[1] The concept of joint sector implies cooperation between -
A.
Public sector and private sector industries
B.
State Government and Central Government
C.
Domestic and. Foreign Companies
D.
None of these
Ans:
Public sector and private sector industries
Explanation :
Joint sector industries are owned jointly by the government and private individuals who have contributed to the capital. In joint sector, both public sector and private sector join hands to establish new enterprise. The joint sector is an extension of the concept of mixed economy.
[2] When there is a change in demand leading to a shift of the Demand Curve to the right, at the same price as before, the quantity demanded will -
A.
decrease
B.
increase
C.
remain the same
D.
contract
Ans:
increase
Explanation :
In economics, the demand curve is the graph depicting the relationship between the price of a certain commodity and the amount of it that consumers are willing and able to purchase at that given price. The shift of a demand curve takes place when there is a change in any non-price determinant of demand, resulting in a new demand curve. There is movement along a demand curve when a change in price causes the quantity demanded to change.
[3] The income elasticity of demand being greater than one, the commodity must be -
A.
a necessity
B.
a luxury
C.
an inferior good
D.
None of these
Ans:
a luxury
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, ceteris paribus. It is calculated as the ratio of the percentage change in demand to the percentage change in income. For example, if, in response to a 10% increase in income, the demand for a good increased by 20%. the income elasticity of demand would be 20%/10% = 2. A positive income elasticity of demand is associated with normal goods: an increase in income will lead to a rise in demand. If income elasticity of demand of a commodity i s less than 1, it is a necessity good. If the elasticity of demand is greater than 1, it is a luxury good or a superior good.
[4] The main determinant of real wage is -
A.
extra earning
B.
nature of work
C.
promotion prospect
D.
purchasing power money
Ans:
purchasing power money
Explanation :
The term real wages refers to wages that have been adjusted for inflation. This term is used in contrast to nominal wages or unadjusted wages. Real wages provide a clearer representation of an individual's wages. The real purchasing power of income or money is the key determinant of real wage. It an indication of an individual's actual purchasing power. Real wages arc a useful economic measure, as opposed to nominal wages, which simply show the monetary value of wages in that year.
[5] A refrigerator operating in a chemist's shop is an example of -
A.
free good
B.
final good
C.
producers good
D.
consumer's good
Ans:
final good
Explanation :
Final goods are goods that are ultimately consumed rather than used in the production of another good. For example, a car sold to a consumer is a final good; the components such as tires sold to the car manufacturer are not; they are intermediate goods used to make the final good.
[6] The situation in which total revenue is equal to total cost, is known as -
A.
monopolistic competition
B.
equilibrium level of output
C.
break-even point
D.
perfect competition
Ans:
break-even point
Explanation :
In economics and cost accounting, the break-even point (BEP) is the point at which cost or expenses and revenue are equal: there is no net loss or gain, and one has "broken even". A profit or a loss has not been made, although opportunity costs have been "paid", and capital has received the risk-adjusted, expected return.
[7] The relationship between price of a commodity and the demand for it -
A.
is a positive relationship
B.
is an inverse relationship
C.
They are independent of each other
D.
They do not have any relationship
Ans:
is an inverse relationship
Explanation :
According to the Law of demand, consumers buy more of a good when its price is lower and less when its price is higher. It states that the quantity demanded and the prices of a commodity are inversely related, other things remaining constant.
[8] Consumer's sovereignty means:
A.
consumers are free to spend their income as they like.
B.
consumers have the power to manage the economy.
C.
consumer's expenditures influence the allocation of resources.
D.
consumer goods are free from government control,
Ans:
consumers are free to spend their income as they like.
Explanation :
Consumer sovereignty means that buyers ultimately determine which goods and services remain in production. In unrestricted markets, those with income or wealth are able to use their purchasing power to motivate producers. So ultimately it means how the consumers want to spend their incomes.
[9] The situation in which total Revenues equals total cost, is known as :
A.
Monopolistic competition
B.
Equilibrium level of output.
C.
Break even point
D.
Perfect competition
Ans:
Break even point
Explanation :
In economics and cost accounting, the break-even point (BEP) is the point at which cost or expenses and revenue are equal: there is no net loss or gain, and one has "broken even."
[10] A market in which there are a few number of large firms is called as
A.
Duopoly
B.
Competition
C.
Oligopoly
D.
Monopoly
Ans:
Oligopoly
Explanation :
Duopoly means a market in which two producers of the same good are predominantly powerful. In some theries, the term is used specifically to denote the existence of only two suppliers of a good.
[11] Number of sellers in the monopoly market structure is -
A.
few
B.
large
C.
one
D.
two
Ans:
one
Explanation :
Monopoly refers to a market in which there is only one supplier and no other firms are able to enter.
[12] When percentage change in demand for a commodity is less than percentage change in its price, then demand is said to be -
A.
Highly elastic
B.
Inelastic
C.
Relatively elastic
D.
Perfectly inelastic
Ans:
Inelastic
Explanation :
When the percentage change in quantity demanded is less than the percentage change in price, then the demand for the commodity is said to be inelastic. Price elasticity of demand refers to the degree of responsiveness of quantity demanded to change in price.
[13] Production function is the relationship between -
A.
Production and Profit
B.
Production and Prices
C.
Production and Production factors
D.
Production and Income
Ans:
Production and Production factors
Explanation :
In economics, a production function relates physical output of a production process to physical inputs or factors of production. The primary purpose of the production function is to address allocative efficiency in the use of factor inputs in production and the resulting distribution of income to those factors.
[14] Any factor of production can earn economic-rent, when its supply will be -
A.
Perfectly elastic
B.
Perfectly inelastic
C.
Elastic in nature
D.
All of the above
Ans:
Perfectly inelastic
Explanation :
Economic rent is the revenue that can be earned from the land or other natural resource for which there is a fixed supply — as economists like to say, the supply is perfectly inelastic. Because the supply is perfectly inelastic, the amount of its supply does not depend on any income that the resource can produce.
[15] The father of Economics is -
A.
Marshall
B.
Adam Smith
C.
J.M. Keynes
D.
Karl Marx
Ans:
Adam Smith
Explanation :
Adam Smith is known as 'Father of Modern Economics,' He is best known for two classic works: The Theory of Moral Sentiments (1759), and An Inquiry into the Nature and Causes of the Wealth of Nations (1776).
[16] The sale of branded articles is common in a situation of -
A.
excess capacity
B.
monopolistic competition
C.
monopoly
D.
pure competition
Ans:
monopolistic competition
Explanation :
Monopolistic competition is a type of imperfect competition such that many producers sell products that are differentiated from one another (e.g. by branding or quality) and hence are not perfect substitutes. Textbook examples of industries with market structures similar to monopolistic competition include restaurants, cereal, clothing, shoes, and service industries in large cities.
[17] Who propounded Dynamic Theory of profit?
A.
Clark
B.
Schumpeter
C.
Knight
D.
Hawly
Ans:
Clark
Explanation :
Dynamic Theory of Profit is associated with the name of an American Economist J. B. Clark. In the world of reality, according to J. B. Clark profit arises only in a dynamic economy.
[18] Demand curve of a firm under perfect competition is :
A.
horizontal to ox-axis
B.
negatively sloped
C.
positively sloped
D.
U - shaped
Ans:
horizontal to ox-axis
Explanation :
Under Perfect Competition, the firm faces a horizontal demand curve. It can sell any quantity desired at the market price, but cannot sell anything above the market price.
[19] The marginal revenue of a monopolist is:
A.
more than price
B.
equal to price
C.
less than price
D.
less than marginal cost
Ans:
less than price
Explanation :
A monopolist's marginal revenue is always less than or equal to the price of the good. Marginal revenue is the amount of revenue the firm receives for each additional unit of output. It is the difference between total revenue - price times quantity - at the new level of output and total revenue at the previous output (one unit less).
[20] Payment of water charges by the farmers to the government represents -
A.
intermediate consumption
B.
final consumption
C.
fixed investment
D.
inventory investment
Ans:
intermediate consumption
Explanation :
Intermediate consumption is an accounting concept which measures the value of the goods and services consumed as inputs by a process of production. It excludes fixed assets whose consumption is recorded as consumption of fixed capital. The goods and services may be either transformed or used up by the production process. Intermediate goods or services used in production can be either changed in form (e.g. bulk sugar) or completely used up (e.g. electric power, water, etc).
[21] The problem of Economics arises from -
A.
Plenty
B.
Scarcity of goods
C.
More wants and less goods
D.
All of the above
Ans:
More wants and less goods
Explanation :
The theory of Economic problem states that there is scarcity, or that the finite resources available are insufficient to satisfy all human wants and needs. The problem then becomes how to determine what is to be produced and how the factors of production (such as capital and labor) are to be allocated. In short, the economic problem is the choice one must make, arising out of limited means and unlimited wants.
[22] When average cost production (AC) falls, marginal cost of production must be -
A.
rising
B.
Falling
C.
Greater than the average cost
D.
Less than the average cost
Ans:
Less than the average cost
Explanation :
Average cost is the total cost per unit of output. Marginal cost, on the other hand, is the addition to the total cost by producing one more units of output. Economies of scale are said to exist if an additional unit of output can he produced for less than the average of all previous units—that is, if long-run marginal cost is below long-run average cost, so the latter is falling. Conversely, there may be levels of production where marginal cost is higher than average cost, and average cost is an increasing function of output.
[23] Production function expresses -
A.
Technological relationship between physical inputs and output
B.
Financial relationship between physical inputs and output
C.
Relationship between finance and technology
D.
Relationship between factors of production
Ans:
technological relationship between physical inputs and output
Explanation :
Production involves transformation of inputs into outputs. The output is a function of input. The functional relationship between physical inputs and physical output of a firm is called production function. The word 'function' in mathematics means the precise relationship that exists between one dependent variable and a number (or one) of independent variables. The production function states the maximum quantity of output that can be produced from any given quantities of various inputs during a given period of time.
[24] When there is one buyer and many sellers then that situation is called -
A.
Monopoly
B.
Single buyer right
C.
Down right
D.
Double buyers right
Ans:
Single buyer right
Explanation :
In economics, a monopsony (mono: single) is a market form in which only one buyer faces many sellers. It is an example of imperfect competition, similar to a monopoly, in which only one seller faces many buyers. As the only purchaser of a good or service, the monopsonist may dictate terms to its suppliers in the same manner that a monopolist controls the market for its buyers. It is also known as Single buyer Right. A single-payer universal health care system, in which the government is the only "buyer" of health care services, is an example of a monopsony. Another possible monopsony could develop in the exchange between the food industry and farmers.
[25] The measure of a worker's real wage is -
A.
The change in his productivity over a given time
B.
His earnings after deduction at source
C.
His daily earnings
D.
The purchasing power of his earnings
Ans:
The purchasing power of his earnings
Explanation :
A real wage rate is a nominal wage rate divided by the price of a good and is a transparent measure of how much of the good an hour of work buys. It provides an important indicator of the living standards of workers, and also of the productivity of workers. While differences in earnings or incomes may be misleading indicators of worker welfare, real wage rates are comparable across time and location. Nominal wages are not sufficient to tell us if workers gain since, even if wages rise, the price of one of the goods also rises when moving to free trade. The real wage represents the purchasing power of wages—that is, the quantity of goods the wages will purchase.
