages could rise above subsistence level. According to this theory a fund of capital has to he accumulated in advance before wage could be paid. This fund of capital is called wages-fund out of which wages are paid to labourers.
[9] Cross demand expresses the functional relationship between -
A.
demand and prices of related commodities
B.
demand and income
C.
demand and prices
D.
demand and supply
Ans:
demand and prices of related commodities
Explanation :
Other things being constant, cross demand expresses the relation between demand for good ‘A’ due to change in the price of its related good 'B’. It shows that at different prices of good ‘B’ what different quantities of good A’ will be demanded.
[10] Third stage of Law of Variable Proportion is called -
A.
negative returns
B.
positive returns
C.
constant returns
D.
increasing returns
Ans:
negative returns
Explanation :
The stages of Law of Variable Proportion are: Stage 1: Increasing return: Stage 2: Diminishing return; and Stage 3: Negative Return. In the third stage Marginal Product of variable factor is zero. In this stage the Total Product starts diminishing.
[11] Other things being equal, a decrease in quantity demanded of a commodity can be caused by –
A.
a rise in the price of the commodity
B.
a rise in the income of the consumer
C.
a fall in the price of a commodity
D.
a fall in the income of the consumer
Ans:
a rise in the price of the commodity
Explanation :
In economics, the law states that, all else being equal, as the price of a product increases, quantity demanded falls; likewise, as the price of a product decreases, quantity demanded increases.
[12] The Psychological law of consumption states that –
A.
Proportionate increase in consumption is less than proportionate increase in income
B.
Increase in income is equal to increase in consumption
C.
Increase in consumption is greater than increase in income
D.
Consumption does not change with a change in income
Ans:
Proportionate increase in consumption is less than proportionate increase in income
Explanation :
According to Keynes’ psychological law of consumption, increased aggregate consumption due to increased aggregate income — aggregate consumption increases with increase in aggregate income but the increase in consumption is less than the increase in the income. This is because when the basic necessities or demand of the people are already fulfilled, they start saving the extra additional income.
[13] Subsidies are payment by government to –
A.
Consuming units
B.
Producing units
C.
Banking units
D.
Retired persons
Ans:
Producing units
Explanation :
A subsidy is essentially a payment by the government to suppliers/producers that reduce their costs of production and encourages them to increase output.
[14] Tha Law of Demand is based on -
A.
Manufacturer's preference
B.
Seller's preference
C.
Supplier's preference
D.
Consumer's preference
Ans:
Consumer's preference
Explanation :
The Law of Demand states that, all else being equal, as the price of a product increases, quantily demanded lowers; likewise, as the price of a product decreases, quantity demanded increases. Demand is derived from consumers’ tastes and preferences, and it is bound by income. In other words, given a limited income, the consumer must decide what goods and services to purchase. Each consumer will purchase different things because individual preferences and incomes differ.
[15] A supply function expresses the relationship between -
A.
price and output
B.
price and selling cost
C.
price and demand
D.
price and consumption
Ans:
price and output
Explanation :
The supply function expresses the relationship between the Lotal quantily supplied and the price received by all suppliers per unit of time, holding other factors constant. It illustrates the relation between price and supply.
[16] The expenses on advertising is called -
A.
Implicit cost
B.
Surplus cost
C.
Fixed cost
D.
Selling cost
Ans:
Selling cost
Explanation :
Selling cost is total cost of marketing, advertising, and selling a product. It differs from the production cost which is incurred to produce goods. Selling cost influences the commercial desire to purchase a commodity,
[17] Name the curve which shows the quantity of products a seller wishes to sell at a given price level.
A.
Demand curve
B.
Cost curve
C.
Supply curve
D.
None of these
Ans:
Supply curve
Explanation :
The supply curve shows the relationship between the price of a good and the quantity supplied, holding constant the values of all other variables that affect supply. Each point on the curve shows the quantity that sellers would choose to sell at a specific price.
[18] Under Perfect Competition -
A.
Marginal Revenue is less than the Average Revenue
B.
Average Revenue is less than the Marginal Revenue
C.
Average Revenue is equal to the Marginal Revenue
D.
Average Revenue is more than the Marginal Revenue
Ans:
Average Revenue is equal to the Marginal Revenue
Explanation :
Perfect competition describes markets such that no participants are large enough to have the market power to set the price of a homogeneous product. In the short run, perfectly-competitive markets are not productively efficient as output will not occur where marginal cost is equal to average cost (MC=AC). They are allocatively efficient, as output will always occur where marginal cost is equal to marginal revenue (MC=MR).
[19] It is prudent to determine the size of the output when the industry is operating in the stage of -
A.
increasing returns
B.
constant returns
C.
diminishing returns
D.
negative returns
Ans:
diminishing returns
Explanation :
In economics, diminishing returns (also called diminishing marginal returns) is the decrease in the marginal (per-unit) output of a production process as the amount of a single factor of production is in- creased, while the amounts of all other factors of production stay constant. This law plays a central role in production theory.
[20] The most distinguishing feature of oligopaly is -
A.
number of firms
B.
interdependence
C.
negligible influence on price
D.
price leadership
Ans:
interdependence
Explanation :
An oligopoly is a market form in which a market or industry is dominated by a small number of sellers (oligopolists). Because there are few sellers, each oilgopolist is likely to be aware of the actions of the others. The decisions of one firm influence, and are influenced by, the decisions of other firms. Some of its characteristics are: Profit maximization conditions; Number of firms; Product differentiation; Interdependence; Non-Price Competition, etc. The distinctive feature of an oligopoly is interdependence. Oligopolies are typically composed of a few large firms.
[21] 'Law of demand' implies that when there is excess demand for a commodity, then -
A.
price of the commodity falls
B.
price of the commodity remains same
C.
price of the commodity rises
D.
quantity demanded of the commodity falls
Ans:
price of the commodity rises
Explanation :
The Law of demand states that the quantity demanded and the price of a commodity are inversely related, other things remaining constant. That is, if the income of the consumer, prices of the related goods, and preferences of the consumer remain unchanged, then the change in quantity of good demanded by the consumer will be negatively correlated to the change in the price of the good. When there is excess demand of the commodity the price starts rising and it continues to rise till equilibrium price is reached.
[22] Given the money wages, if the price level in an economy increases, then the real wages will -
A.
increase
B.
decrease
C.
remain constant
D.
become flexible
Ans:
decrease
Explanation :
If workers receive a higher nominal wage and the price level does not change, then the real purchasing power of their wages is higher and they are inclined to increase the quantity of labor supplied.
[23] In Economics, production means -
A.
manufacturing
B.
making
C.
creating utility
D.
farming
Ans:
creating utility
Explanation :
All factors of production like land, labour, capital and entrepreneur are required in combination at a time to produce a commodity. Production means creation or an addition of utility. Factors of production (or productive 'inputs' or 'resources') are any commodities or services used to produce goods and services.
[24] What is included in the Tetiary sector?
A.
Banking
B.
Manufacturing
C.
Forestry
D.
Mining
Ans:
Banking
Explanation :
The led 'my industry is the segment of the economy that provides services to its consumers. It includes a wide range or activities that service based and give non-tangible value to customers such as provision of trading, insurance, banking, etc. The other sectors are the secondary sector (manufacturing), and the primary sector (agriculture and allied activities).
[25] Minimum payment to factor of production is called -
A.
Quasi Rent
B.
Rent
C.
Wages
D.
Transfer Payment
Ans:
Transfer Payment
Explanation :
In economics, factors of production are the inputs to the production process. There are three basic factors of production: land, labour, capital. The payment for use and the received income of a land owner is rent. The payment for someone else's labor and all income received from one's own labor is wages. The modern theory of rent is that it is the difference between the actual earning of a factor unit over its transfer earnings. So the Transfer earnings are the minimum payment required to keep a factor of production in its present use. It is also known as opportunity cost.
