[1] A mixed economy works primarily through the -
A.
market mechanism
B.
central allocative machinery
C.
market mechanism regulated by Government policy
D.
market mechanism guided by Government participation and planning
Ans:
market mechanism guided by Government participation and planning
Explanation :
Mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies. The basic idea of the mixed economy is that (he means of production are mainly under private ownership; that markets remain the dominant form of economic coordination: and that profit-seeking enterprises and the accumulation of capital remain the fundamental driving force behind economic activity.
[2] Which one of the following is the most appropriate reason for Inequalities in Income?
A.
Racial factors
B.
Lack of opportunities
C.
Inheritance from family Environment
D.
Differences in Ability
Ans:
Lack of opportunities
Explanation :
Joseph E. Stiglitz, a Nobel laureate in economics, has pointed how lack of opportunity leads to widening of inequality. It leads to concentration of income and wealth at the top, the hollowing out of the middle, and increasing poverty at the bottom.
[3] Which one of the following is not included in current revenue of the Union Government?
A.
Tax revenue
B.
Non-tax revenue
C.
Loans
D.
interest payments
Ans:
Loans
Explanation :
Loans are not included in the current revenue of the Union Government.
[4] Which is the parameter for the economic development?
A.
Per capita monetary income
B.
National income
C.
Per capita rural income
D.
Population
Ans:
Per capita monetary income
Explanation :
A majority of economists such as Simon Kuznets, Meter and Baldwin, Hicks D. Samuelson, Pigeon and others consider national income as the most suitable index of economic development. However, the UNO experts in their report on 'Measures of Economic Development of Under-Developed Countries' have Per Capita Real Income as the best measurement of economic development. They contend that economic growth is meaningless if it does not improve the standard of living of the common masses.
[5] The supply-side economics lays greater emphasis on -
A.
Producer
B.
Global economy
C.
Consumer
D.
Middle Man
Ans:
Producer
Explanation :
Supply-side economics emphasizes economic growth achieved by tax and fiscal policy that creates incentives to produce goods and service. It lays great emphasis on entrepreneurs, investors and producers who are treated the prime movers on which the economy depends.
[6] Which of the following is not included in the National Income?
A.
Imputed rent of owner-occupied houses
B.
Government expenditure on making new bridges
C.
Winning a lottery
D.
Commission paid to an agent for sale of house
Ans:
Winning a lottery
Explanation :
National income is the total value a country's final output of all new goods and services produced in one year. Transfer payments are not a part of the national income so they are cut from national income to get n.n.p in order to arrive national income such payments are bad debts incurred by banks, payments of pensions, charity, scholarships etc. Private-sector transfers include charitable donations and prizes to lottery winners.
[7] Personal disposable income is -
A.
always equal to personal income
B.
always more than personal income
C.
equal to personal income minus indirect taxes
D.
equal to personal income minus direct taxes
Ans:
equal to personal income minus direct taxes
Explanation :
Disposable income is total personal income minus personal current taxes. In national accounts definitions, personal income, minus personal current taxes equals disposable personal income. Subtracting personal outlays (which includes the major category of personal (or, private) consumption expenditure) yields personal (or, private) savings.
[8] Depreciation is equal to —
A.
Gross national product —Net national product
B.
Net national product —Gross national product
C.
Gross national product —Personal income
D.
Personal income — Personal taxes
Ans:
Gross national product —Net national product
Explanation :
Net national product at market price is the market value of the output of final goods and services produced at current price in one year of a country. If we subtract the depreciation charges from the gross national product, we get net national product at market price. So depreciation = Gross National Product-Net National Product,
[9] National Income Estimates in India are prepared by:
A.
National Development Council
B.
National Productivity Council
C.
National Income Committee
D.
Central Statistical Organization
Ans:
Central Statistical Organization
Explanation :
Since 1955 the national income estimates are being prepared by Central Statistical Organization. The CSO uses different methods like the Product Method, Income Method and Expenditure method for various sectors in the process of estimating the National Income.