Explanation :
Joint sector industries are owned jointly by the government and private individuals who have contributed to the capital. In joint sector, both public sector and private sector join hands to establish new enterprise. The joint sector is an extension of the concept of mixed economy.
[2] When there is a change in demand leading to a shift of the Demand Curve to the right, at the same price as before, the quantity demanded will -
A.
decrease
B.
increase
C.
remain the same
D.
contract
Ans:
increase
Explanation :
In economics, the demand curve is the graph depicting the relationship between the price of a certain commodity and the amount of it that consumers are willing and able to purchase at that given price. The shift of a demand curve takes place when there is a change in any non-price determinant of demand, resulting in a new demand curve. There is movement along a demand curve when a change in price causes the quantity demanded to change.
[3] The income elasticity of demand being greater than one, the commodity must be -
A.
a necessity
B.
a luxury
C.
an inferior good
D.
None of these
Ans:
a luxury
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, ceteris paribus. It is calculated as the ratio of the percentage change in demand to the percentage change in income. For example, if, in response to a 10% increase in income, the demand for a good increased by 20%. the income elasticity of demand would be 20%/10% = 2. A positive income elasticity of demand is associated with normal goods: an increase in income will lead to a rise in demand. If income elasticity of demand of a commodity i s less than 1, it is a necessity good. If the elasticity of demand is greater than 1, it is a luxury good or a superior good.
[4] The main determinant of real wage is -
A.
extra earning
B.
nature of work
C.
promotion prospect
D.
purchasing power money
Ans:
purchasing power money
Explanation :
The term real wages refers to wages that have been adjusted for inflation. This term is used in contrast to nominal wages or unadjusted wages. Real wages provide a clearer representation of an individual's wages. The real purchasing power of income or money is the key determinant of real wage. It an indication of an individual's actual purchasing power. Real wages arc a useful economic measure, as opposed to nominal wages, which simply show the monetary value of wages in that year.
[5] A refrigerator operating in a chemist's shop is an example of -
A.
free good
B.
final good
C.
producers good
D.
consumer's good
Ans:
final good
Explanation :
Final goods are goods that are ultimately consumed rather than used in the production of another good. For example, a car sold to a consumer is a final good; the components such as tires sold to the car manufacturer are not; they are intermediate goods used to make the final good.
[6] The situation in which total revenue is equal to total cost, is known as -
A.
monopolistic competition
B.
equilibrium level of output
C.
break-even point
D.
perfect competition
Ans:
break-even point
Explanation :
In economics and cost accounting, the break-even point (BEP) is the point at which cost or expenses and revenue are equal: there is no net loss or gain, and one has "broken even". A profit or a loss has not been made, although opportunity costs have been "paid", and capital has received the risk-adjusted, expected return.
[7] The relationship between price of a commodity and the demand for it -
A.
is a positive relationship
B.
is an inverse relationship
C.
They are independent of each other
D.
They do not have any relationship
Ans:
is an inverse relationship
Explanation :
According to the Law of demand, consumers buy more of a good when its price is lower and less when its price is higher. It states that the quantity demanded and the prices of a commodity are inversely related, other things remaining constant.
[8] Consumer's sovereignty means:
A.
consumers are free to spend their income as they like.
B.
consumers have the power to manage the economy.
C.
consumer's expenditures influence the allocation of resources.
D.
consumer goods are free from government control,
Ans:
consumers are free to spend their income as they like.
Explanation :
Consumer sovereignty means that buyers ultimately determine which goods and services remain in production. In unrestricted markets, those with income or wealth are able to use their purchasing power to motivate producers. So ultimately it means how the consumers want to spend their incomes.
[9] The situation in which total Revenues equals total cost, is known as :
A.
Monopolistic competition
B.
Equilibrium level of output.
C.
Break even point
D.
Perfect competition
Ans:
Break even point
Explanation :
In economics and cost accounting, the break-even point (BEP) is the point at which cost or expenses and revenue are equal: there is no net loss or gain, and one has "broken even."
[10] A market in which there are a few number of large firms is called as
A.
Duopoly
B.
Competition
C.
Oligopoly
D.
Monopoly
Ans:
Oligopoly
Explanation :
Duopoly means a market in which two producers of the same good are predominantly powerful. In some theries, the term is used specifically to denote the existence of only two suppliers of a good.
[11] Number of sellers in the monopoly market structure is -
A.
few
B.
large
C.
one
D.
two
Ans:
one
Explanation :
Monopoly refers to a market in which there is only one supplier and no other firms are able to enter.
[12] When percentage change in demand for a commodity is less than percentage change in its price, then demand is said to be -
A.
Highly elastic
B.
Inelastic
C.
Relatively elastic
D.
Perfectly inelastic
Ans:
Inelastic
Explanation :
When the percentage change in quantity demanded is less than the percentage change in price, then the demand for the commodity is said to be inelastic. Price elasticity of demand refers to the degree of responsiveness of quantity demanded to change in price.
[13] Production function is the relationship between -
A.
Production and Profit
B.
Production and Prices
C.
Production and Production factors
D.
Production and Income
Ans:
Production and Production factors
Explanation :
In economics, a production function relates physical output of a production process to physical inputs or factors of production. The primary purpose of the production function is to address allocative efficiency in the use of factor inputs in production and the resulting distribution of income to those factors.
[14] Any factor of production can earn economic-rent, when its supply will be -
A.
Perfectly elastic
B.
Perfectly inelastic
C.
Elastic in nature
D.
All of the above
Ans:
Perfectly inelastic
Explanation :
Economic rent is the revenue that can be earned from the land or other natural resource for which there is a fixed supply — as economists like to say, the supply is perfectly inelastic. Because the supply is perfectly inelastic, the amount of its supply does not depend on any income that the resource can produce.
[15] The father of Economics is -
A.
Marshall
B.
Adam Smith
C.
J.M. Keynes
D.
Karl Marx
Ans:
Adam Smith
Explanation :
Adam Smith is known as 'Father of Modern Economics,' He is best known for two classic works: The Theory of Moral Sentiments (1759), and An Inquiry into the Nature and Causes of the Wealth of Nations (1776).
[16] The sale of branded articles is common in a situation of -
A.
excess capacity
B.
monopolistic competition
C.
monopoly
D.
pure competition
Ans:
monopolistic competition
Explanation :
Monopolistic competition is a type of imperfect competition such that many producers sell products that are differentiated from one another (e.g. by branding or quality) and hence are not perfect substitutes. Textbook examples of industries with market structures similar to monopolistic competition include restaurants, cereal, clothing, shoes, and service industries in large cities.
[17] Who propounded Dynamic Theory of profit?
A.
Clark
B.
Schumpeter
C.
Knight
D.
Hawly
Ans:
Clark
Explanation :
Dynamic Theory of Profit is associated with the name of an American Economist J. B. Clark. In the world of reality, according to J. B. Clark profit arises only in a dynamic economy.
[18] Demand curve of a firm under perfect competition is :
A.
horizontal to ox-axis
B.
negatively sloped
C.
positively sloped
D.
U - shaped
Ans:
horizontal to ox-axis
Explanation :
Under Perfect Competition, the firm faces a horizontal demand curve. It can sell any quantity desired at the market price, but cannot sell anything above the market price.
[19] The marginal revenue of a monopolist is:
A.
more than price
B.
equal to price
C.
less than price
D.
less than marginal cost
Ans:
less than price
Explanation :
A monopolist's marginal revenue is always less than or equal to the price of the good. Marginal revenue is the amount of revenue the firm receives for each additional unit of output. It is the difference between total revenue - price times quantity - at the new level of output and total revenue at the previous output (one unit less).
[20] Payment of water charges by the farmers to the government represents -
A.
intermediate consumption
B.
final consumption
C.
fixed investment
D.
inventory investment
Ans:
intermediate consumption
Explanation :
Intermediate consumption is an accounting concept which measures the value of the goods and services consumed as inputs by a process of production. It excludes fixed assets whose consumption is recorded as consumption of fixed capital. The goods and services may be either transformed or used up by the production process. Intermediate goods or services used in production can be either changed in form (e.g. bulk sugar) or completely used up (e.g. electric power, water, etc).
[21] The problem of Economics arises from -
A.
Plenty
B.
Scarcity of goods
C.
More wants and less goods
D.
All of the above
Ans:
More wants and less goods
Explanation :
The theory of Economic problem states that there is scarcity, or that the finite resources available are insufficient to satisfy all human wants and needs. The problem then becomes how to determine what is to be produced and how the factors of production (such as capital and labor) are to be allocated. In short, the economic problem is the choice one must make, arising out of limited means and unlimited wants.
[22] When average cost production (AC) falls, marginal cost of production must be -
A.
rising
B.
Falling
C.
Greater than the average cost
D.
Less than the average cost
Ans:
Less than the average cost
Explanation :
Average cost is the total cost per unit of output. Marginal cost, on the other hand, is the addition to the total cost by producing one more units of output. Economies of scale are said to exist if an additional unit of output can he produced for less than the average of all previous units—that is, if long-run marginal cost is below long-run average cost, so the latter is falling. Conversely, there may be levels of production where marginal cost is higher than average cost, and average cost is an increasing function of output.
[23] Production function expresses -
A.
Technological relationship between physical inputs and output
B.
Financial relationship between physical inputs and output
C.
Relationship between finance and technology
D.
Relationship between factors of production
Ans:
technological relationship between physical inputs and output
Explanation :
Production involves transformation of inputs into outputs. The output is a function of input. The functional relationship between physical inputs and physical output of a firm is called production function. The word 'function' in mathematics means the precise relationship that exists between one dependent variable and a number (or one) of independent variables. The production function states the maximum quantity of output that can be produced from any given quantities of various inputs during a given period of time.
[24] When there is one buyer and many sellers then that situation is called -
A.
Monopoly
B.
Single buyer right
C.
Down right
D.
Double buyers right
Ans:
Single buyer right
Explanation :
In economics, a monopsony (mono: single) is a market form in which only one buyer faces many sellers. It is an example of imperfect competition, similar to a monopoly, in which only one seller faces many buyers. As the only purchaser of a good or service, the monopsonist may dictate terms to its suppliers in the same manner that a monopolist controls the market for its buyers. It is also known as Single buyer Right. A single-payer universal health care system, in which the government is the only "buyer" of health care services, is an example of a monopsony. Another possible monopsony could develop in the exchange between the food industry and farmers.
[25] The measure of a worker's real wage is -
A.
The change in his productivity over a given time
B.
His earnings after deduction at source
C.
His daily earnings
D.
The purchasing power of his earnings
Ans:
The purchasing power of his earnings
Explanation :
A real wage rate is a nominal wage rate divided by the price of a good and is a transparent measure of how much of the good an hour of work buys. It provides an important indicator of the living standards of workers, and also of the productivity of workers. While differences in earnings or incomes may be misleading indicators of worker welfare, real wage rates are comparable across time and location. Nominal wages are not sufficient to tell us if workers gain since, even if wages rise, the price of one of the goods also rises when moving to free trade. The real wage represents the purchasing power of wages—that is, the quantity of goods the wages will purchase.