Explanation :
The fundamental condition of perfect competition is that there must be a large number of sellers or firms. Homogeneous Commodity is the second fundamental condition of a perfect market. The products of all firms in the industry are homogeneous and identical.
[6] The difference between the price the consumer is prepared to pay for a commodity and the price which he actually pays is called -
A.
Consumer's Surplus
B.
Producer's Surplus
C.
Landlord's Surplus
D.
Worker's Surplus
Ans:
Consumer's Surplus
Explanation :
Consumer surplus is the difference between the maximum price a consumer is willing to pay and the actual price they do pay. If a consumer would be willing to pay more than the current asking price, then they are getting more benefit from the purchased product than they spent to buy it.
[7] For an inferior good, demand falls when -
A.
price rises
B.
income rise
C.
price falls
D.
income falls
Ans:
income rise
Explanation :
In economics, income elasticity of demand measures the responsiveness of the demand for a good to a change in the income of the people demanding the good. An Inferior good is a good that decreases in demand when consumer income rises, unlike normal goods, for which the opposite is observed. Normal goods are those for which consumers' demand increases when their income increases.
[8] Wage fund theory was propounded by -
A.
J.B. Say
B.
J.S. Mill
C.
J.R. Hicks
D.
J.M. Keynes
Ans:
J.S. Mill
Explanation :
J.S. Mill developed the wages-fund theory. This theory of wage was an attempt to show that in certain circumstances wages could rise above subsistence level. According to this theory a fund of capital has to he accumulated in advance before wage could be paid. This fund of capital is called wages-fund out of which wages are paid to labourers.
[9] Cross demand expresses the functional relationship between -
A.
demand and prices of related commodities
B.
demand and income
C.
demand and prices
D.
demand and supply
Ans:
demand and prices of related commodities
Explanation :
Other things being constant, cross demand expresses the relation between demand for good ‘A’ due to change in the price of its related good 'B’. It shows that at different prices of good ‘B’ what different quantities of good A’ will be demanded.
[10] Third stage of Law of Variable Proportion is called -
A.
negative returns
B.
positive returns
C.
constant returns
D.
increasing returns
Ans:
negative returns
Explanation :
The stages of Law of Variable Proportion are: Stage 1: Increasing return: Stage 2: Diminishing return; and Stage 3: Negative Return. In the third stage Marginal Product of variable factor is zero. In this stage the Total Product starts diminishing.
[11] Other things being equal, a decrease in quantity demanded of a commodity can be caused by –
A.
a rise in the price of the commodity
B.
a rise in the income of the consumer
C.
a fall in the price of a commodity
D.
a fall in the income of the consumer
Ans:
a rise in the price of the commodity
Explanation :
In economics, the law states that, all else being equal, as the price of a product increases, quantity demanded falls; likewise, as the price of a product decreases, quantity demanded increases.
[12] The Psychological law of consumption states that –
A.
Proportionate increase in consumption is less than proportionate increase in income
B.
Increase in income is equal to increase in consumption
C.
Increase in consumption is greater than increase in income
D.
Consumption does not change with a change in income
Ans:
Proportionate increase in consumption is less than proportionate increase in income
Explanation :
According to Keynes’ psychological law of consumption, increased aggregate consumption due to increased aggregate income — aggregate consumption increases with increase in aggregate income but the increase in consumption is less than the increase in the income. This is because when the basic necessities or demand of the people are already fulfilled, they start saving the extra additional income.
[13] Subsidies are payment by government to –
A.
Consuming units
B.
Producing units
C.
Banking units
D.
Retired persons
Ans:
Producing units
Explanation :
A subsidy is essentially a payment by the government to suppliers/producers that reduce their costs of production and encourages them to increase output.
[14] Tha Law of Demand is based on -
A.
Manufacturer's preference
B.
Seller's preference
C.
Supplier's preference
D.
Consumer's preference
Ans:
Consumer's preference
Explanation :
The Law of Demand states that, all else being equal, as the price of a product increases, quantily demanded lowers; likewise, as the price of a product decreases, quantity demanded increases. Demand is derived from consumers’ tastes and preferences, and it is bound by income. In other words, given a limited income, the consumer must decide what goods and services to purchase. Each consumer will purchase different things because individual preferences and incomes differ.
[15] A supply function expresses the relationship between -
A.
price and output
B.
price and selling cost
C.
price and demand
D.
price and consumption
Ans:
price and output
Explanation :
The supply function expresses the relationship between the Lotal quantily supplied and the price received by all suppliers per unit of time, holding other factors constant. It illustrates the relation between price and supply.
[16] The expenses on advertising is called -
A.
Implicit cost
B.
Surplus cost
C.
Fixed cost
D.
Selling cost
Ans:
Selling cost
Explanation :
Selling cost is total cost of marketing, advertising, and selling a product. It differs from the production cost which is incurred to produce goods. Selling cost influences the commercial desire to purchase a commodity,
[17] Name the curve which shows the quantity of products a seller wishes to sell at a given price level.
A.
Demand curve
B.
Cost curve
C.
Supply curve
D.
None of these
Ans:
Supply curve
Explanation :
The supply curve shows the relationship between the price of a good and the quantity supplied, holding constant the values of all other variables that affect supply. Each point on the curve shows the quantity that sellers would choose to sell at a specific price.
[18] Under Perfect Competition -
A.
Marginal Revenue is less than the Average Revenue
B.
Average Revenue is less than the Marginal Revenue
C.
Average Revenue is equal to the Marginal Revenue
D.
Average Revenue is more than the Marginal Revenue
Ans:
Average Revenue is equal to the Marginal Revenue
Explanation :
Perfect competition describes markets such that no participants are large enough to have the market power to set the price of a homogeneous product. In the short run, perfectly-competitive markets are not productively efficient as output will not occur where marginal cost is equal to average cost (MC=AC). They are allocatively efficient, as output will always occur where marginal cost is equal to marginal revenue (MC=MR).
[19] It is prudent to determine the size of the output when the industry is operating in the stage of -
A.
increasing returns
B.
constant returns
C.
diminishing returns
D.
negative returns
Ans:
diminishing returns
Explanation :
In economics, diminishing returns (also called diminishing marginal returns) is the decrease in the marginal (per-unit) output of a production process as the amount of a single factor of production is in- creased, while the amounts of all other factors of production stay constant. This law plays a central role in production theory.
[20] The most distinguishing feature of oligopaly is -
A.
number of firms
B.
interdependence
C.
negligible influence on price
D.
price leadership
Ans:
interdependence
Explanation :
An oligopoly is a market form in which a market or industry is dominated by a small number of sellers (oligopolists). Because there are few sellers, each oilgopolist is likely to be aware of the actions of the others. The decisions of one firm influence, and are influenced by, the decisions of other firms. Some of its characteristics are: Profit maximization conditions; Number of firms; Product differentiation; Interdependence; Non-Price Competition, etc. The distinctive feature of an oligopoly is interdependence. Oligopolies are typically composed of a few large firms.
[21] 'Law of demand' implies that when there is excess demand for a commodity, then -
A.
price of the commodity falls
B.
price of the commodity remains same
C.
price of the commodity rises
D.
quantity demanded of the commodity falls
Ans:
price of the commodity rises
Explanation :
The Law of demand states that the quantity demanded and the price of a commodity are inversely related, other things remaining constant. That is, if the income of the consumer, prices of the related goods, and preferences of the consumer remain unchanged, then the change in quantity of good demanded by the consumer will be negatively correlated to the change in the price of the good. When there is excess demand of the commodity the price starts rising and it continues to rise till equilibrium price is reached.