[10] Over short period, when income rises, average propensity to consume usually -
A.
rises
B.
falls
C.
remains constant
D.
fluctuates
Ans:
falls
Explanation :
Keynes postulated that aggregate consumption is a function of aggregate current disposable income. The Keynesian consumption function is written as: C = a + eY a > 0, 0 < c < 1; where a is the intercept, a constant which measures consumption at a zero level of disposal income; c is the marginal propensity to consume (MPC); and Y is the disposal in-come. So as income increases, average propensity to consume (APC = C/Y) falls.
[11] According to Keynes, business cycles are due to variation in the rate of investment caused by fluctuations, in the -
A.
Marginal efficiency of capital
B.
Marginal propensity to save
C.
Marginal propensity to consumption
D.
Marginal efficiency to investment
Ans:
Marginal efficiency of capital
Explanation :
According to Keynes' General Theory of Employment, Interest, and Money,' business cycles are caused by variations in the rate of investment which are caused by fluctuations in the marginal efficiency of capital. Marginal efficiency of capital means the expected profits from new investments.
[12] When average product of an input is at its maximum then : (AP= Average product) (MP= Marginal product.)
A.
AP = 0
B.
AP = MP
C.
AP > MP
D.
AP < MP
Ans:
AP = MP
Explanation :
There is a close relationship between marginal product and average product because both are derived from total product. When marginal product is equal to average product, the average product is at its maxi-mum. In the short-run production function, since marginal product starts off as greater than average product and then falls below average product, we can assume that at the "cross-over point," when MP = AP, AP is at its maximum.
[13] If total product is at its maximum then: (AP= Average product) (MP= Marginal product)
A.
AF = 0
B.
AP < 0
C.
MP = 0
D.
AP = MP = 0
Ans:
MP = 0
Explanation :
Total product (TP) is the total output a production unit can produce, using different combination of factors of production. When marginal product =0 (at point D in the figure), the total product is at its maximum (as seen at point C in the figure given below). Then en as the marginal product becomes negative, the total product starts going down.
[14] The innovation theory of profit was proposed by -
A.
Marshall
B.
Clark
C.
Schumpeter
D.
Joan Robbinson
Ans:
Schumpeter
Explanation :
The Innovation Theory of Profit was proposed by Joseph. A. Schumpeter, who believed that an entrepreneur can earn economic profits by introducing successful innovations. In other words, innovation theory of profit posits that the main function of an entrepreneur is to introduce innovations and the profit in the form of reward is given for his performance.
[15] An economy in which there are no flows of labour, goods or money to and from other nations is a/an -
A.
slow economy
B.
mixed economy
C.
closed economy
D.
open economy
Ans:
closed economy
Explanation :
An economy that does not interact with the economy of any other country is known as closed economy. A closed economy is self-sufficient, meaning no imports are brought in and no exports are sent out. It is the opposite of an open economy, in which a country conducts trade with outside regions.
[16] Seawater, fresh air, etc., are regarded in Economics as -
A.
Giffen goods
B.
inferior goods
C.
free goods
D.
normal goods
Ans:
free goods
Explanation :
Free goods are what is needed by the society and is available without limits, The free good is a term used in economics to describe a good that is not scarce. A free good is available in as great a quantity as desired with zero opportunity cost to society.
[17] Which of the following does not determine supply of labour?
A.
Size and age-structure of population
B.
Nature of work
C.
Marginal productivity of labour
D.
Work-leisure ratio
Ans:
Marginal productivity of labour
Explanation :
The term 'supply of labour' refers to the number of hours of a given type of labour which will be offered for hire at different wage rates. Usually, it is found that higher the wage rates larger is the supply indicating a direct relationship that exists between the wage rate i.e. the price of labour and labour hours supplied.
[18] The 'break-even' point is where
A.
marginal revenue equals marginal cost
B.
average revenue equals average cost,
C.
total revenue equals total cost
D.
None of the above
Ans:
total revenue equals total cost
Explanation :
Break-even is the point of balance between making either a profit or a loss. In economics & business, specifically 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.
[19] The value of a commodity expressed in terms of money is known as -
A.
Price
B.
Utility
C.
Value
D.