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, ceteris paribus. It is calculated as the ratio of the percentage change in demand to the percentage change in income. For example, if, in response to a 10% increase in income, the demand for a good increased by 20%. the income elasticity of demand would be 20%/10% = 2. A positive income elasticity of demand is associated with normal goods: an increase in income will lead to a rise in demand. If income elasticity of demand of a commodity i s less than 1, it is a necessity good. If the elasticity of demand is greater than 1, it is a luxury good or a superior good.
[4] The main determinant of real wage is -
A.
extra earning
B.
nature of work
C.
promotion prospect
D.
purchasing power money
Ans:
purchasing power money
Explanation :
The term real wages refers to wages that have been adjusted for inflation. This term is used in contrast to nominal wages or unadjusted wages. Real wages provide a clearer representation of an individual's wages. The real purchasing power of income or money is the key determinant of real wage. It an indication of an individual's actual purchasing power. Real wages arc a useful economic measure, as opposed to nominal wages, which simply show the monetary value of wages in that year.
[5] A refrigerator operating in a chemist's shop is an example of -
A.
free good
B.
final good
C.
producers good
D.
consumer's good
Ans:
final good
Explanation :
Final goods are goods that are ultimately consumed rather than used in the production of another good. For example, a car sold to a consumer is a final good; the components such as tires sold to the car manufacturer are not; they are intermediate goods used to make the final good.
[6] The situation in which total revenue is equal to total cost, is known as -
A.
monopolistic competition
B.
equilibrium level of output
C.
break-even point
D.
perfect competition
Ans:
break-even point
Explanation :
In economics and cost accounting, the break-even point (BEP) is the point at which cost or expenses and revenue are equal: there is no net loss or gain, and one has "broken even". A profit or a loss has not been made, although opportunity costs have been "paid", and capital has received the risk-adjusted, expected return.
[7] The relationship between price of a commodity and the demand for it -
A.
is a positive relationship
B.
is an inverse relationship
C.
They are independent of each other
D.
They do not have any relationship
Ans:
is an inverse relationship
Explanation :
According to the Law of demand, consumers buy more of a good when its price is lower and less when its price is higher. It states that the quantity demanded and the prices of a commodity are inversely related, other things remaining constant.
[8] Consumer's sovereignty means:
A.
consumers are free to spend their income as they like.
B.
consumers have the power to manage the economy.
C.
consumer's expenditures influence the allocation of resources.
D.
consumer goods are free from government control,
Ans:
consumers are free to spend their income as they like.
Explanation :
Consumer sovereignty means that buyers ultimately determine which goods and services remain in production. In unrestricted markets, those with income or wealth are able to use their purchasing power to motivate producers. So ultimately it means how the consumers want to spend their incomes.
[9] The situation in which total Revenues equals total cost, is known as :
A.
Monopolistic competition
B.
Equilibrium level of output.
C.
Break even point
D.
Perfect competition
Ans:
Break even point
Explanation :
In economics and cost accounting, the break-even point (BEP) is the point at which cost or expenses and revenue are equal: there is no net loss or gain, and one has "broken even."
[10] A market in which there are a few number of large firms is called as
A.
Duopoly
B.
Competition
C.
Oligopoly
D.
Monopoly
Ans:
Oligopoly
Explanation :
Duopoly means a market in which two producers of the same good are predominantly powerful. In some theries, the term is used specifically to denote the existence of only two suppliers of a good.
[11] Number of sellers in the monopoly market structure is -
A.
few
B.
large
C.
one
D.
two
Ans:
one
Explanation :
Monopoly refers to a market in which there is only one supplier and no other firms are able to enter.
[12] When percentage change in demand for a commodity is less than percentage change in its price, then demand is said to be -
A.
Highly elastic
B.
Inelastic
C.
Relatively elastic
D.
Perfectly inelastic
Ans:
Inelastic
Explanation :
When the percentage change in quantity demanded is less than the percentage change in price, then the demand for the commodity is said to be inelastic. Price elasticity of demand refers to the degree of responsiveness of quantity demanded to change in price.
[13] Production function is the relationship between -
A.
Production and Profit
B.
Production and Prices
C.
Production and Production factors
D.
Production and Income
Ans:
Production and Production factors
Explanation :
In economics, a production function relates physical output of a production process to physical inputs or factors of production. The primary purpose of the production function is to address allocative efficiency in the use of factor inputs in production and the resulting distribution of income to those factors.
[14] Any factor of production can earn economic-rent, when its supply will be -
A.
Perfectly elastic
B.
Perfectly inelastic
C.
Elastic in nature
D.
All of the above
Ans:
Perfectly inelastic
Explanation :
Economic rent is the revenue that can be earned from the land or other natural resource for which there is a fixed supply — as economists like to say, the supply is perfectly inelastic. Because the supply is perfectly inelastic, the amount of its supply does not depend on any income that the resource can produce.
[15] The father of Economics is -
A.
Marshall
B.
Adam Smith
C.
J.M. Keynes
D.
Karl Marx
Ans:
Adam Smith
Explanation :
Adam Smith is known as 'Father of Modern Economics,' He is best known for two classic works: The Theory of Moral Sentiments (1759), and An Inquiry into the Nature and Causes of the Wealth of Nations (1776).
[16] The sale of branded articles is common in a situation of -
A.
excess capacity
B.
monopolistic competition
C.
monopoly
D.
pure competition
Ans:
monopolistic competition
Explanation :
Monopolistic competition is a type of imperfect competition such that many producers sell products that are differentiated from one another (e.g. by branding or quality) and hence are not perfect substitutes. Textbook examples of industries with market structures similar to monopolistic competition include restaurants, cereal, clothing, shoes, and service industries in large cities.
[17] Who propounded Dynamic Theory of profit?
A.
Clark
B.
Schumpeter
C.
Knight
D.
Hawly
Ans:
Clark
Explanation :
Dynamic Theory of Profit is associated with the name of an American Economist J. B. Clark. In the world of reality, according to J. B. Clark profit arises only in a dynamic economy.
[18] Demand curve of a firm under perfect competition is :
A.
horizontal to ox-axis
B.
negatively sloped
C.
positively sloped
D.
U - shaped
Ans:
horizontal to ox-axis
Explanation :
Under Perfect Competition, the firm faces a horizontal demand curve. It can sell any quantity desired at the market price, but cannot sell anything above the market price.
[19] The marginal revenue of a monopolist is:
A.
more than price
B.
equal to price
C.
less than price
D.
less than marginal cost
Ans:
less than price
Explanation :
A monopolist's marginal revenue is always less than or equal to the price of the good. Marginal revenue is the amount of revenue the firm receives for each additional unit of output. It is the difference between total revenue - price times quantity - at the new level of output and total revenue at the previous output (one unit less).
[20] Payment of water charges by the farmers to the government represents -
A.
intermediate consumption
B.
final consumption
C.
fixed investment
D.
inventory investment
Ans:
intermediate consumption
Explanation :
Intermediate consumption is an accounting concept which measures the value of the goods and services consumed as inputs by a process of production. It excludes fixed assets whose consumption is recorded as consumption of fixed capital. The goods and services may be either transformed or used up by the production process. Intermediate goods or services used in production can be either changed in form (e.g. bulk sugar) or completely used up (e.g. electric power, water, etc).
[21] The problem of Economics arises from -
A.
Plenty
B.
Scarcity of goods
C.
More wants and less goods
D.
All of the above
Ans:
More wants and less goods
Explanation :
The theory of Economic problem states that there is scarcity, or that the finite resources available are insufficient to satisfy all human wants and needs. The problem then becomes how to determine what is to be produced and how the factors of production (such as capital and labor) are to be allocated. In short, the economic problem is the choice one must make, arising out of limited means and unlimited wants.
[22] When average cost production (AC) falls, marginal cost of production must be -
A.
rising
B.
Falling
C.
Greater than the average cost
D.
Less than the average cost
Ans:
Less than the average cost
Explanation :
Average cost is the total cost per unit of output. Marginal cost, on the other hand, is the addition to the total cost by producing one more units of output. Economies of scale are said to exist if an additional unit of output can he produced for less than the average of all previous units—that is, if long-run marginal cost is below long-run average cost, so the latter is falling. Conversely, there may be levels of production where marginal cost is higher than average cost, and average cost is an increasing function of output.
[23] Production function expresses -
A.
Technological relationship between physical inputs and output
B.
Financial relationship between physical inputs and output
C.
Relationship between finance and technology
D.
Relationship between factors of production
Ans:
technological relationship between physical inputs and output
Explanation :
Production involves transformation of inputs into outputs. The output is a function of input. The functional relationship between physical inputs and physical output of a firm is called production function. The word 'function' in mathematics means the precise relationship that exists between one dependent variable and a number (or one) of independent variables. The production function states the maximum quantity of output that can be produced from any given quantities of various inputs during a given period of time.
[24] When there is one buyer and many sellers then that situation is called -
A.
Monopoly
B.
Single buyer right
C.
Down right
D.
Double buyers right
Ans:
Single buyer right
Explanation :
In economics, a monopsony (mono: single) is a market form in which only one buyer faces many sellers. It is an example of imperfect competition, similar to a monopoly, in which only one seller faces many buyers. As the only purchaser of a good or service, the monopsonist may dictate terms to its suppliers in the same manner that a monopolist controls the market for its buyers. It is also known as Single buyer Right. A single-payer universal health care system, in which the government is the only "buyer" of health care services, is an example of a monopsony. Another possible monopsony could develop in the exchange between the food industry and farmers.
[25] The measure of a worker's real wage is -
A.
The change in his productivity over a given time
B.
His earnings after deduction at source
C.
His daily earnings
D.
The purchasing power of his earnings
Ans:
The purchasing power of his earnings
Explanation :
A real wage rate is a nominal wage rate divided by the price of a good and is a transparent measure of how much of the good an hour of work buys. It provides an important indicator of the living standards of workers, and also of the productivity of workers. While differences in earnings or incomes may be misleading indicators of worker welfare, real wage rates are comparable across time and location. Nominal wages are not sufficient to tell us if workers gain since, even if wages rise, the price of one of the goods also rises when moving to free trade. The real wage represents the purchasing power of wages—that is, the quantity of goods the wages will purchase.
Explanation :
Final goods are goods that are ultimately consumed rather than used in the production of another good. For example, a car sold to a consumer is a final good; the components such as tires sold to the car manufacturer are not; they are intermediate goods used to make the final good.
[6] The situation in which total revenue is equal to total cost, is known as -
A.
monopolistic competition
B.
equilibrium level of output
C.
break-even point
D.
perfect competition
Ans:
break-even point
Explanation :
In economics and cost accounting, the break-even point (BEP) is the point at which cost or expenses and revenue are equal: there is no net loss or gain, and one has "broken even". A profit or a loss has not been made, although opportunity costs have been "paid", and capital has received the risk-adjusted, expected return.