[22] Given the money wages, if the price level in an economy increases, then the real wages will -
A.
increase
B.
decrease
C.
remain constant
D.
become flexible
Ans:
decrease
Explanation :
If workers receive a higher nominal wage and the price level does not change, then the real purchasing power of their wages is higher and they are inclined to increase the quantity of labor supplied.
[23] In Economics, production means -
A.
manufacturing
B.
making
C.
creating utility
D.
farming
Ans:
creating utility
Explanation :
All factors of production like land, labour, capital and entrepreneur are required in combination at a time to produce a commodity. Production means creation or an addition of utility. Factors of production (or productive 'inputs' or 'resources') are any commodities or services used to produce goods and services.
[24] What is included in the Tetiary sector?
A.
Banking
B.
Manufacturing
C.
Forestry
D.
Mining
Ans:
Banking
Explanation :
The led 'my industry is the segment of the economy that provides services to its consumers. It includes a wide range or activities that service based and give non-tangible value to customers such as provision of trading, insurance, banking, etc. The other sectors are the secondary sector (manufacturing), and the primary sector (agriculture and allied activities).
[25] Minimum payment to factor of production is called -
A.
Quasi Rent
B.
Rent
C.
Wages
D.
Transfer Payment
Ans:
Transfer Payment
Explanation :
In economics, factors of production are the inputs to the production process. There are three basic factors of production: land, labour, capital. The payment for use and the received income of a land owner is rent. The payment for someone else's labor and all income received from one's own labor is wages. The modern theory of rent is that it is the difference between the actual earning of a factor unit over its transfer earnings. So the Transfer earnings are the minimum payment required to keep a factor of production in its present use. It is also known as opportunity cost.
Explanation :
In economics, income elasticity of demand measures the responsiveness of the demand for a good to a change in the income of the people demanding the good. An Inferior good is a good that decreases in demand when consumer income rises, unlike normal goods, for which the opposite is observed. Normal goods are those for which consumers' demand increases when their income increases.
[8] Wage fund theory was propounded by -
A.
J.B. Say
B.
J.S. Mill
C.
J.R. Hicks
D.
J.M. Keynes
Ans:
J.S. Mill
Explanation :
J.S. Mill developed the wages-fund theory. This theory of wage was an attempt to show that in certain circumstances wages could rise above subsistence level. According to this theory a fund of capital has to he accumulated in advance before wage could be paid. This fund of capital is called wages-fund out of which wages are paid to labourers.
[9] Cross demand expresses the functional relationship between -
A.
demand and prices of related commodities
B.
demand and income
C.
demand and prices
D.
demand and supply
Ans:
demand and prices of related commodities
Explanation :
Other things being constant, cross demand expresses the relation between demand for good ‘A’ due to change in the price of its related good 'B’. It shows that at different prices of good ‘B’ what different quantities of good A’ will be demanded.
[10] Third stage of Law of Variable Proportion is called -
A.
negative returns
B.
positive returns
C.
constant returns
D.
increasing returns
Ans:
negative returns
Explanation :
The stages of Law of Variable Proportion are: Stage 1: Increasing return: Stage 2: Diminishing return; and Stage 3: Negative Return. In the third stage Marginal Product of variable factor is zero. In this stage the Total Product starts diminishing.
[11] Other things being equal, a decrease in quantity demanded of a commodity can be caused by –
A.
a rise in the price of the commodity
B.
a rise in the income of the consumer
C.
a fall in the price of a commodity
D.
a fall in the income of the consumer
Ans:
a rise in the price of the commodity
Explanation :
In economics, the law states that, all else being equal, as the price of a product increases, quantity demanded falls; likewise, as the price of a product decreases, quantity demanded increases.
[12] The Psychological law of consumption states that –
A.
Proportionate increase in consumption is less than proportionate increase in income
B.
Increase in income is equal to increase in consumption
C.
Increase in consumption is greater than increase in income
D.
Consumption does not change with a change in income
Ans:
Proportionate increase in consumption is less than proportionate increase in income
Explanation :
According to Keynes’ psychological law of consumption, increased aggregate consumption due to increased aggregate income — aggregate consumption increases with increase in aggregate income but the increase in consumption is less than the increase in the income. This is because when the basic necessities or demand of the people are already fulfilled, they start saving the extra additional income.
[13] Subsidies are payment by government to –
A.
Consuming units
B.
Producing units
C.
Banking units
D.
Retired persons
Ans:
Producing units
Explanation :
A subsidy is essentially a payment by the government to suppliers/producers that reduce their costs of production and encourages them to increase output.
[14] Tha Law of Demand is based on -
A.
Manufacturer's preference
B.
Seller's preference
C.
Supplier's preference
D.
Consumer's preference
Ans:
Consumer's preference
Explanation :
The Law of Demand states that, all else being equal, as the price of a product increases, quantily demanded lowers; likewise, as the price of a product decreases, quantity demanded increases. Demand is derived from consumers’ tastes and preferences, and it is bound by income. In other words, given a limited income, the consumer must decide what goods and services to purchase. Each consumer will purchase different things because individual preferences and incomes differ.
[15] A supply function expresses the relationship between -
A.
price and output
B.
price and selling cost
C.
price and demand
D.
price and consumption
Ans:
price and output
Explanation :
The supply function expresses the relationship between the Lotal quantily supplied and the price received by all suppliers per unit of time, holding other factors constant. It illustrates the relation between price and supply.
[16] The expenses on advertising is called -
A.
Implicit cost
B.
Surplus cost
C.
Fixed cost
D.
Selling cost
Ans:
Selling cost
Explanation :
Selling cost is total cost of marketing, advertising, and selling a product. It differs from the production cost which is incurred to produce goods. Selling cost influences the commercial desire to purchase a commodity,
[17] Name the curve which shows the quantity of products a seller wishes to sell at a given price level.
A.
Demand curve
B.
Cost curve
C.
Supply curve
D.
None of these
Ans:
Supply curve
Explanation :
The supply curve shows the relationship between the price of a good and the quantity supplied, holding constant the values of all other variables that affect supply. Each point on the curve shows the quantity that sellers would choose to sell at a specific price.
[18] Under Perfect Competition -
A.
Marginal Revenue is less than the Average Revenue
B.
Average Revenue is less than the Marginal Revenue
C.
Average Revenue is equal to the Marginal Revenue
D.
Average Revenue is more than the Marginal Revenue
Ans:
Average Revenue is equal to the Marginal Revenue
Explanation :
Perfect competition describes markets such that no participants are large enough to have the market power to set the price of a homogeneous product. In the short run, perfectly-competitive markets are not productively efficient as output will not occur where marginal cost is equal to average cost (MC=AC). They are allocatively efficient, as output will always occur where marginal cost is equal to marginal revenue (MC=MR).
[19] It is prudent to determine the size of the output when the industry is operating in the stage of -
A.
increasing returns
B.
constant returns
C.
diminishing returns
D.
negative returns
Ans:
diminishing returns
Explanation :
In economics, diminishing returns (also called diminishing marginal returns) is the decrease in the marginal (per-unit) output of a production process as the amount of a single factor of production is in- creased, while the amounts of all other factors of production stay constant. This law plays a central role in production theory.
[20] The most distinguishing feature of oligopaly is -
A.
number of firms
B.
interdependence
C.
negligible influence on price
D.
price leadership
Ans:
interdependence
Explanation :
An oligopoly is a market form in which a market or industry is dominated by a small number of sellers (oligopolists). Because there are few sellers, each oilgopolist is likely to be aware of the actions of the others. The decisions of one firm influence, and are influenced by, the decisions of other firms. Some of its characteristics are: Profit maximization conditions; Number of firms; Product differentiation; Interdependence; Non-Price Competition, etc. The distinctive feature of an oligopoly is interdependence. Oligopolies are typically composed of a few large firms.