Wealth
Ans:
Price
Explanation :
The exchange value of every commodity can be expressed in terms of money. This possibility has enabled money to become a medium for expressing values when the growing elaboration of the scale of values which resulted from the development of exchange necessitated a revision of the technique of valuation. When value is expressed in terms of money, it is called price. Thus, price can be defined as exchange value of a commodity expressed in terms of money.
[20] Total fixed cost curve is -
A.
Vertical
B.
Horizontal
C.
Positively Sloping
D.
Negatively sloping
Ans:
Horizontal
Explanation :
The Total Fixed Cost Curve is a curve that graphically represents the relation between total fixed cost incurred by a firm in the short-run product of a good or service and the quantity produced. This curve is constructed to capture the relation between total fixed cost and the level of output, holding other variables, like technology and resource prices, constant. Because total fixed cost are, in fact, fixed, the total fixed cost curve is, in fact, a horizontal line.
[21] Economic rent does not arise when the supply of a factor unit is -
A.
Perfectly inelastic
B.
Perfectly elastic
C.
Relatively elastic
D.
Relatively inelastic
Ans:
Perfectly elastic
Explanation :
Economic rent in the sense of surplus over transfer earnings arise when the supply of the factor units is less than perfectly elastic or not perfectly elastic. When the supply of factor units is perfectly elastic, there is no surplus or economic rent and the actual earnings and transfer earnings are equal. In such a scenario, at a given price or remuneration, the entrepreneur can engage any number of factor units.
[22] The supply of labour in the economy depends on -
A.
Population
B.
National income
C.
Per capita income
D.
Natural resources
Ans:
Population
Explanation :
The supply curve for labor depends on variables such as population, wage rates, etc. in developing countries, the vast population base explains the relatively lower wage rates and easy accessibility to labour supply. This is just the opposite in the case of developed countries.
[23] Which one of the following pairs of goods is an example for Joint Supply?
A.
Coffee and Tea
B.
Ink and Pen
C.
Tooth brush and Paste
D.
Wool and Mutton
Ans:
Wool and Mutton
Explanation :
The production of two or more goods simultaneously from the same imputs is called Joint Supply. Wool and Mutton are an example for joint supply.
[24] Goods which are meant either for consumption or for investment are called -
A.
Final goods
B.
Giffen goods
C.
Inferior goods
D.
Intermediate goods
Ans:
Final goods
Explanation :
All goods which are meant either (i) for consumption by consumers or (ii) for investment by firms are called final goods. They are finished goods, meant for final use. These are neither resold nor do they enter into further stages of production. Cars, television sets, cloth, food, machinery, equipments etc. are final goods.
[25] Which is the most essential function of an entrepreneur?
A.
Supervision
B.
Management
C.
Marketing
D.
Risk bearing
Ans:
Risk bearing
Explanation :
An entrepreneur performs a series of functions necessary right from the genesis of an idea up to the establishment and effective operation of an enterprise. The functions of an entrepreneur as risk bearer are specific in nature. The entrepreneur assumes all possible risks of business which emerges due to the possibility of changes in the tastes of consumers, modem techniques of production and new inventions. Such risks are not insurable and incalculable. In simple terms such risks are known as uncertainty concerning a loss.
Explanation :
Mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies. The basic idea of the mixed economy is that (he means of production are mainly under private ownership; that markets remain the dominant form of economic coordination: and that profit-seeking enterprises and the accumulation of capital remain the fundamental driving force behind economic activity.
[2] Which one of the following is the most appropriate reason for Inequalities in Income?
A.
Racial factors
B.
Lack of opportunities
C.
Inheritance from family Environment
D.
Differences in Ability
Ans:
Lack of opportunities
Explanation :
Joseph E. Stiglitz, a Nobel laureate in economics, has pointed how lack of opportunity leads to widening of inequality. It leads to concentration of income and wealth at the top, the hollowing out of the middle, and increasing poverty at the bottom.
[3] Which one of the following is not included in current revenue of the Union Government?
A.
Tax revenue
B.
Non-tax revenue
C.