[7] The relationship between price of a commodity and the demand for it -
A.
is a positive relationship
B.
is an inverse relationship
C.
They are independent of each other
D.
They do not have any relationship
Ans:
is an inverse relationship
Explanation :
According to the Law of demand, consumers buy more of a good when its price is lower and less when its price is higher. It states that the quantity demanded and the prices of a commodity are inversely related, other things remaining constant.
[8] Consumer's sovereignty means:
A.
consumers are free to spend their income as they like.
B.
consumers have the power to manage the economy.
C.
consumer's expenditures influence the allocation of resources.
D.
consumer goods are free from government control,
Ans:
consumers are free to spend their income as they like.
Explanation :
Consumer sovereignty means that buyers ultimately determine which goods and services remain in production. In unrestricted markets, those with income or wealth are able to use their purchasing power to motivate producers. So ultimately it means how the consumers want to spend their incomes.
[9] The situation in which total Revenues equals total cost, is known as :
A.
Monopolistic competition
B.
Equilibrium level of output.
C.
Break even point
D.
Perfect competition
Ans:
Break even point
Explanation :
In economics and cost accounting, the break-even point (BEP) is the point at which cost or expenses and revenue are equal: there is no net loss or gain, and one has "broken even."
[10] A market in which there are a few number of large firms is called as
A.
Duopoly
B.
Competition
C.
Oligopoly
D.
Monopoly
Ans:
Oligopoly
Explanation :
Duopoly means a market in which two producers of the same good are predominantly powerful. In some theries, the term is used specifically to denote the existence of only two suppliers of a good.
[11] Number of sellers in the monopoly market structure is -
A.
few
B.
large
C.
one
D.
two
Ans:
one
Explanation :
Monopoly refers to a market in which there is only one supplier and no other firms are able to enter.
[12] When percentage change in demand for a commodity is less than percentage change in its price, then demand is said to be -
A.
Highly elastic
B.
Inelastic
C.
Relatively elastic
D.
Perfectly inelastic
Ans:
Inelastic
Explanation :
When the percentage change in quantity demanded is less than the percentage change in price, then the demand for the commodity is said to be inelastic. Price elasticity of demand refers to the degree of responsiveness of quantity demanded to change in price.
[13] Production function is the relationship between -
A.
Production and Profit
B.
Production and Prices
C.
Production and Production factors
D.
Production and Income
Ans:
Production and Production factors
Explanation :
In economics, a production function relates physical output of a production process to physical inputs or factors of production. The primary purpose of the production function is to address allocative efficiency in the use of factor inputs in production and the resulting distribution of income to those factors.
[14] Any factor of production can earn economic-rent, when its supply will be -
A.
Perfectly elastic
B.
Perfectly inelastic
C.
Elastic in nature
D.
All of the above
Ans:
Perfectly inelastic
Explanation :
Economic rent is the revenue that can be earned from the land or other natural resource for which there is a fixed supply — as economists like to say, the supply is perfectly inelastic. Because the supply is perfectly inelastic, the amount of its supply does not depend on any income that the resource can produce.
[15] The father of Economics is -
A.
Marshall
B.
Adam Smith
C.
J.M. Keynes
D.
Karl Marx
Ans:
Adam Smith
Explanation :
Adam Smith is known as 'Father of Modern Economics,' He is best known for two classic works: The Theory of Moral Sentiments (1759), and An Inquiry into the Nature and Causes of the Wealth of Nations (1776).
[16] The sale of branded articles is common in a situation of -
A.
excess capacity
B.
monopolistic competition
C.
monopoly
D.
pure competition
Ans:
monopolistic competition
Explanation :
Monopolistic competition is a type of imperfect competition such that many producers sell products that are differentiated from one another (e.g. by branding or quality) and hence are not perfect substitutes. Textbook examples of industries with market structures similar to monopolistic competition include restaurants, cereal, clothing, shoes, and service industries in large cities.
[17] Who propounded Dynamic Theory of profit?
A.
Clark
B.
Schumpeter
C.
Knight
D.
Hawly
Ans:
Clark
Explanation :
Dynamic Theory of Profit is associated with the name of an American Economist J. B. Clark. In the world of reality, according to J. B. Clark profit arises only in a dynamic economy.
[18] Demand curve of a firm under perfect competition is :
A.
horizontal to ox-axis
B.
negatively sloped
C.
positively sloped
D.
U - shaped
Ans:
horizontal to ox-axis
Explanation :
Under Perfect Competition, the firm faces a horizontal demand curve. It can sell any quantity desired at the market price, but cannot sell anything above the market price.
[19] The marginal revenue of a monopolist is:
A.
more than price
B.
equal to price
C.
less than price
D.
less than marginal cost
Ans:
less than price
Explanation :
A monopolist's marginal revenue is always less than or equal to the price of the good. Marginal revenue is the amount of revenue the firm receives for each additional unit of output. It is the difference between total revenue - price times quantity - at the new level of output and total revenue at the previous output (one unit less).
[20] Payment of water charges by the farmers to the government represents -
A.
intermediate consumption
B.
final consumption
C.
fixed investment
D.
inventory investment
Ans:
intermediate consumption
Explanation :
Intermediate consumption is an accounting concept which measures the value of the goods and services consumed as inputs by a process of production. It excludes fixed assets whose consumption is recorded as consumption of fixed capital. The goods and services may be either transformed or used up by the production process. Intermediate goods or services used in production can be either changed in form (e.g. bulk sugar) or completely used up (e.g. electric power, water, etc).
[21] The problem of Economics arises from -
A.
Plenty
B.
Scarcity of goods
C.
More wants and less goods
D.
All of the above
Ans:
More wants and less goods
Explanation :
The theory of Economic problem states that there is scarcity, or that the finite resources available are insufficient to satisfy all human wants and needs. The problem then becomes how to determine what is to be produced and how the factors of production (such as capital and labor) are to be allocated. In short, the economic problem is the choice one must make, arising out of limited means and unlimited wants.
[22] When average cost production (AC) falls, marginal cost of production must be -
A.
rising
B.
Falling
C.
Greater than the average cost
D.
Less than the average cost
Ans:
Less than the average cost
Explanation :
Average cost is the total cost per unit of output. Marginal cost, on the other hand, is the addition to the total cost by producing one more units of output. Economies of scale are said to exist if an additional unit of output can he produced for less than the average of all previous units—that is, if long-run marginal cost is below long-run average cost, so the latter is falling. Conversely, there may be levels of production where marginal cost is higher than average cost, and average cost is an increasing function of output.
[23] Production function expresses -
A.
Technological relationship between physical inputs and output
B.
Financial relationship between physical inputs and output
C.
Relationship between finance and technology
D.
Relationship between factors of production
Ans:
technological relationship between physical inputs and output
Explanation :
Production involves transformation of inputs into outputs. The output is a function of input. The functional relationship between physical inputs and physical output of a firm is called production function. The word 'function' in mathematics means the precise relationship that exists between one dependent variable and a number (or one) of independent variables. The production function states the maximum quantity of output that can be produced from any given quantities of various inputs during a given period of time.
[24] When there is one buyer and many sellers then that situation is called -
A.
Monopoly
B.
Single buyer right
C.
Down right
D.
Double buyers right
Ans:
Single buyer right
Explanation :
In economics, a monopsony (mono: single) is a market form in which only one buyer faces many sellers. It is an example of imperfect competition, similar to a monopoly, in which only one seller faces many buyers. As the only purchaser of a good or service, the monopsonist may dictate terms to its suppliers in the same manner that a monopolist controls the market for its buyers. It is also known as Single buyer Right. A single-payer universal health care system, in which the government is the only "buyer" of health care services, is an example of a monopsony. Another possible monopsony could develop in the exchange between the food industry and farmers.
[25] The measure of a worker's real wage is -
A.
The change in his productivity over a given time
B.
His earnings after deduction at source
C.
His daily earnings
D.
The purchasing power of his earnings
Ans:
The purchasing power of his earnings
Explanation :
A real wage rate is a nominal wage rate divided by the price of a good and is a transparent measure of how much of the good an hour of work buys. It provides an important indicator of the living standards of workers, and also of the productivity of workers. While differences in earnings or incomes may be misleading indicators of worker welfare, real wage rates are comparable across time and location. Nominal wages are not sufficient to tell us if workers gain since, even if wages rise, the price of one of the goods also rises when moving to free trade. The real wage represents the purchasing power of wages—that is, the quantity of goods the wages will purchase.
Explanation :
According to the Law of demand, consumers buy more of a good when its price is lower and less when its price is higher. It states that the quantity demanded and the prices of a commodity are inversely related, other things remaining constant.
[8] Consumer's sovereignty means:
A.
consumers are free to spend their income as they like.
B.
consumers have the power to manage the economy.
C.
consumer's expenditures influence the allocation of resources.
D.
consumer goods are free from government control,
Ans:
consumers are free to spend their income as they like.
Explanation :
Consumer sovereignty means that buyers ultimately determine which goods and services remain in production. In unrestricted markets, those with income or wealth are able to use their purchasing power to motivate producers. So ultimately it means how the consumers want to spend their incomes.
[9] The situation in which total Revenues equals total cost, is known as :
A.
Monopolistic competition
B.
Equilibrium level of output.
C.
Break even point
D.
Perfect competition
Ans:
Break even point
Explanation :
In economics and cost accounting, the break-even point (BEP) is the point at which cost or expenses and revenue are equal: there is no net loss or gain, and one has "broken even."
[10] A market in which there are a few number of large firms is called as
A.
Duopoly
B.
Competition
C.
Oligopoly
D.
Monopoly
Ans:
Oligopoly
Explanation :
Duopoly means a market in which two producers of the same good are predominantly powerful. In some theries, the term is used specifically to denote the existence of only two suppliers of a good.
[11] Number of sellers in the monopoly market structure is -
A.
few
B.
large
C.
one
D.
two
Ans:
one
Explanation :
Monopoly refers to a market in which there is only one supplier and no other firms are able to enter.
[12] When percentage change in demand for a commodity is less than percentage change in its price, then demand is said to be -
A.
Highly elastic
B.
Inelastic
C.
Relatively elastic
D.
Perfectly inelastic
Ans:
Inelastic
Explanation :
When the percentage change in quantity demanded is less than the percentage change in price, then the demand for the commodity is said to be inelastic. Price elasticity of demand refers to the degree of responsiveness of quantity demanded to change in price.
[13] Production function is the relationship between -
A.
Production and Profit
B.
Production and Prices
C.
Production and Production factors
D.
Production and Income
Ans:
Production and Production factors
Explanation :
In economics, a production function relates physical output of a production process to physical inputs or factors of production. The primary purpose of the production function is to address allocative efficiency in the use of factor inputs in production and the resulting distribution of income to those factors.
[14] Any factor of production can earn economic-rent, when its supply will be -
A.
Perfectly elastic
B.
Perfectly inelastic
C.
Elastic in nature
D.