[21] 'Law of demand' implies that when there is excess demand for a commodity, then -
A.
price of the commodity falls
B.
price of the commodity remains same
C.
price of the commodity rises
D.
quantity demanded of the commodity falls
Ans:
price of the commodity rises
Explanation :
The Law of demand states that the quantity demanded and the price of a commodity are inversely related, other things remaining constant. That is, if the income of the consumer, prices of the related goods, and preferences of the consumer remain unchanged, then the change in quantity of good demanded by the consumer will be negatively correlated to the change in the price of the good. When there is excess demand of the commodity the price starts rising and it continues to rise till equilibrium price is reached.
[22] Given the money wages, if the price level in an economy increases, then the real wages will -
A.
increase
B.
decrease
C.
remain constant
D.
become flexible
Ans:
decrease
Explanation :
If workers receive a higher nominal wage and the price level does not change, then the real purchasing power of their wages is higher and they are inclined to increase the quantity of labor supplied.
[23] In Economics, production means -
A.
manufacturing
B.
making
C.
creating utility
D.
farming
Ans:
creating utility
Explanation :
All factors of production like land, labour, capital and entrepreneur are required in combination at a time to produce a commodity. Production means creation or an addition of utility. Factors of production (or productive 'inputs' or 'resources') are any commodities or services used to produce goods and services.
[24] What is included in the Tetiary sector?
A.
Banking
B.
Manufacturing
C.
Forestry
D.
Mining
Ans:
Banking
Explanation :
The led 'my industry is the segment of the economy that provides services to its consumers. It includes a wide range or activities that service based and give non-tangible value to customers such as provision of trading, insurance, banking, etc. The other sectors are the secondary sector (manufacturing), and the primary sector (agriculture and allied activities).
[25] Minimum payment to factor of production is called -
A.
Quasi Rent
B.
Rent
C.
Wages
D.
Transfer Payment
Ans:
Transfer Payment
Explanation :
In economics, factors of production are the inputs to the production process. There are three basic factors of production: land, labour, capital. The payment for use and the received income of a land owner is rent. The payment for someone else's labor and all income received from one's own labor is wages. The modern theory of rent is that it is the difference between the actual earning of a factor unit over its transfer earnings. So the Transfer earnings are the minimum payment required to keep a factor of production in its present use. It is also known as opportunity cost.
Explanation :
Other things being constant, cross demand expresses the relation between demand for good ‘A’ due to change in the price of its related good 'B’. It shows that at different prices of good ‘B’ what different quantities of good A’ will be demanded.
[10] Third stage of Law of Variable Proportion is called -
A.
negative returns
B.
positive returns
C.
constant returns
D.
increasing returns
Ans:
negative returns
Explanation :
The stages of Law of Variable Proportion are: Stage 1: Increasing return: Stage 2: Diminishing return; and Stage 3: Negative Return. In the third stage Marginal Product of variable factor is zero. In this stage the Total Product starts diminishing.
[11] Other things being equal, a decrease in quantity demanded of a commodity can be caused by –
A.
a rise in the price of the commodity
B.
a rise in the income of the consumer
C.
a fall in the price of a commodity
D.
a fall in the income of the consumer
Ans:
a rise in the price of the commodity
Explanation :
In economics, the law states that, all else being equal, as the price of a product increases, quantity demanded falls; likewise, as the price of a product decreases, quantity demanded increases.
[12] The Psychological law of consumption states that –
A.
Proportionate increase in consumption is less than proportionate increase in income
B.
Increase in income is equal to increase in consumption
C.
Increase in consumption is greater than increase in income
D.
Consumption does not change with a change in income
Ans:
Proportionate increase in consumption is less than proportionate increase in income
Explanation :
According to Keynes’ psychological law of consumption, increased aggregate consumption due to increased aggregate income — aggregate consumption increases with increase in aggregate income but the increase in consumption is less than the increase in the income. This is because when the basic necessities or demand of the people are already fulfilled, they start saving the extra additional income.
[13] Subsidies are payment by government to –
A.
Consuming units
B.
Producing units
C.
Banking units
D.
Retired persons
Ans:
Producing units
Explanation :
A subsidy is essentially a payment by the government to suppliers/producers that reduce their costs of production and encourages them to increase output.
[14] Tha Law of Demand is based on -
A.
Manufacturer's preference
B.
Seller's preference
C.
Supplier's preference
D.
Consumer's preference
Ans:
Consumer's preference
Explanation :
The Law of Demand states that, all else being equal, as the price of a product increases, quantily demanded lowers; likewise, as the price of a product decreases, quantity demanded increases. Demand is derived from consumers’ tastes and preferences, and it is bound by income. In other words, given a limited income, the consumer must decide what goods and services to purchase. Each consumer will purchase different things because individual preferences and incomes differ.
[15] A supply function expresses the relationship between -
A.
price and output
B.
price and selling cost
C.
price and demand
D.
price and consumption
Ans:
price and output
Explanation :
The supply function expresses the relationship between the Lotal quantily supplied and the price received by all suppliers per unit of time, holding other factors constant. It illustrates the relation between price and supply.
[16] The expenses on advertising is called -
A.
Implicit cost
B.
Surplus cost
C.
Fixed cost
D.
Selling cost
Ans:
Selling cost
Explanation :
Selling cost is total cost of marketing, advertising, and selling a product. It differs from the production cost which is incurred to produce goods. Selling cost influences the commercial desire to purchase a commodity,
[17] Name the curve which shows the quantity of products a seller wishes to sell at a given price level.
A.
Demand curve
B.
Cost curve
C.
Supply curve
D.
None of these
Ans:
Supply curve
Explanation :
The supply curve shows the relationship between the price of a good and the quantity supplied, holding constant the values of all other variables that affect supply. Each point on the curve shows the quantity that sellers would choose to sell at a specific price.
[18] Under Perfect Competition -
A.
Marginal Revenue is less than the Average Revenue
B.
Average Revenue is less than the Marginal Revenue
C.
Average Revenue is equal to the Marginal Revenue
D.
Average Revenue is more than the Marginal Revenue
Ans:
Average Revenue is equal to the Marginal Revenue
Explanation :
Perfect competition describes markets such that no participants are large enough to have the market power to set the price of a homogeneous product. In the short run, perfectly-competitive markets are not productively efficient as output will not occur where marginal cost is equal to average cost (MC=AC). They are allocatively efficient, as output will always occur where marginal cost is equal to marginal revenue (MC=MR).
[19] It is prudent to determine the size of the output when the industry is operating in the stage of -
A.
increasing returns
B.
constant returns
C.
diminishing returns
D.
negative returns
Ans:
diminishing returns
Explanation :
In economics, diminishing returns (also called diminishing marginal returns) is the decrease in the marginal (per-unit) output of a production process as the amount of a single factor of production is in- creased, while the amounts of all other factors of production stay constant. This law plays a central role in production theory.
[20] The most distinguishing feature of oligopaly is -
A.
number of firms
B.
interdependence
C.
negligible influence on price
D.
price leadership
Ans:
interdependence
Explanation :
An oligopoly is a market form in which a market or industry is dominated by a small number of sellers (oligopolists). Because there are few sellers, each oilgopolist is likely to be aware of the actions of the others. The decisions of one firm influence, and are influenced by, the decisions of other firms. Some of its characteristics are: Profit maximization conditions; Number of firms; Product differentiation; Interdependence; Non-Price Competition, etc. The distinctive feature of an oligopoly is interdependence. Oligopolies are typically composed of a few large firms.