Loans
D.
interest payments
Ans:
Loans
Explanation :
Loans are not included in the current revenue of the Union Government.
[4] Which is the parameter for the economic development?
A.
Per capita monetary income
B.
National income
C.
Per capita rural income
D.
Population
Ans:
Per capita monetary income
Explanation :
A majority of economists such as Simon Kuznets, Meter and Baldwin, Hicks D. Samuelson, Pigeon and others consider national income as the most suitable index of economic development. However, the UNO experts in their report on 'Measures of Economic Development of Under-Developed Countries' have Per Capita Real Income as the best measurement of economic development. They contend that economic growth is meaningless if it does not improve the standard of living of the common masses.
[5] The supply-side economics lays greater emphasis on -
A.
Producer
B.
Global economy
C.
Consumer
D.
Middle Man
Ans:
Producer
Explanation :
Supply-side economics emphasizes economic growth achieved by tax and fiscal policy that creates incentives to produce goods and service. It lays great emphasis on entrepreneurs, investors and producers who are treated the prime movers on which the economy depends.
[6] Which of the following is not included in the National Income?
A.
Imputed rent of owner-occupied houses
B.
Government expenditure on making new bridges
C.
Winning a lottery
D.
Commission paid to an agent for sale of house
Ans:
Winning a lottery
Explanation :
National income is the total value a country's final output of all new goods and services produced in one year. Transfer payments are not a part of the national income so they are cut from national income to get n.n.p in order to arrive national income such payments are bad debts incurred by banks, payments of pensions, charity, scholarships etc. Private-sector transfers include charitable donations and prizes to lottery winners.
[7] Personal disposable income is -
A.
always equal to personal income
B.
always more than personal income
C.
equal to personal income minus indirect taxes
D.
equal to personal income minus direct taxes
Ans:
equal to personal income minus direct taxes
Explanation :
Disposable income is total personal income minus personal current taxes. In national accounts definitions, personal income, minus personal current taxes equals disposable personal income. Subtracting personal outlays (which includes the major category of personal (or, private) consumption expenditure) yields personal (or, private) savings.
[8] Depreciation is equal to —
A.
Gross national product —Net national product
B.
Net national product —Gross national product
C.
Gross national product —Personal income
D.
Personal income — Personal taxes
Ans:
Gross national product —Net national product
Explanation :
Net national product at market price is the market value of the output of final goods and services produced at current price in one year of a country. If we subtract the depreciation charges from the gross national product, we get net national product at market price. So depreciation = Gross National Product-Net National Product,
[9] National Income Estimates in India are prepared by:
A.
National Development Council
B.
National Productivity Council
C.
National Income Committee
D.
Central Statistical Organization
Ans:
Central Statistical Organization
Explanation :
Since 1955 the national income estimates are being prepared by Central Statistical Organization. The CSO uses different methods like the Product Method, Income Method and Expenditure method for various sectors in the process of estimating the National Income.
[10] Over short period, when income rises, average propensity to consume usually -
A.
rises
B.
falls
C.
remains constant
D.
fluctuates
Ans:
falls
Explanation :
Keynes postulated that aggregate consumption is a function of aggregate current disposable income. The Keynesian consumption function is written as: C = a + eY a > 0, 0 < c < 1; where a is the intercept, a constant which measures consumption at a zero level of disposal income; c is the marginal propensity to consume (MPC); and Y is the disposal in-come. So as income increases, average propensity to consume (APC = C/Y) falls.
[11] According to Keynes, business cycles are due to variation in the rate of investment caused by fluctuations, in the -
A.
Marginal efficiency of capital
B.
Marginal propensity to save
C.
Marginal propensity to consumption
D.
Marginal efficiency to investment
Ans:
Marginal efficiency of capital
Explanation :
According to Keynes' General Theory of Employment, Interest, and Money,' business cycles are caused by variations in the rate of investment which are caused by fluctuations in the marginal efficiency of capital. Marginal efficiency of capital means the expected profits from new investments.
[12] When average product of an input is at its maximum then : (AP= Average product) (MP= Marginal product.)
A.
AP = 0
B.
AP = MP
C.
AP > MP
D.