All of the above
Ans:
Perfectly inelastic
Explanation :
Economic rent is the revenue that can be earned from the land or other natural resource for which there is a fixed supply — as economists like to say, the supply is perfectly inelastic. Because the supply is perfectly inelastic, the amount of its supply does not depend on any income that the resource can produce.
[15] The father of Economics is -
A.
Marshall
B.
Adam Smith
C.
J.M. Keynes
D.
Karl Marx
Ans:
Adam Smith
Explanation :
Adam Smith is known as 'Father of Modern Economics,' He is best known for two classic works: The Theory of Moral Sentiments (1759), and An Inquiry into the Nature and Causes of the Wealth of Nations (1776).
[16] The sale of branded articles is common in a situation of -
A.
excess capacity
B.
monopolistic competition
C.
monopoly
D.
pure competition
Ans:
monopolistic competition
Explanation :
Monopolistic competition is a type of imperfect competition such that many producers sell products that are differentiated from one another (e.g. by branding or quality) and hence are not perfect substitutes. Textbook examples of industries with market structures similar to monopolistic competition include restaurants, cereal, clothing, shoes, and service industries in large cities.
[17] Who propounded Dynamic Theory of profit?
A.
Clark
B.
Schumpeter
C.
Knight
D.
Hawly
Ans:
Clark
Explanation :
Dynamic Theory of Profit is associated with the name of an American Economist J. B. Clark. In the world of reality, according to J. B. Clark profit arises only in a dynamic economy.
[18] Demand curve of a firm under perfect competition is :
A.
horizontal to ox-axis
B.
negatively sloped
C.
positively sloped
D.
U - shaped
Ans:
horizontal to ox-axis
Explanation :
Under Perfect Competition, the firm faces a horizontal demand curve. It can sell any quantity desired at the market price, but cannot sell anything above the market price.
[19] The marginal revenue of a monopolist is:
A.
more than price
B.
equal to price
C.
less than price
D.
less than marginal cost
Ans:
less than price
Explanation :
A monopolist's marginal revenue is always less than or equal to the price of the good. Marginal revenue is the amount of revenue the firm receives for each additional unit of output. It is the difference between total revenue - price times quantity - at the new level of output and total revenue at the previous output (one unit less).
[20] Payment of water charges by the farmers to the government represents -
A.
intermediate consumption
B.
final consumption
C.
fixed investment
D.
inventory investment
Ans:
intermediate consumption
Explanation :
Intermediate consumption is an accounting concept which measures the value of the goods and services consumed as inputs by a process of production. It excludes fixed assets whose consumption is recorded as consumption of fixed capital. The goods and services may be either transformed or used up by the production process. Intermediate goods or services used in production can be either changed in form (e.g. bulk sugar) or completely used up (e.g. electric power, water, etc).
[21] The problem of Economics arises from -
A.
Plenty
B.
Scarcity of goods
C.
More wants and less goods
D.
All of the above
Ans:
More wants and less goods
Explanation :
The theory of Economic problem states that there is scarcity, or that the finite resources available are insufficient to satisfy all human wants and needs. The problem then becomes how to determine what is to be produced and how the factors of production (such as capital and labor) are to be allocated. In short, the economic problem is the choice one must make, arising out of limited means and unlimited wants.
[22] When average cost production (AC) falls, marginal cost of production must be -
A.
rising
B.
Falling
C.
Greater than the average cost
D.
Less than the average cost
Ans:
Less than the average cost
Explanation :
Average cost is the total cost per unit of output. Marginal cost, on the other hand, is the addition to the total cost by producing one more units of output. Economies of scale are said to exist if an additional unit of output can he produced for less than the average of all previous units—that is, if long-run marginal cost is below long-run average cost, so the latter is falling. Conversely, there may be levels of production where marginal cost is higher than average cost, and average cost is an increasing function of output.
[23] Production function expresses -
A.
Technological relationship between physical inputs and output
B.
Financial relationship between physical inputs and output
C.
Relationship between finance and technology
D.
Relationship between factors of production
Ans:
technological relationship between physical inputs and output
Explanation :
Production involves transformation of inputs into outputs. The output is a function of input. The functional relationship between physical inputs and physical output of a firm is called production function. The word 'function' in mathematics means the precise relationship that exists between one dependent variable and a number (or one) of independent variables. The production function states the maximum quantity of output that can be produced from any given quantities of various inputs during a given period of time.
[24] When there is one buyer and many sellers then that situation is called -
A.
Monopoly
B.
Single buyer right
C.
Down right
D.
Double buyers right
Ans:
Single buyer right
Explanation :
In economics, a monopsony (mono: single) is a market form in which only one buyer faces many sellers. It is an example of imperfect competition, similar to a monopoly, in which only one seller faces many buyers. As the only purchaser of a good or service, the monopsonist may dictate terms to its suppliers in the same manner that a monopolist controls the market for its buyers. It is also known as Single buyer Right. A single-payer universal health care system, in which the government is the only "buyer" of health care services, is an example of a monopsony. Another possible monopsony could develop in the exchange between the food industry and farmers.
[25] The measure of a worker's real wage is -
A.
The change in his productivity over a given time
B.
His earnings after deduction at source
C.
His daily earnings
D.
The purchasing power of his earnings
Ans:
The purchasing power of his earnings
Explanation :
A real wage rate is a nominal wage rate divided by the price of a good and is a transparent measure of how much of the good an hour of work buys. It provides an important indicator of the living standards of workers, and also of the productivity of workers. While differences in earnings or incomes may be misleading indicators of worker welfare, real wage rates are comparable across time and location. Nominal wages are not sufficient to tell us if workers gain since, even if wages rise, the price of one of the goods also rises when moving to free trade. The real wage represents the purchasing power of wages—that is, the quantity of goods the wages will purchase.
Explanation :
In economics and cost accounting, the break-even point (BEP) is the point at which cost or expenses and revenue are equal: there is no net loss or gain, and one has "broken even."
[10] A market in which there are a few number of large firms is called as
A.
Duopoly
B.
Competition
C.
Oligopoly
D.
Monopoly
Ans:
Oligopoly
Explanation :
Duopoly means a market in which two producers of the same good are predominantly powerful. In some theries, the term is used specifically to denote the existence of only two suppliers of a good.
[11] Number of sellers in the monopoly market structure is -
A.
few
B.
large
C.
one
D.
two
Ans:
one
Explanation :
Monopoly refers to a market in which there is only one supplier and no other firms are able to enter.
[12] When percentage change in demand for a commodity is less than percentage change in its price, then demand is said to be -
A.
Highly elastic
B.
Inelastic
C.
Relatively elastic
D.
Perfectly inelastic
Ans:
Inelastic
Explanation :
When the percentage change in quantity demanded is less than the percentage change in price, then the demand for the commodity is said to be inelastic. Price elasticity of demand refers to the degree of responsiveness of quantity demanded to change in price.
[13] Production function is the relationship between -
A.
Production and Profit
B.
Production and Prices
C.
Production and Production factors
D.
Production and Income
Ans:
Production and Production factors
Explanation :
In economics, a production function relates physical output of a production process to physical inputs or factors of production. The primary purpose of the production function is to address allocative efficiency in the use of factor inputs in production and the resulting distribution of income to those factors.
[14] Any factor of production can earn economic-rent, when its supply will be -
A.
Perfectly elastic
B.
Perfectly inelastic
C.
Elastic in nature
D.
All of the above
Ans:
Perfectly inelastic
Explanation :
Economic rent is the revenue that can be earned from the land or other natural resource for which there is a fixed supply — as economists like to say, the supply is perfectly inelastic. Because the supply is perfectly inelastic, the amount of its supply does not depend on any income that the resource can produce.
[15] The father of Economics is -
A.
Marshall
B.
Adam Smith
C.
J.M. Keynes
D.
Karl Marx
Ans:
Adam Smith
Explanation :
Adam Smith is known as 'Father of Modern Economics,' He is best known for two classic works: The Theory of Moral Sentiments (1759), and An Inquiry into the Nature and Causes of the Wealth of Nations (1776).
[16] The sale of branded articles is common in a situation of -
A.
excess capacity
B.
monopolistic competition
C.
monopoly
D.
pure competition
Ans:
monopolistic competition
Explanation :
Monopolistic competition is a type of imperfect competition such that many producers sell products that are differentiated from one another (e.g. by branding or quality) and hence are not perfect substitutes. Textbook examples of industries with market structures similar to monopolistic competition include restaurants, cereal, clothing, shoes, and service industries in large cities.
[17] Who propounded Dynamic Theory of profit?
A.
Clark
B.
Schumpeter
C.
Knight
D.
Hawly
Ans:
Clark
Explanation :
Dynamic Theory of Profit is associated with the name of an American Economist J. B. Clark. In the world of reality, according to J. B. Clark profit arises only in a dynamic economy.
[18] Demand curve of a firm under perfect competition is :
A.
horizontal to ox-axis
B.
negatively sloped
C.
positively sloped
D.
U - shaped
Ans:
horizontal to ox-axis
Explanation :
Under Perfect Competition, the firm faces a horizontal demand curve. It can sell any quantity desired at the market price, but cannot sell anything above the market price.
[19] The marginal revenue of a monopolist is:
A.
more than price
B.
equal to price
C.
less than price
D.
less than marginal cost
Ans:
less than price
Explanation :
A monopolist's marginal revenue is always less than or equal to the price of the good. Marginal revenue is the amount of revenue the firm receives for each additional unit of output. It is the difference between total revenue - price times quantity - at the new level of output and total revenue at the previous output (one unit less).
[20] Payment of water charges by the farmers to the government represents -
A.
intermediate consumption
B.
final consumption
C.
fixed investment
D.
inventory investment
Ans:
intermediate consumption
Explanation :
Intermediate consumption is an accounting concept which measures the value of the goods and services consumed as inputs by a process of production. It excludes fixed assets whose consumption is recorded as consumption of fixed capital. The goods and services may be either transformed or used up by the production process. Intermediate goods or services used in production can be either changed in form (e.g. bulk sugar) or completely used up (e.g. electric power, water, etc).
[21] The problem of Economics arises from -
A.
Plenty
B.
Scarcity of goods
C.
More wants and less goods
D.
All of the above
Ans:
More wants and less goods
Explanation :
The theory of Economic problem states that there is scarcity, or that the finite resources available are insufficient to satisfy all human wants and needs. The problem then becomes how to determine what is to be produced and how the factors of production (such as capital and labor) are to be allocated. In short, the economic problem is the choice one must make, arising out of limited means and unlimited wants.
[22] When average cost production (AC) falls, marginal cost of production must be -
A.
rising
B.
Falling
C.
Greater than the average cost
D.
Less than the average cost
Ans:
Less than the average cost
Explanation :
Average cost is the total cost per unit of output. Marginal cost, on the other hand, is the addition to the total cost by producing one more units of output. Economies of scale are said to exist if an additional unit of output can he produced for less than the average of all previous units—that is, if long-run marginal cost is below long-run average cost, so the latter is falling. Conversely, there may be levels of production where marginal cost is higher than average cost, and average cost is an increasing function of output.
[23] Production function expresses -
A.
Technological relationship between physical inputs and output
B.