[21] 'Law of demand' implies that when there is excess demand for a commodity, then -
A.
price of the commodity falls
B.
price of the commodity remains same
C.
price of the commodity rises
D.
quantity demanded of the commodity falls
Ans:
price of the commodity rises
Explanation :
The Law of demand states that the quantity demanded and the price of a commodity are inversely related, other things remaining constant. That is, if the income of the consumer, prices of the related goods, and preferences of the consumer remain unchanged, then the change in quantity of good demanded by the consumer will be negatively correlated to the change in the price of the good. When there is excess demand of the commodity the price starts rising and it continues to rise till equilibrium price is reached.
[22] Given the money wages, if the price level in an economy increases, then the real wages will -
A.
increase
B.
decrease
C.
remain constant
D.
become flexible
Ans:
decrease
Explanation :
If workers receive a higher nominal wage and the price level does not change, then the real purchasing power of their wages is higher and they are inclined to increase the quantity of labor supplied.
[23] In Economics, production means -
A.
manufacturing
B.
making
C.
creating utility
D.
farming
Ans:
creating utility
Explanation :
All factors of production like land, labour, capital and entrepreneur are required in combination at a time to produce a commodity. Production means creation or an addition of utility. Factors of production (or productive 'inputs' or 'resources') are any commodities or services used to produce goods and services.
[24] What is included in the Tetiary sector?
A.
Banking
B.
Manufacturing
C.
Forestry
D.
Mining
Ans:
Banking
Explanation :
The led 'my industry is the segment of the economy that provides services to its consumers. It includes a wide range or activities that service based and give non-tangible value to customers such as provision of trading, insurance, banking, etc. The other sectors are the secondary sector (manufacturing), and the primary sector (agriculture and allied activities).
[25] Minimum payment to factor of production is called -
A.
Quasi Rent
B.
Rent
C.
Wages
D.
Transfer Payment
Ans:
Transfer Payment
Explanation :
In economics, factors of production are the inputs to the production process. There are three basic factors of production: land, labour, capital. The payment for use and the received income of a land owner is rent. The payment for someone else's labor and all income received from one's own labor is wages. The modern theory of rent is that it is the difference between the actual earning of a factor unit over its transfer earnings. So the Transfer earnings are the minimum payment required to keep a factor of production in its present use. It is also known as opportunity cost.
Explanation :
In economics, the law states that, all else being equal, as the price of a product increases, quantity demanded falls; likewise, as the price of a product decreases, quantity demanded increases.
[12] The Psychological law of consumption states that –
A.
Proportionate increase in consumption is less than proportionate increase in income
B.
Increase in income is equal to increase in consumption
C.
Increase in consumption is greater than increase in income
D.
Consumption does not change with a change in income
Ans:
Proportionate increase in consumption is less than proportionate increase in income
Explanation :
According to Keynes’ psychological law of consumption, increased aggregate consumption due to increased aggregate income — aggregate consumption increases with increase in aggregate income but the increase in consumption is less than the increase in the income. This is because when the basic necessities or demand of the people are already fulfilled, they start saving the extra additional income.
[13] Subsidies are payment by government to –
A.
Consuming units
B.
Producing units
C.
Banking units
D.
Retired persons
Ans:
Producing units
Explanation :
A subsidy is essentially a payment by the government to suppliers/producers that reduce their costs of production and encourages them to increase output.
[14] Tha Law of Demand is based on -
A.
Manufacturer's preference
B.
Seller's preference
C.
Supplier's preference
D.
Consumer's preference
Ans:
Consumer's preference
Explanation :
The Law of Demand states that, all else being equal, as the price of a product increases, quantily demanded lowers; likewise, as the price of a product decreases, quantity demanded increases. Demand is derived from consumers’ tastes and preferences, and it is bound by income. In other words, given a limited income, the consumer must decide what goods and services to purchase. Each consumer will purchase different things because individual preferences and incomes differ.
[15] A supply function expresses the relationship between -
A.
price and output
B.
price and selling cost
C.
price and demand
D.
price and consumption
Ans:
price and output
Explanation :
The supply function expresses the relationship between the Lotal quantily supplied and the price received by all suppliers per unit of time, holding other factors constant. It illustrates the relation between price and supply.
[16] The expenses on advertising is called -
A.
Implicit cost
B.
Surplus cost
C.
Fixed cost
D.
Selling cost
Ans:
Selling cost
Explanation :
Selling cost is total cost of marketing, advertising, and selling a product. It differs from the production cost which is incurred to produce goods. Selling cost influences the commercial desire to purchase a commodity,
[17] Name the curve which shows the quantity of products a seller wishes to sell at a given price level.
A.
Demand curve
B.
Cost curve
C.
Supply curve
D.
None of these
Ans:
Supply curve
Explanation :
The supply curve shows the relationship between the price of a good and the quantity supplied, holding constant the values of all other variables that affect supply. Each point on the curve shows the quantity that sellers would choose to sell at a specific price.
[18] Under Perfect Competition -
A.
Marginal Revenue is less than the Average Revenue
B.
Average Revenue is less than the Marginal Revenue
C.
Average Revenue is equal to the Marginal Revenue
D.
Average Revenue is more than the Marginal Revenue
Ans:
Average Revenue is equal to the Marginal Revenue
Explanation :
Perfect competition describes markets such that no participants are large enough to have the market power to set the price of a homogeneous product. In the short run, perfectly-competitive markets are not productively efficient as output will not occur where marginal cost is equal to average cost (MC=AC). They are allocatively efficient, as output will always occur where marginal cost is equal to marginal revenue (MC=MR).
[19] It is prudent to determine the size of the output when the industry is operating in the stage of -
A.
increasing returns
B.
constant returns
C.
diminishing returns
D.
negative returns
Ans:
diminishing returns
Explanation :
In economics, diminishing returns (also called diminishing marginal returns) is the decrease in the marginal (per-unit) output of a production process as the amount of a single factor of production is in- creased, while the amounts of all other factors of production stay constant. This law plays a central role in production theory.
[20] The most distinguishing feature of oligopaly is -
A.
number of firms
B.
interdependence
C.
negligible influence on price
D.
price leadership
Ans:
interdependence
Explanation :
An oligopoly is a market form in which a market or industry is dominated by a small number of sellers (oligopolists). Because there are few sellers, each oilgopolist is likely to be aware of the actions of the others. The decisions of one firm influence, and are influenced by, the decisions of other firms. Some of its characteristics are: Profit maximization conditions; Number of firms; Product differentiation; Interdependence; Non-Price Competition, etc. The distinctive feature of an oligopoly is interdependence. Oligopolies are typically composed of a few large firms.
[21] 'Law of demand' implies that when there is excess demand for a commodity, then -
A.
price of the commodity falls
B.
price of the commodity remains same
C.
price of the commodity rises
D.
quantity demanded of the commodity falls
Ans:
price of the commodity rises
Explanation :
The Law of demand states that the quantity demanded and the price of a commodity are inversely related, other things remaining constant. That is, if the income of the consumer, prices of the related goods, and preferences of the consumer remain unchanged, then the change in quantity of good demanded by the consumer will be negatively correlated to the change in the price of the good. When there is excess demand of the commodity the price starts rising and it continues to rise till equilibrium price is reached.
[22] Given the money wages, if the price level in an economy increases, then the real wages will -
A.
increase
B.
decrease
C.
remain constant
D.
become flexible
Ans:
decrease
Explanation :
If workers receive a higher nominal wage and the price level does not change, then the real purchasing power of their wages is higher and they are inclined to increase the quantity of labor supplied.