AP < MP
Ans:
AP = MP
Explanation :
There is a close relationship between marginal product and average product because both are derived from total product. When marginal product is equal to average product, the average product is at its maxi-mum. In the short-run production function, since marginal product starts off as greater than average product and then falls below average product, we can assume that at the "cross-over point," when MP = AP, AP is at its maximum.
[13] If total product is at its maximum then: (AP= Average product) (MP= Marginal product)
A.
AF = 0
B.
AP < 0
C.
MP = 0
D.
AP = MP = 0
Ans:
MP = 0
Explanation :
Total product (TP) is the total output a production unit can produce, using different combination of factors of production. When marginal product =0 (at point D in the figure), the total product is at its maximum (as seen at point C in the figure given below). Then en as the marginal product becomes negative, the total product starts going down.
[14] The innovation theory of profit was proposed by -
A.
Marshall
B.
Clark
C.
Schumpeter
D.
Joan Robbinson
Ans:
Schumpeter
Explanation :
The Innovation Theory of Profit was proposed by Joseph. A. Schumpeter, who believed that an entrepreneur can earn economic profits by introducing successful innovations. In other words, innovation theory of profit posits that the main function of an entrepreneur is to introduce innovations and the profit in the form of reward is given for his performance.
[15] An economy in which there are no flows of labour, goods or money to and from other nations is a/an -
A.
slow economy
B.
mixed economy
C.
closed economy
D.
open economy
Ans:
closed economy
Explanation :
An economy that does not interact with the economy of any other country is known as closed economy. A closed economy is self-sufficient, meaning no imports are brought in and no exports are sent out. It is the opposite of an open economy, in which a country conducts trade with outside regions.
[16] Seawater, fresh air, etc., are regarded in Economics as -
A.
Giffen goods
B.
inferior goods
C.
free goods
D.
normal goods
Ans:
free goods
Explanation :
Free goods are what is needed by the society and is available without limits, The free good is a term used in economics to describe a good that is not scarce. A free good is available in as great a quantity as desired with zero opportunity cost to society.
[17] Which of the following does not determine supply of labour?
A.
Size and age-structure of population
B.
Nature of work
C.
Marginal productivity of labour
D.
Work-leisure ratio
Ans:
Marginal productivity of labour
Explanation :
The term 'supply of labour' refers to the number of hours of a given type of labour which will be offered for hire at different wage rates. Usually, it is found that higher the wage rates larger is the supply indicating a direct relationship that exists between the wage rate i.e. the price of labour and labour hours supplied.
[18] The 'break-even' point is where
A.
marginal revenue equals marginal cost
B.
average revenue equals average cost,
C.
total revenue equals total cost
D.
None of the above
Ans:
total revenue equals total cost
Explanation :
Break-even is the point of balance between making either a profit or a loss. In economics & business, specifically 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.
[19] The value of a commodity expressed in terms of money is known as -
A.
Price
B.
Utility
C.
Value
D.
Wealth
Ans:
Price
Explanation :
The exchange value of every commodity can be expressed in terms of money. This possibility has enabled money to become a medium for expressing values when the growing elaboration of the scale of values which resulted from the development of exchange necessitated a revision of the technique of valuation. When value is expressed in terms of money, it is called price. Thus, price can be defined as exchange value of a commodity expressed in terms of money.
[20] Total fixed cost curve is -
A.
Vertical
B.
Horizontal
C.
Positively Sloping
D.
Negatively sloping
Ans:
Horizontal
Explanation :
The Total Fixed Cost Curve is a curve that graphically represents the relation between total fixed cost incurred by a firm in the short-run product of a good or service and the quantity produced. This curve is constructed to capture the relation between total fixed cost and the level of output, holding other variables, like technology and resource prices, constant. Because total fixed cost are, in fact, fixed, the total fixed cost curve is, in fact, a horizontal line.
[21] Economic rent does not arise when the supply of a factor unit is -
A.
Perfectly inelastic
B.
Perfectly elastic
C.
Relatively elastic
D.