Financial relationship between physical inputs and output
C.
Relationship between finance and technology
D.
Relationship between factors of production
Ans:
technological relationship between physical inputs and output
Explanation :
Production involves transformation of inputs into outputs. The output is a function of input. The functional relationship between physical inputs and physical output of a firm is called production function. The word 'function' in mathematics means the precise relationship that exists between one dependent variable and a number (or one) of independent variables. The production function states the maximum quantity of output that can be produced from any given quantities of various inputs during a given period of time.
[24] When there is one buyer and many sellers then that situation is called -
A.
Monopoly
B.
Single buyer right
C.
Down right
D.
Double buyers right
Ans:
Single buyer right
Explanation :
In economics, a monopsony (mono: single) is a market form in which only one buyer faces many sellers. It is an example of imperfect competition, similar to a monopoly, in which only one seller faces many buyers. As the only purchaser of a good or service, the monopsonist may dictate terms to its suppliers in the same manner that a monopolist controls the market for its buyers. It is also known as Single buyer Right. A single-payer universal health care system, in which the government is the only "buyer" of health care services, is an example of a monopsony. Another possible monopsony could develop in the exchange between the food industry and farmers.
[25] The measure of a worker's real wage is -
A.
The change in his productivity over a given time
B.
His earnings after deduction at source
C.
His daily earnings
D.
The purchasing power of his earnings
Ans:
The purchasing power of his earnings
Explanation :
A real wage rate is a nominal wage rate divided by the price of a good and is a transparent measure of how much of the good an hour of work buys. It provides an important indicator of the living standards of workers, and also of the productivity of workers. While differences in earnings or incomes may be misleading indicators of worker welfare, real wage rates are comparable across time and location. Nominal wages are not sufficient to tell us if workers gain since, even if wages rise, the price of one of the goods also rises when moving to free trade. The real wage represents the purchasing power of wages—that is, the quantity of goods the wages will purchase.
Explanation :
Monopoly refers to a market in which there is only one supplier and no other firms are able to enter.
[12] When percentage change in demand for a commodity is less than percentage change in its price, then demand is said to be -
A.
Highly elastic
B.
Inelastic
C.
Relatively elastic
D.
Perfectly inelastic
Ans:
Inelastic
Explanation :
When the percentage change in quantity demanded is less than the percentage change in price, then the demand for the commodity is said to be inelastic. Price elasticity of demand refers to the degree of responsiveness of quantity demanded to change in price.
[13] Production function is the relationship between -
A.
Production and Profit
B.
Production and Prices
C.
Production and Production factors
D.
Production and Income
Ans:
Production and Production factors
Explanation :
In economics, a production function relates physical output of a production process to physical inputs or factors of production. The primary purpose of the production function is to address allocative efficiency in the use of factor inputs in production and the resulting distribution of income to those factors.
[14] Any factor of production can earn economic-rent, when its supply will be -
A.
Perfectly elastic
B.
Perfectly inelastic
C.
Elastic in nature
D.
All of the above
Ans:
Perfectly inelastic
Explanation :
Economic rent is the revenue that can be earned from the land or other natural resource for which there is a fixed supply — as economists like to say, the supply is perfectly inelastic. Because the supply is perfectly inelastic, the amount of its supply does not depend on any income that the resource can produce.
[15] The father of Economics is -
A.
Marshall
B.
Adam Smith
C.
J.M. Keynes
D.
Karl Marx
Ans:
Adam Smith
Explanation :
Adam Smith is known as 'Father of Modern Economics,' He is best known for two classic works: The Theory of Moral Sentiments (1759), and An Inquiry into the Nature and Causes of the Wealth of Nations (1776).
[16] The sale of branded articles is common in a situation of -
A.
excess capacity
B.
monopolistic competition
C.
monopoly
D.
pure competition
Ans:
monopolistic competition
Explanation :
Monopolistic competition is a type of imperfect competition such that many producers sell products that are differentiated from one another (e.g. by branding or quality) and hence are not perfect substitutes. Textbook examples of industries with market structures similar to monopolistic competition include restaurants, cereal, clothing, shoes, and service industries in large cities.
[17] Who propounded Dynamic Theory of profit?
A.
Clark
B.
Schumpeter
C.
Knight
D.
Hawly
Ans:
Clark
Explanation :
Dynamic Theory of Profit is associated with the name of an American Economist J. B. Clark. In the world of reality, according to J. B. Clark profit arises only in a dynamic economy.
[18] Demand curve of a firm under perfect competition is :
A.
horizontal to ox-axis
B.
negatively sloped
C.
positively sloped
D.
U - shaped
Ans:
horizontal to ox-axis
Explanation :
Under Perfect Competition, the firm faces a horizontal demand curve. It can sell any quantity desired at the market price, but cannot sell anything above the market price.
[19] The marginal revenue of a monopolist is:
A.
more than price
B.
equal to price
C.
less than price
D.
less than marginal cost
Ans:
less than price
Explanation :
A monopolist's marginal revenue is always less than or equal to the price of the good. Marginal revenue is the amount of revenue the firm receives for each additional unit of output. It is the difference between total revenue - price times quantity - at the new level of output and total revenue at the previous output (one unit less).
[20] Payment of water charges by the farmers to the government represents -
A.
intermediate consumption
B.
final consumption
C.
fixed investment
D.
inventory investment
Ans:
intermediate consumption
Explanation :
Intermediate consumption is an accounting concept which measures the value of the goods and services consumed as inputs by a process of production. It excludes fixed assets whose consumption is recorded as consumption of fixed capital. The goods and services may be either transformed or used up by the production process. Intermediate goods or services used in production can be either changed in form (e.g. bulk sugar) or completely used up (e.g. electric power, water, etc).
[21] The problem of Economics arises from -
A.
Plenty
B.
Scarcity of goods
C.
More wants and less goods
D.
All of the above
Ans:
More wants and less goods
Explanation :
The theory of Economic problem states that there is scarcity, or that the finite resources available are insufficient to satisfy all human wants and needs. The problem then becomes how to determine what is to be produced and how the factors of production (such as capital and labor) are to be allocated. In short, the economic problem is the choice one must make, arising out of limited means and unlimited wants.
[22] When average cost production (AC) falls, marginal cost of production must be -
A.
rising
B.
Falling
C.
Greater than the average cost
D.
Less than the average cost
Ans:
Less than the average cost
Explanation :
Average cost is the total cost per unit of output. Marginal cost, on the other hand, is the addition to the total cost by producing one more units of output. Economies of scale are said to exist if an additional unit of output can he produced for less than the average of all previous units—that is, if long-run marginal cost is below long-run average cost, so the latter is falling. Conversely, there may be levels of production where marginal cost is higher than average cost, and average cost is an increasing function of output.
[23] Production function expresses -
A.
Technological relationship between physical inputs and output
B.
Financial relationship between physical inputs and output
C.
Relationship between finance and technology
D.
Relationship between factors of production
Ans:
technological relationship between physical inputs and output
Explanation :
Production involves transformation of inputs into outputs. The output is a function of input. The functional relationship between physical inputs and physical output of a firm is called production function. The word 'function' in mathematics means the precise relationship that exists between one dependent variable and a number (or one) of independent variables. The production function states the maximum quantity of output that can be produced from any given quantities of various inputs during a given period of time.
[24] When there is one buyer and many sellers then that situation is called -
A.
Monopoly
B.
Single buyer right
C.
Down right
D.
Double buyers right
Ans:
Single buyer right
Explanation :
In economics, a monopsony (mono: single) is a market form in which only one buyer faces many sellers. It is an example of imperfect competition, similar to a monopoly, in which only one seller faces many buyers. As the only purchaser of a good or service, the monopsonist may dictate terms to its suppliers in the same manner that a monopolist controls the market for its buyers. It is also known as Single buyer Right. A single-payer universal health care system, in which the government is the only "buyer" of health care services, is an example of a monopsony. Another possible monopsony could develop in the exchange between the food industry and farmers.
[25] The measure of a worker's real wage is -
A.
The change in his productivity over a given time
B.
His earnings after deduction at source
C.
His daily earnings
D.
The purchasing power of his earnings
Ans:
The purchasing power of his earnings
Explanation :
A real wage rate is a nominal wage rate divided by the price of a good and is a transparent measure of how much of the good an hour of work buys. It provides an important indicator of the living standards of workers, and also of the productivity of workers. While differences in earnings or incomes may be misleading indicators of worker welfare, real wage rates are comparable across time and location. Nominal wages are not sufficient to tell us if workers gain since, even if wages rise, the price of one of the goods also rises when moving to free trade. The real wage represents the purchasing power of wages—that is, the quantity of goods the wages will purchase.
Explanation :
In economics, a production function relates physical output of a production process to physical inputs or factors of production. The primary purpose of the production function is to address allocative efficiency in the use of factor inputs in production and the resulting distribution of income to those factors.
[14] Any factor of production can earn economic-rent, when its supply will be -
A.
Perfectly elastic
B.
Perfectly inelastic
C.
Elastic in nature
D.
All of the above
Ans:
Perfectly inelastic
Explanation :
Economic rent is the revenue that can be earned from the land or other natural resource for which there is a fixed supply — as economists like to say, the supply is perfectly inelastic. Because the supply is perfectly inelastic, the amount of its supply does not depend on any income that the resource can produce.
[15] The father of Economics is -
A.
Marshall
B.
Adam Smith
C.
J.M. Keynes
D.
Karl Marx
Ans:
Adam Smith
Explanation :
Adam Smith is known as 'Father of Modern Economics,' He is best known for two classic works: The Theory of Moral Sentiments (1759), and An Inquiry into the Nature and Causes of the Wealth of Nations (1776).
[16] The sale of branded articles is common in a situation of -
A.
excess capacity
B.
monopolistic competition
C.
monopoly
D.
pure competition
Ans:
monopolistic competition
Explanation :
Monopolistic competition is a type of imperfect competition such that many producers sell products that are differentiated from one another (e.g. by branding or quality) and hence are not perfect substitutes. Textbook examples of industries with market structures similar to monopolistic competition include restaurants, cereal, clothing, shoes, and service industries in large cities.
[17] Who propounded Dynamic Theory of profit?
A.
Clark
B.
Schumpeter
C.
Knight
D.
Hawly
Ans:
Clark
Explanation :
Dynamic Theory of Profit is associated with the name of an American Economist J. B. Clark. In the world of reality, according to J. B. Clark profit arises only in a dynamic economy.
[18] Demand curve of a firm under perfect competition is :
A.
horizontal to ox-axis
B.
negatively sloped
C.
positively sloped
D.
U - shaped
Ans:
horizontal to ox-axis
Explanation :
Under Perfect Competition, the firm faces a horizontal demand curve. It can sell any quantity desired at the market price, but cannot sell anything above the market price.
[19] The marginal revenue of a monopolist is:
A.
more than price
B.
equal to price
C.
less than price
D.
less than marginal cost
Ans:
less than price
Explanation :
A monopolist's marginal revenue is always less than or equal to the price of the good. Marginal revenue is the amount of revenue the firm receives for each additional unit of output. It is the difference between total revenue - price times quantity - at the new level of output and total revenue at the previous output (one unit less).