[23] In Economics, production means -
A.
manufacturing
B.
making
C.
creating utility
D.
farming
Ans:
creating utility
Explanation :
All factors of production like land, labour, capital and entrepreneur are required in combination at a time to produce a commodity. Production means creation or an addition of utility. Factors of production (or productive 'inputs' or 'resources') are any commodities or services used to produce goods and services.
[24] What is included in the Tetiary sector?
A.
Banking
B.
Manufacturing
C.
Forestry
D.
Mining
Ans:
Banking
Explanation :
The led 'my industry is the segment of the economy that provides services to its consumers. It includes a wide range or activities that service based and give non-tangible value to customers such as provision of trading, insurance, banking, etc. The other sectors are the secondary sector (manufacturing), and the primary sector (agriculture and allied activities).
[25] Minimum payment to factor of production is called -
A.
Quasi Rent
B.
Rent
C.
Wages
D.
Transfer Payment
Ans:
Transfer Payment
Explanation :
In economics, factors of production are the inputs to the production process. There are three basic factors of production: land, labour, capital. The payment for use and the received income of a land owner is rent. The payment for someone else's labor and all income received from one's own labor is wages. The modern theory of rent is that it is the difference between the actual earning of a factor unit over its transfer earnings. So the Transfer earnings are the minimum payment required to keep a factor of production in its present use. It is also known as opportunity cost.
Explanation :
A subsidy is essentially a payment by the government to suppliers/producers that reduce their costs of production and encourages them to increase output.
[14] Tha Law of Demand is based on -
A.
Manufacturer's preference
B.
Seller's preference
C.
Supplier's preference
D.
Consumer's preference
Ans:
Consumer's preference
Explanation :
The Law of Demand states that, all else being equal, as the price of a product increases, quantily demanded lowers; likewise, as the price of a product decreases, quantity demanded increases. Demand is derived from consumers’ tastes and preferences, and it is bound by income. In other words, given a limited income, the consumer must decide what goods and services to purchase. Each consumer will purchase different things because individual preferences and incomes differ.
[15] A supply function expresses the relationship between -
A.
price and output
B.
price and selling cost
C.
price and demand
D.
price and consumption
Ans:
price and output
Explanation :
The supply function expresses the relationship between the Lotal quantily supplied and the price received by all suppliers per unit of time, holding other factors constant. It illustrates the relation between price and supply.
[16] The expenses on advertising is called -
A.
Implicit cost
B.
Surplus cost
C.
Fixed cost
D.
Selling cost
Ans:
Selling cost
Explanation :
Selling cost is total cost of marketing, advertising, and selling a product. It differs from the production cost which is incurred to produce goods. Selling cost influences the commercial desire to purchase a commodity,
[17] Name the curve which shows the quantity of products a seller wishes to sell at a given price level.
A.
Demand curve
B.
Cost curve
C.
Supply curve
D.
None of these
Ans:
Supply curve
Explanation :
The supply curve shows the relationship between the price of a good and the quantity supplied, holding constant the values of all other variables that affect supply. Each point on the curve shows the quantity that sellers would choose to sell at a specific price.
[18] Under Perfect Competition -
A.
Marginal Revenue is less than the Average Revenue
B.
Average Revenue is less than the Marginal Revenue
C.
Average Revenue is equal to the Marginal Revenue
D.
Average Revenue is more than the Marginal Revenue
Ans:
Average Revenue is equal to the Marginal Revenue
Explanation :
Perfect competition describes markets such that no participants are large enough to have the market power to set the price of a homogeneous product. In the short run, perfectly-competitive markets are not productively efficient as output will not occur where marginal cost is equal to average cost (MC=AC). They are allocatively efficient, as output will always occur where marginal cost is equal to marginal revenue (MC=MR).
[19] It is prudent to determine the size of the output when the industry is operating in the stage of -
A.
increasing returns
B.
constant returns
C.
diminishing returns
D.
negative returns
Ans:
diminishing returns
Explanation :
In economics, diminishing returns (also called diminishing marginal returns) is the decrease in the marginal (per-unit) output of a production process as the amount of a single factor of production is in- creased, while the amounts of all other factors of production stay constant. This law plays a central role in production theory.
[20] The most distinguishing feature of oligopaly is -
A.
number of firms
B.
interdependence
C.
negligible influence on price
D.
price leadership
Ans:
interdependence
Explanation :
An oligopoly is a market form in which a market or industry is dominated by a small number of sellers (oligopolists). Because there are few sellers, each oilgopolist is likely to be aware of the actions of the others. The decisions of one firm influence, and are influenced by, the decisions of other firms. Some of its characteristics are: Profit maximization conditions; Number of firms; Product differentiation; Interdependence; Non-Price Competition, etc. The distinctive feature of an oligopoly is interdependence. Oligopolies are typically composed of a few large firms.
[21] 'Law of demand' implies that when there is excess demand for a commodity, then -
A.
price of the commodity falls
B.
price of the commodity remains same
C.
price of the commodity rises
D.
quantity demanded of the commodity falls
Ans:
price of the commodity rises
Explanation :
The Law of demand states that the quantity demanded and the price of a commodity are inversely related, other things remaining constant. That is, if the income of the consumer, prices of the related goods, and preferences of the consumer remain unchanged, then the change in quantity of good demanded by the consumer will be negatively correlated to the change in the price of the good. When there is excess demand of the commodity the price starts rising and it continues to rise till equilibrium price is reached.
[22] Given the money wages, if the price level in an economy increases, then the real wages will -
A.
increase
B.
decrease
C.
remain constant
D.
become flexible
Ans:
decrease
Explanation :
If workers receive a higher nominal wage and the price level does not change, then the real purchasing power of their wages is higher and they are inclined to increase the quantity of labor supplied.
[23] In Economics, production means -
A.
manufacturing
B.
making
C.
creating utility
D.
farming
Ans:
creating utility
Explanation :
All factors of production like land, labour, capital and entrepreneur are required in combination at a time to produce a commodity. Production means creation or an addition of utility. Factors of production (or productive 'inputs' or 'resources') are any commodities or services used to produce goods and services.
[24] What is included in the Tetiary sector?
A.
Banking
B.
Manufacturing
C.
Forestry
D.
Mining
Ans:
Banking
Explanation :
The led 'my industry is the segment of the economy that provides services to its consumers. It includes a wide range or activities that service based and give non-tangible value to customers such as provision of trading, insurance, banking, etc. The other sectors are the secondary sector (manufacturing), and the primary sector (agriculture and allied activities).
[25] Minimum payment to factor of production is called -
A.
Quasi Rent
B.
Rent
C.
Wages
D.
Transfer Payment
Ans:
Transfer Payment
Explanation :
In economics, factors of production are the inputs to the production process. There are three basic factors of production: land, labour, capital. The payment for use and the received income of a land owner is rent. The payment for someone else's labor and all income received from one's own labor is wages. The modern theory of rent is that it is the difference between the actual earning of a factor unit over its transfer earnings. So the Transfer earnings are the minimum payment required to keep a factor of production in its present use. It is also known as opportunity cost.
Explanation :
The supply function expresses the relationship between the Lotal quantily supplied and the price received by all suppliers per unit of time, holding other factors constant. It illustrates the relation between price and supply.
[16] The expenses on advertising is called -
A.
Implicit cost
B.
Surplus cost
C.
Fixed cost
D.
Selling cost
Ans:
Selling cost
Explanation :
Selling cost is total cost of marketing, advertising, and selling a product. It differs from the production cost which is incurred to produce goods. Selling cost influences the commercial desire to purchase a commodity,
[17] Name the curve which shows the quantity of products a seller wishes to sell at a given price level.
A.
Demand curve
B.
Cost curve
C.
Supply curve
D.
None of these
Ans:
Supply curve
Explanation :
The supply curve shows the relationship between the price of a good and the quantity supplied, holding constant the values of all other variables that affect supply. Each point on the curve shows the quantity that sellers would choose to sell at a specific price.
[18] Under Perfect Competition -
A.
Marginal Revenue is less than the Average Revenue
B.
Average Revenue is less than the Marginal Revenue
C.
Average Revenue is equal to the Marginal Revenue
D.
Average Revenue is more than the Marginal Revenue
Ans:
Average Revenue is equal to the Marginal Revenue
Explanation :
Perfect competition describes markets such that no participants are large enough to have the market power to set the price of a homogeneous product. In the short run, perfectly-competitive markets are not productively efficient as output will not occur where marginal cost is equal to average cost (MC=AC). They are allocatively efficient, as output will always occur where marginal cost is equal to marginal revenue (MC=MR).
[19] It is prudent to determine the size of the output when the industry is operating in the stage of -
A.
increasing returns
B.
constant returns
C.
diminishing returns
D.
negative returns
Ans:
diminishing returns
Explanation :
In economics, diminishing returns (also called diminishing marginal returns) is the decrease in the marginal (per-unit) output of a production process as the amount of a single factor of production is in- creased, while the amounts of all other factors of production stay constant. This law plays a central role in production theory.
[20] The most distinguishing feature of oligopaly is -
A.
number of firms
B.
interdependence
C.
negligible influence on price
D.
price leadership
Ans:
interdependence
Explanation :
An oligopoly is a market form in which a market or industry is dominated by a small number of sellers (oligopolists). Because there are few sellers, each oilgopolist is likely to be aware of the actions of the others. The decisions of one firm influence, and are influenced by, the decisions of other firms. Some of its characteristics are: Profit maximization conditions; Number of firms; Product differentiation; Interdependence; Non-Price Competition, etc. The distinctive feature of an oligopoly is interdependence. Oligopolies are typically composed of a few large firms.
[21] 'Law of demand' implies that when there is excess demand for a commodity, then -
A.
price of the commodity falls
B.
price of the commodity remains same
C.
price of the commodity rises
D.
quantity demanded of the commodity falls
Ans:
price of the commodity rises
Explanation :
The Law of demand states that the quantity demanded and the price of a commodity are inversely related, other things remaining constant. That is, if the income of the consumer, prices of the related goods, and preferences of the consumer remain unchanged, then the change in quantity of good demanded by the consumer will be negatively correlated to the change in the price of the good. When there is excess demand of the commodity the price starts rising and it continues to rise till equilibrium price is reached.
[22] Given the money wages, if the price level in an economy increases, then the real wages will -
A.
increase
B.
decrease
C.
remain constant
D.
become flexible
Ans:
decrease
Explanation :
If workers receive a higher nominal wage and the price level does not change, then the real purchasing power of their wages is higher and they are inclined to increase the quantity of labor supplied.
[23] In Economics, production means -
A.
manufacturing
B.
making
C.
creating utility
D.
farming
Ans:
creating utility
Explanation :
All factors of production like land, labour, capital and entrepreneur are required in combination at a time to produce a commodity. Production means creation or an addition of utility. Factors of production (or productive 'inputs' or 'resources') are any commodities or services used to produce goods and services.
[24] What is included in the Tetiary sector?
A.
Banking
B.
Manufacturing
C.
Forestry
D.
Mining
Ans:
Banking
Explanation :
The led 'my industry is the segment of the economy that provides services to its consumers. It includes a wide range or activities that service based and give non-tangible value to customers such as provision of trading, insurance, banking, etc. The other sectors are the secondary sector (manufacturing), and the primary sector (agriculture and allied activities).
[25] Minimum payment to factor of production is called -
A.
Quasi Rent
B.
Rent
C.
Wages
D.
Transfer Payment
Ans:
Transfer Payment
Explanation :
In economics, factors of production are the inputs to the production process. There are three basic factors of production: land, labour, capital. The payment for use and the received income of a land owner is rent. The payment for someone else's labor and all income received from one's own labor is wages. The modern theory of rent is that it is the difference between the actual earning of a factor unit over its transfer earnings. So the Transfer earnings are the minimum payment required to keep a factor of production in its present use. It is also known as opportunity cost.
Explanation :
The supply curve shows the relationship between the price of a good and the quantity supplied, holding constant the values of all other variables that affect supply. Each point on the curve shows the quantity that sellers would choose to sell at a specific price.
[18] Under Perfect Competition -
A.
Marginal Revenue is less than the Average Revenue
B.
Average Revenue is less than the Marginal Revenue
C.
Average Revenue is equal to the Marginal Revenue
D.
Average Revenue is more than the Marginal Revenue
Ans:
Average Revenue is equal to the Marginal Revenue
Explanation :
Perfect competition describes markets such that no participants are large enough to have the market power to set the price of a homogeneous product. In the short run, perfectly-competitive markets are not productively efficient as output will not occur where marginal cost is equal to average cost (MC=AC). They are allocatively efficient, as output will always occur where marginal cost is equal to marginal revenue (MC=MR).
[19] It is prudent to determine the size of the output when the industry is operating in the stage of -
A.
increasing returns
B.
constant returns
C.
diminishing returns
D.
negative returns
Ans:
diminishing returns
Explanation :
In economics, diminishing returns (also called diminishing marginal returns) is the decrease in the marginal (per-unit) output of a production process as the amount of a single factor of production is in- creased, while the amounts of all other factors of production stay constant. This law plays a central role in production theory.
[20] The most distinguishing feature of oligopaly is -
A.
number of firms
B.
interdependence
C.
negligible influence on price
D.
price leadership
Ans:
interdependence
Explanation :
An oligopoly is a market form in which a market or industry is dominated by a small number of sellers (oligopolists). Because there are few sellers, each oilgopolist is likely to be aware of the actions of the others. The decisions of one firm influence, and are influenced by, the decisions of other firms. Some of its characteristics are: Profit maximization conditions; Number of firms; Product differentiation; Interdependence; Non-Price Competition, etc. The distinctive feature of an oligopoly is interdependence. Oligopolies are typically composed of a few large firms.
[21] 'Law of demand' implies that when there is excess demand for a commodity, then -
A.
price of the commodity falls
B.
price of the commodity remains same
C.
price of the commodity rises
D.
quantity demanded of the commodity falls
Ans:
price of the commodity rises
Explanation :
The Law of demand states that the quantity demanded and the price of a commodity are inversely related, other things remaining constant. That is, if the income of the consumer, prices of the related goods, and preferences of the consumer remain unchanged, then the change in quantity of good demanded by the consumer will be negatively correlated to the change in the price of the good. When there is excess demand of the commodity the price starts rising and it continues to rise till equilibrium price is reached.
[22] Given the money wages, if the price level in an economy increases, then the real wages will -
A.
increase
B.
decrease
C.
remain constant
D.
become flexible
Ans:
decrease
Explanation :
If workers receive a higher nominal wage and the price level does not change, then the real purchasing power of their wages is higher and they are inclined to increase the quantity of labor supplied.
[23] In Economics, production means -
A.
manufacturing
B.
making
C.
creating utility
D.
farming
Ans:
creating utility
Explanation :
All factors of production like land, labour, capital and entrepreneur are required in combination at a time to produce a commodity. Production means creation or an addition of utility. Factors of production (or productive 'inputs' or 'resources') are any commodities or services used to produce goods and services.
[24] What is included in the Tetiary sector?
A.
Banking
B.
Manufacturing
C.
Forestry
D.