[20] Payment of water charges by the farmers to the government represents -
A.
intermediate consumption
B.
final consumption
C.
fixed investment
D.
inventory investment
Ans:
intermediate consumption
Explanation :
Intermediate consumption is an accounting concept which measures the value of the goods and services consumed as inputs by a process of production. It excludes fixed assets whose consumption is recorded as consumption of fixed capital. The goods and services may be either transformed or used up by the production process. Intermediate goods or services used in production can be either changed in form (e.g. bulk sugar) or completely used up (e.g. electric power, water, etc).
[21] The problem of Economics arises from -
A.
Plenty
B.
Scarcity of goods
C.
More wants and less goods
D.
All of the above
Ans:
More wants and less goods
Explanation :
The theory of Economic problem states that there is scarcity, or that the finite resources available are insufficient to satisfy all human wants and needs. The problem then becomes how to determine what is to be produced and how the factors of production (such as capital and labor) are to be allocated. In short, the economic problem is the choice one must make, arising out of limited means and unlimited wants.
[22] When average cost production (AC) falls, marginal cost of production must be -
A.
rising
B.
Falling
C.
Greater than the average cost
D.
Less than the average cost
Ans:
Less than the average cost
Explanation :
Average cost is the total cost per unit of output. Marginal cost, on the other hand, is the addition to the total cost by producing one more units of output. Economies of scale are said to exist if an additional unit of output can he produced for less than the average of all previous units—that is, if long-run marginal cost is below long-run average cost, so the latter is falling. Conversely, there may be levels of production where marginal cost is higher than average cost, and average cost is an increasing function of output.
[23] Production function expresses -
A.
Technological relationship between physical inputs and output
B.
Financial relationship between physical inputs and output
C.
Relationship between finance and technology
D.
Relationship between factors of production
Ans:
technological relationship between physical inputs and output
Explanation :
Production involves transformation of inputs into outputs. The output is a function of input. The functional relationship between physical inputs and physical output of a firm is called production function. The word 'function' in mathematics means the precise relationship that exists between one dependent variable and a number (or one) of independent variables. The production function states the maximum quantity of output that can be produced from any given quantities of various inputs during a given period of time.
[24] When there is one buyer and many sellers then that situation is called -
A.
Monopoly
B.
Single buyer right
C.
Down right
D.
Double buyers right
Ans:
Single buyer right
Explanation :
In economics, a monopsony (mono: single) is a market form in which only one buyer faces many sellers. It is an example of imperfect competition, similar to a monopoly, in which only one seller faces many buyers. As the only purchaser of a good or service, the monopsonist may dictate terms to its suppliers in the same manner that a monopolist controls the market for its buyers. It is also known as Single buyer Right. A single-payer universal health care system, in which the government is the only "buyer" of health care services, is an example of a monopsony. Another possible monopsony could develop in the exchange between the food industry and farmers.
[25] The measure of a worker's real wage is -
A.
The change in his productivity over a given time
B.
His earnings after deduction at source
C.
His daily earnings
D.
The purchasing power of his earnings
Ans:
The purchasing power of his earnings
Explanation :
A real wage rate is a nominal wage rate divided by the price of a good and is a transparent measure of how much of the good an hour of work buys. It provides an important indicator of the living standards of workers, and also of the productivity of workers. While differences in earnings or incomes may be misleading indicators of worker welfare, real wage rates are comparable across time and location. Nominal wages are not sufficient to tell us if workers gain since, even if wages rise, the price of one of the goods also rises when moving to free trade. The real wage represents the purchasing power of wages—that is, the quantity of goods the wages will purchase.
Explanation :
Adam Smith is known as 'Father of Modern Economics,' He is best known for two classic works: The Theory of Moral Sentiments (1759), and An Inquiry into the Nature and Causes of the Wealth of Nations (1776).
[16] The sale of branded articles is common in a situation of -
A.
excess capacity
B.
monopolistic competition
C.
monopoly
D.
pure competition
Ans:
monopolistic competition
Explanation :
Monopolistic competition is a type of imperfect competition such that many producers sell products that are differentiated from one another (e.g. by branding or quality) and hence are not perfect substitutes. Textbook examples of industries with market structures similar to monopolistic competition include restaurants, cereal, clothing, shoes, and service industries in large cities.
[17] Who propounded Dynamic Theory of profit?
A.
Clark
B.
Schumpeter
C.
Knight
D.
Hawly
Ans:
Clark
Explanation :
Dynamic Theory of Profit is associated with the name of an American Economist J. B. Clark. In the world of reality, according to J. B. Clark profit arises only in a dynamic economy.
[18] Demand curve of a firm under perfect competition is :
A.
horizontal to ox-axis
B.
negatively sloped
C.
positively sloped
D.
U - shaped
Ans:
horizontal to ox-axis
Explanation :
Under Perfect Competition, the firm faces a horizontal demand curve. It can sell any quantity desired at the market price, but cannot sell anything above the market price.
[19] The marginal revenue of a monopolist is:
A.
more than price
B.
equal to price
C.
less than price
D.
less than marginal cost
Ans:
less than price
Explanation :
A monopolist's marginal revenue is always less than or equal to the price of the good. Marginal revenue is the amount of revenue the firm receives for each additional unit of output. It is the difference between total revenue - price times quantity - at the new level of output and total revenue at the previous output (one unit less).
[20] Payment of water charges by the farmers to the government represents -
A.
intermediate consumption
B.
final consumption
C.
fixed investment
D.
inventory investment
Ans:
intermediate consumption
Explanation :
Intermediate consumption is an accounting concept which measures the value of the goods and services consumed as inputs by a process of production. It excludes fixed assets whose consumption is recorded as consumption of fixed capital. The goods and services may be either transformed or used up by the production process. Intermediate goods or services used in production can be either changed in form (e.g. bulk sugar) or completely used up (e.g. electric power, water, etc).
[21] The problem of Economics arises from -
A.
Plenty
B.
Scarcity of goods
C.
More wants and less goods
D.
All of the above
Ans:
More wants and less goods
Explanation :
The theory of Economic problem states that there is scarcity, or that the finite resources available are insufficient to satisfy all human wants and needs. The problem then becomes how to determine what is to be produced and how the factors of production (such as capital and labor) are to be allocated. In short, the economic problem is the choice one must make, arising out of limited means and unlimited wants.
[22] When average cost production (AC) falls, marginal cost of production must be -
A.
rising
B.
Falling
C.
Greater than the average cost
D.
Less than the average cost
Ans:
Less than the average cost
Explanation :
Average cost is the total cost per unit of output. Marginal cost, on the other hand, is the addition to the total cost by producing one more units of output. Economies of scale are said to exist if an additional unit of output can he produced for less than the average of all previous units—that is, if long-run marginal cost is below long-run average cost, so the latter is falling. Conversely, there may be levels of production where marginal cost is higher than average cost, and average cost is an increasing function of output.
[23] Production function expresses -
A.
Technological relationship between physical inputs and output
B.
Financial relationship between physical inputs and output
C.
Relationship between finance and technology
D.
Relationship between factors of production
Ans:
technological relationship between physical inputs and output
Explanation :
Production involves transformation of inputs into outputs. The output is a function of input. The functional relationship between physical inputs and physical output of a firm is called production function. The word 'function' in mathematics means the precise relationship that exists between one dependent variable and a number (or one) of independent variables. The production function states the maximum quantity of output that can be produced from any given quantities of various inputs during a given period of time.
[24] When there is one buyer and many sellers then that situation is called -
A.
Monopoly
B.
Single buyer right
C.
Down right
D.
Double buyers right
Ans:
Single buyer right
Explanation :
In economics, a monopsony (mono: single) is a market form in which only one buyer faces many sellers. It is an example of imperfect competition, similar to a monopoly, in which only one seller faces many buyers. As the only purchaser of a good or service, the monopsonist may dictate terms to its suppliers in the same manner that a monopolist controls the market for its buyers. It is also known as Single buyer Right. A single-payer universal health care system, in which the government is the only "buyer" of health care services, is an example of a monopsony. Another possible monopsony could develop in the exchange between the food industry and farmers.
[25] The measure of a worker's real wage is -
A.
The change in his productivity over a given time
B.
His earnings after deduction at source
C.
His daily earnings
D.
The purchasing power of his earnings
Ans:
The purchasing power of his earnings
Explanation :
A real wage rate is a nominal wage rate divided by the price of a good and is a transparent measure of how much of the good an hour of work buys. It provides an important indicator of the living standards of workers, and also of the productivity of workers. While differences in earnings or incomes may be misleading indicators of worker welfare, real wage rates are comparable across time and location. Nominal wages are not sufficient to tell us if workers gain since, even if wages rise, the price of one of the goods also rises when moving to free trade. The real wage represents the purchasing power of wages—that is, the quantity of goods the wages will purchase.
Explanation :
Dynamic Theory of Profit is associated with the name of an American Economist J. B. Clark. In the world of reality, according to J. B. Clark profit arises only in a dynamic economy.
[18] Demand curve of a firm under perfect competition is :
A.
horizontal to ox-axis
B.
negatively sloped
C.
positively sloped
D.
U - shaped
Ans:
horizontal to ox-axis
Explanation :
Under Perfect Competition, the firm faces a horizontal demand curve. It can sell any quantity desired at the market price, but cannot sell anything above the market price.
[19] The marginal revenue of a monopolist is:
A.
more than price
B.
equal to price
C.
less than price
D.
less than marginal cost
Ans:
less than price
Explanation :
A monopolist's marginal revenue is always less than or equal to the price of the good. Marginal revenue is the amount of revenue the firm receives for each additional unit of output. It is the difference between total revenue - price times quantity - at the new level of output and total revenue at the previous output (one unit less).
[20] Payment of water charges by the farmers to the government represents -
A.
intermediate consumption
B.
final consumption
C.
fixed investment
D.
inventory investment
Ans:
intermediate consumption
Explanation :
Intermediate consumption is an accounting concept which measures the value of the goods and services consumed as inputs by a process of production. It excludes fixed assets whose consumption is recorded as consumption of fixed capital. The goods and services may be either transformed or used up by the production process. Intermediate goods or services used in production can be either changed in form (e.g. bulk sugar) or completely used up (e.g. electric power, water, etc).
[21] The problem of Economics arises from -
A.
Plenty
B.
Scarcity of goods
C.
More wants and less goods
D.
All of the above
Ans:
More wants and less goods
Explanation :
The theory of Economic problem states that there is scarcity, or that the finite resources available are insufficient to satisfy all human wants and needs. The problem then becomes how to determine what is to be produced and how the factors of production (such as capital and labor) are to be allocated. In short, the economic problem is the choice one must make, arising out of limited means and unlimited wants.
[22] When average cost production (AC) falls, marginal cost of production must be -
A.
rising
B.
Falling
C.
Greater than the average cost
D.