Mining
Ans:
Banking
Explanation :
The led 'my industry is the segment of the economy that provides services to its consumers. It includes a wide range or activities that service based and give non-tangible value to customers such as provision of trading, insurance, banking, etc. The other sectors are the secondary sector (manufacturing), and the primary sector (agriculture and allied activities).
[25] Minimum payment to factor of production is called -
A.
Quasi Rent
B.
Rent
C.
Wages
D.
Transfer Payment
Ans:
Transfer Payment
Explanation :
In economics, factors of production are the inputs to the production process. There are three basic factors of production: land, labour, capital. The payment for use and the received income of a land owner is rent. The payment for someone else's labor and all income received from one's own labor is wages. The modern theory of rent is that it is the difference between the actual earning of a factor unit over its transfer earnings. So the Transfer earnings are the minimum payment required to keep a factor of production in its present use. It is also known as opportunity cost.
Explanation :
In economics, diminishing returns (also called diminishing marginal returns) is the decrease in the marginal (per-unit) output of a production process as the amount of a single factor of production is in- creased, while the amounts of all other factors of production stay constant. This law plays a central role in production theory.
[20] The most distinguishing feature of oligopaly is -
A.
number of firms
B.
interdependence
C.
negligible influence on price
D.
price leadership
Ans:
interdependence
Explanation :
An oligopoly is a market form in which a market or industry is dominated by a small number of sellers (oligopolists). Because there are few sellers, each oilgopolist is likely to be aware of the actions of the others. The decisions of one firm influence, and are influenced by, the decisions of other firms. Some of its characteristics are: Profit maximization conditions; Number of firms; Product differentiation; Interdependence; Non-Price Competition, etc. The distinctive feature of an oligopoly is interdependence. Oligopolies are typically composed of a few large firms.
[21] 'Law of demand' implies that when there is excess demand for a commodity, then -
A.
price of the commodity falls
B.
price of the commodity remains same
C.
price of the commodity rises
D.
quantity demanded of the commodity falls
Ans:
price of the commodity rises
Explanation :
The Law of demand states that the quantity demanded and the price of a commodity are inversely related, other things remaining constant. That is, if the income of the consumer, prices of the related goods, and preferences of the consumer remain unchanged, then the change in quantity of good demanded by the consumer will be negatively correlated to the change in the price of the good. When there is excess demand of the commodity the price starts rising and it continues to rise till equilibrium price is reached.
[22] Given the money wages, if the price level in an economy increases, then the real wages will -
A.
increase
B.
decrease
C.
remain constant
D.
become flexible
Ans:
decrease
Explanation :
If workers receive a higher nominal wage and the price level does not change, then the real purchasing power of their wages is higher and they are inclined to increase the quantity of labor supplied.
[23] In Economics, production means -
A.
manufacturing
B.
making
C.
creating utility
D.
farming
Ans:
creating utility
Explanation :
All factors of production like land, labour, capital and entrepreneur are required in combination at a time to produce a commodity. Production means creation or an addition of utility. Factors of production (or productive 'inputs' or 'resources') are any commodities or services used to produce goods and services.
[24] What is included in the Tetiary sector?
A.
Banking
B.
Manufacturing
C.
Forestry
D.
Mining
Ans:
Banking
Explanation :
The led 'my industry is the segment of the economy that provides services to its consumers. It includes a wide range or activities that service based and give non-tangible value to customers such as provision of trading, insurance, banking, etc. The other sectors are the secondary sector (manufacturing), and the primary sector (agriculture and allied activities).
[25] Minimum payment to factor of production is called -
A.
Quasi Rent
B.
Rent
C.
Wages
D.
Transfer Payment
Ans:
Transfer Payment
Explanation :
In economics, factors of production are the inputs to the production process. There are three basic factors of production: land, labour, capital. The payment for use and the received income of a land owner is rent. The payment for someone else's labor and all income received from one's own labor is wages. The modern theory of rent is that it is the difference between the actual earning of a factor unit over its transfer earnings. So the Transfer earnings are the minimum payment required to keep a factor of production in its present use. It is also known as opportunity cost.
Explanation :
The Law of demand states that the quantity demanded and the price of a commodity are inversely related, other things remaining constant. That is, if the income of the consumer, prices of the related goods, and preferences of the consumer remain unchanged, then the change in quantity of good demanded by the consumer will be negatively correlated to the change in the price of the good. When there is excess demand of the commodity the price starts rising and it continues to rise till equilibrium price is reached.
[22] Given the money wages, if the price level in an economy increases, then the real wages will -
A.
increase
B.
decrease
C.
remain constant
D.
become flexible
Ans:
decrease
Explanation :
If workers receive a higher nominal wage and the price level does not change, then the real purchasing power of their wages is higher and they are inclined to increase the quantity of labor supplied.
[23] In Economics, production means -
A.
manufacturing
B.
making
C.
creating utility
D.
farming
Ans:
creating utility
Explanation :
All factors of production like land, labour, capital and entrepreneur are required in combination at a time to produce a commodity. Production means creation or an addition of utility. Factors of production (or productive 'inputs' or 'resources') are any commodities or services used to produce goods and services.
[24] What is included in the Tetiary sector?
A.
Banking
B.
Manufacturing
C.
Forestry
D.
Mining
Ans:
Banking
Explanation :
The led 'my industry is the segment of the economy that provides services to its consumers. It includes a wide range or activities that service based and give non-tangible value to customers such as provision of trading, insurance, banking, etc. The other sectors are the secondary sector (manufacturing), and the primary sector (agriculture and allied activities).
[25] Minimum payment to factor of production is called -
A.
Quasi Rent
B.
Rent
C.
Wages
D.
Transfer Payment
Ans:
Transfer Payment
Explanation :
In economics, factors of production are the inputs to the production process. There are three basic factors of production: land, labour, capital. The payment for use and the received income of a land owner is rent. The payment for someone else's labor and all income received from one's own labor is wages. The modern theory of rent is that it is the difference between the actual earning of a factor unit over its transfer earnings. So the Transfer earnings are the minimum payment required to keep a factor of production in its present use. It is also known as opportunity cost.
Explanation :
All factors of production like land, labour, capital and entrepreneur are required in combination at a time to produce a commodity. Production means creation or an addition of utility. Factors of production (or productive 'inputs' or 'resources') are any commodities or services used to produce goods and services.
[24] What is included in the Tetiary sector?
A.
Banking
B.
Manufacturing
C.
Forestry
D.
Mining
Ans:
Banking
Explanation :
The led 'my industry is the segment of the economy that provides services to its consumers. It includes a wide range or activities that service based and give non-tangible value to customers such as provision of trading, insurance, banking, etc. The other sectors are the secondary sector (manufacturing), and the primary sector (agriculture and allied activities).
[25] Minimum payment to factor of production is called -
A.
Quasi Rent
B.
Rent
C.
Wages
D.
Transfer Payment
Ans:
Transfer Payment
Explanation :
In economics, factors of production are the inputs to the production process. There are three basic factors of production: land, labour, capital. The payment for use and the received income of a land owner is rent. The payment for someone else's labor and all income received from one's own labor is wages. The modern theory of rent is that it is the difference between the actual earning of a factor unit over its transfer earnings. So the Transfer earnings are the minimum payment required to keep a factor of production in its present use. It is also known as opportunity cost.
Explanation :
In economics, factors of production are the inputs to the production process. There are three basic factors of production: land, labour, capital. The payment for use and the received income of a land owner is rent. The payment for someone else's labor and all income received from one's own labor is wages. The modern theory of rent is that it is the difference between the actual earning of a factor unit over its transfer earnings. So the Transfer earnings are the minimum payment required to keep a factor of production in its present use. It is also known as opportunity cost.