Less than the average cost
Ans:
Less than the average cost
Explanation :
Average cost is the total cost per unit of output. Marginal cost, on the other hand, is the addition to the total cost by producing one more units of output. Economies of scale are said to exist if an additional unit of output can he produced for less than the average of all previous units—that is, if long-run marginal cost is below long-run average cost, so the latter is falling. Conversely, there may be levels of production where marginal cost is higher than average cost, and average cost is an increasing function of output.
[23] Production function expresses -
A.
Technological relationship between physical inputs and output
B.
Financial relationship between physical inputs and output
C.
Relationship between finance and technology
D.
Relationship between factors of production
Ans:
technological relationship between physical inputs and output
Explanation :
Production involves transformation of inputs into outputs. The output is a function of input. The functional relationship between physical inputs and physical output of a firm is called production function. The word 'function' in mathematics means the precise relationship that exists between one dependent variable and a number (or one) of independent variables. The production function states the maximum quantity of output that can be produced from any given quantities of various inputs during a given period of time.
[24] When there is one buyer and many sellers then that situation is called -
A.
Monopoly
B.
Single buyer right
C.
Down right
D.
Double buyers right
Ans:
Single buyer right
Explanation :
In economics, a monopsony (mono: single) is a market form in which only one buyer faces many sellers. It is an example of imperfect competition, similar to a monopoly, in which only one seller faces many buyers. As the only purchaser of a good or service, the monopsonist may dictate terms to its suppliers in the same manner that a monopolist controls the market for its buyers. It is also known as Single buyer Right. A single-payer universal health care system, in which the government is the only "buyer" of health care services, is an example of a monopsony. Another possible monopsony could develop in the exchange between the food industry and farmers.
[25] The measure of a worker's real wage is -
A.
The change in his productivity over a given time
B.
His earnings after deduction at source
C.
His daily earnings
D.
The purchasing power of his earnings
Ans:
The purchasing power of his earnings
Explanation :
A real wage rate is a nominal wage rate divided by the price of a good and is a transparent measure of how much of the good an hour of work buys. It provides an important indicator of the living standards of workers, and also of the productivity of workers. While differences in earnings or incomes may be misleading indicators of worker welfare, real wage rates are comparable across time and location. Nominal wages are not sufficient to tell us if workers gain since, even if wages rise, the price of one of the goods also rises when moving to free trade. The real wage represents the purchasing power of wages—that is, the quantity of goods the wages will purchase.
Explanation :
A monopolist's marginal revenue is always less than or equal to the price of the good. Marginal revenue is the amount of revenue the firm receives for each additional unit of output. It is the difference between total revenue - price times quantity - at the new level of output and total revenue at the previous output (one unit less).
[20] Payment of water charges by the farmers to the government represents -
A.
intermediate consumption
B.
final consumption
C.
fixed investment
D.
inventory investment
Ans:
intermediate consumption
Explanation :
Intermediate consumption is an accounting concept which measures the value of the goods and services consumed as inputs by a process of production. It excludes fixed assets whose consumption is recorded as consumption of fixed capital. The goods and services may be either transformed or used up by the production process. Intermediate goods or services used in production can be either changed in form (e.g. bulk sugar) or completely used up (e.g. electric power, water, etc).
[21] The problem of Economics arises from -
A.
Plenty
B.
Scarcity of goods
C.
More wants and less goods
D.
All of the above
Ans:
More wants and less goods
Explanation :
The theory of Economic problem states that there is scarcity, or that the finite resources available are insufficient to satisfy all human wants and needs. The problem then becomes how to determine what is to be produced and how the factors of production (such as capital and labor) are to be allocated. In short, the economic problem is the choice one must make, arising out of limited means and unlimited wants.
[22] When average cost production (AC) falls, marginal cost of production must be -
A.
rising
B.
Falling
C.
Greater than the average cost
D.
Less than the average cost
Ans:
Less than the average cost
Explanation :
Average cost is the total cost per unit of output. Marginal cost, on the other hand, is the addition to the total cost by producing one more units of output. Economies of scale are said to exist if an additional unit of output can he produced for less than the average of all previous units—that is, if long-run marginal cost is below long-run average cost, so the latter is falling. Conversely, there may be levels of production where marginal cost is higher than average cost, and average cost is an increasing function of output.
[23] Production function expresses -
A.
Technological relationship between physical inputs and output
B.
Financial relationship between physical inputs and output
C.
Relationship between finance and technology
D.
Relationship between factors of production
Ans:
technological relationship between physical inputs and output
Explanation :
Production involves transformation of inputs into outputs. The output is a function of input. The functional relationship between physical inputs and physical output of a firm is called production function. The word 'function' in mathematics means the precise relationship that exists between one dependent variable and a number (or one) of independent variables. The production function states the maximum quantity of output that can be produced from any given quantities of various inputs during a given period of time.
[24] When there is one buyer and many sellers then that situation is called -
A.
Monopoly
B.
Single buyer right
C.
Down right
D.
Double buyers right
Ans:
Single buyer right
Explanation :
In economics, a monopsony (mono: single) is a market form in which only one buyer faces many sellers. It is an example of imperfect competition, similar to a monopoly, in which only one seller faces many buyers. As the only purchaser of a good or service, the monopsonist may dictate terms to its suppliers in the same manner that a monopolist controls the market for its buyers. It is also known as Single buyer Right. A single-payer universal health care system, in which the government is the only "buyer" of health care services, is an example of a monopsony. Another possible monopsony could develop in the exchange between the food industry and farmers.
[25] The measure of a worker's real wage is -
A.
The change in his productivity over a given time
B.
His earnings after deduction at source
C.
His daily earnings
D.
The purchasing power of his earnings
Ans:
The purchasing power of his earnings
Explanation :
A real wage rate is a nominal wage rate divided by the price of a good and is a transparent measure of how much of the good an hour of work buys. It provides an important indicator of the living standards of workers, and also of the productivity of workers. While differences in earnings or incomes may be misleading indicators of worker welfare, real wage rates are comparable across time and location. Nominal wages are not sufficient to tell us if workers gain since, even if wages rise, the price of one of the goods also rises when moving to free trade. The real wage represents the purchasing power of wages—that is, the quantity of goods the wages will purchase.
Explanation :
The theory of Economic problem states that there is scarcity, or that the finite resources available are insufficient to satisfy all human wants and needs. The problem then becomes how to determine what is to be produced and how the factors of production (such as capital and labor) are to be allocated. In short, the economic problem is the choice one must make, arising out of limited means and unlimited wants.
[22] When average cost production (AC) falls, marginal cost of production must be -
A.
rising
B.
Falling
C.
Greater than the average cost
D.
Less than the average cost
Ans:
Less than the average cost
Explanation :
Average cost is the total cost per unit of output. Marginal cost, on the other hand, is the addition to the total cost by producing one more units of output. Economies of scale are said to exist if an additional unit of output can he produced for less than the average of all previous units—that is, if long-run marginal cost is below long-run average cost, so the latter is falling. Conversely, there may be levels of production where marginal cost is higher than average cost, and average cost is an increasing function of output.
[23] Production function expresses -
A.
Technological relationship between physical inputs and output
B.
Financial relationship between physical inputs and output
C.
Relationship between finance and technology
D.
Relationship between factors of production
Ans:
technological relationship between physical inputs and output
Explanation :
Production involves transformation of inputs into outputs. The output is a function of input. The functional relationship between physical inputs and physical output of a firm is called production function. The word 'function' in mathematics means the precise relationship that exists between one dependent variable and a number (or one) of independent variables. The production function states the maximum quantity of output that can be produced from any given quantities of various inputs during a given period of time.
[24] When there is one buyer and many sellers then that situation is called -
A.
Monopoly
B.
Single buyer right
C.
Down right
D.
Double buyers right
Ans:
Single buyer right
Explanation :
In economics, a monopsony (mono: single) is a market form in which only one buyer faces many sellers. It is an example of imperfect competition, similar to a monopoly, in which only one seller faces many buyers. As the only purchaser of a good or service, the monopsonist may dictate terms to its suppliers in the same manner that a monopolist controls the market for its buyers. It is also known as Single buyer Right. A single-payer universal health care system, in which the government is the only "buyer" of health care services, is an example of a monopsony. Another possible monopsony could develop in the exchange between the food industry and farmers.
[25] The measure of a worker's real wage is -
A.
The change in his productivity over a given time
B.
His earnings after deduction at source
C.
His daily earnings
D.
The purchasing power of his earnings
Ans:
The purchasing power of his earnings
Explanation :
A real wage rate is a nominal wage rate divided by the price of a good and is a transparent measure of how much of the good an hour of work buys. It provides an important indicator of the living standards of workers, and also of the productivity of workers. While differences in earnings or incomes may be misleading indicators of worker welfare, real wage rates are comparable across time and location. Nominal wages are not sufficient to tell us if workers gain since, even if wages rise, the price of one of the goods also rises when moving to free trade. The real wage represents the purchasing power of wages—that is, the quantity of goods the wages will purchase.
Explanation :
Production involves transformation of inputs into outputs. The output is a function of input. The functional relationship between physical inputs and physical output of a firm is called production function. The word 'function' in mathematics means the precise relationship that exists between one dependent variable and a number (or one) of independent variables. The production function states the maximum quantity of output that can be produced from any given quantities of various inputs during a given period of time.
[24] When there is one buyer and many sellers then that situation is called -
A.
Monopoly
B.
Single buyer right
C.
Down right
D.
Double buyers right
Ans:
Single buyer right
Explanation :
In economics, a monopsony (mono: single) is a market form in which only one buyer faces many sellers. It is an example of imperfect competition, similar to a monopoly, in which only one seller faces many buyers. As the only purchaser of a good or service, the monopsonist may dictate terms to its suppliers in the same manner that a monopolist controls the market for its buyers. It is also known as Single buyer Right. A single-payer universal health care system, in which the government is the only "buyer" of health care services, is an example of a monopsony. Another possible monopsony could develop in the exchange between the food industry and farmers.
[25] The measure of a worker's real wage is -
A.
The change in his productivity over a given time
B.
His earnings after deduction at source
C.
His daily earnings
D.
The purchasing power of his earnings
Ans:
The purchasing power of his earnings
Explanation :
A real wage rate is a nominal wage rate divided by the price of a good and is a transparent measure of how much of the good an hour of work buys. It provides an important indicator of the living standards of workers, and also of the productivity of workers. While differences in earnings or incomes may be misleading indicators of worker welfare, real wage rates are comparable across time and location. Nominal wages are not sufficient to tell us if workers gain since, even if wages rise, the price of one of the goods also rises when moving to free trade. The real wage represents the purchasing power of wages—that is, the quantity of goods the wages will purchase.
Explanation :
A real wage rate is a nominal wage rate divided by the price of a good and is a transparent measure of how much of the good an hour of work buys. It provides an important indicator of the living standards of workers, and also of the productivity of workers. While differences in earnings or incomes may be misleading indicators of worker welfare, real wage rates are comparable across time and location. Nominal wages are not sufficient to tell us if workers gain since, even if wages rise, the price of one of the goods also rises when moving to free trade. The real wage represents the purchasing power of wages—that is, the quantity of goods the wages will purchase.