Relatively inelastic
Ans:
Perfectly elastic
Explanation :
Economic rent in the sense of surplus over transfer earnings arise when the supply of the factor units is less than perfectly elastic or not perfectly elastic. When the supply of factor units is perfectly elastic, there is no surplus or economic rent and the actual earnings and transfer earnings are equal. In such a scenario, at a given price or remuneration, the entrepreneur can engage any number of factor units.
[22] The supply of labour in the economy depends on -
A.
Population
B.
National income
C.
Per capita income
D.
Natural resources
Ans:
Population
Explanation :
The supply curve for labor depends on variables such as population, wage rates, etc. in developing countries, the vast population base explains the relatively lower wage rates and easy accessibility to labour supply. This is just the opposite in the case of developed countries.
[23] Which one of the following pairs of goods is an example for Joint Supply?
A.
Coffee and Tea
B.
Ink and Pen
C.
Tooth brush and Paste
D.
Wool and Mutton
Ans:
Wool and Mutton
Explanation :
The production of two or more goods simultaneously from the same imputs is called Joint Supply. Wool and Mutton are an example for joint supply.
[24] Goods which are meant either for consumption or for investment are called -
A.
Final goods
B.
Giffen goods
C.
Inferior goods
D.
Intermediate goods
Ans:
Final goods
Explanation :
All goods which are meant either (i) for consumption by consumers or (ii) for investment by firms are called final goods. They are finished goods, meant for final use. These are neither resold nor do they enter into further stages of production. Cars, television sets, cloth, food, machinery, equipments etc. are final goods.
[25] Which is the most essential function of an entrepreneur?
A.
Supervision
B.
Management
C.
Marketing
D.
Risk bearing
Ans:
Risk bearing
Explanation :
An entrepreneur performs a series of functions necessary right from the genesis of an idea up to the establishment and effective operation of an enterprise. The functions of an entrepreneur as risk bearer are specific in nature. The entrepreneur assumes all possible risks of business which emerges due to the possibility of changes in the tastes of consumers, modem techniques of production and new inventions. Such risks are not insurable and incalculable. In simple terms such risks are known as uncertainty concerning a loss.
Explanation :
Loans are not included in the current revenue of the Union Government.
[4] Which is the parameter for the economic development?
A.
Per capita monetary income
B.
National income
C.
Per capita rural income
D.
Population
Ans:
Per capita monetary income
Explanation :
A majority of economists such as Simon Kuznets, Meter and Baldwin, Hicks D. Samuelson, Pigeon and others consider national income as the most suitable index of economic development. However, the UNO experts in their report on 'Measures of Economic Development of Under-Developed Countries' have Per Capita Real Income as the best measurement of economic development. They contend that economic growth is meaningless if it does not improve the standard of living of the common masses.
[5] The supply-side economics lays greater emphasis on -
A.
Producer
B.
Global economy
C.
Consumer
D.
Middle Man
Ans:
Producer
Explanation :
Supply-side economics emphasizes economic growth achieved by tax and fiscal policy that creates incentives to produce goods and service. It lays great emphasis on entrepreneurs, investors and producers who are treated the prime movers on which the economy depends.
[6] Which of the following is not included in the National Income?
A.
Imputed rent of owner-occupied houses
B.
Government expenditure on making new bridges
C.
Winning a lottery
D.
Commission paid to an agent for sale of house
Ans:
Winning a lottery
Explanation :
National income is the total value a country's final output of all new goods and services produced in one year. Transfer payments are not a part of the national income so they are cut from national income to get n.n.p in order to arrive national income such payments are bad debts incurred by banks, payments of pensions, charity, scholarships etc. Private-sector transfers include charitable donations and prizes to lottery winners.
[7] Personal disposable income is -
A.
always equal to personal income
B.
always more than personal income
C.
equal to personal income minus indirect taxes
D.
equal to personal income minus direct taxes
Ans:
equal to personal income minus direct taxes
Explanation :
Disposable income is total personal income minus personal current taxes. In national accounts definitions, personal income, minus personal current taxes equals disposable personal income. Subtracting personal outlays (which includes the major category of personal (or, private) consumption expenditure) yields personal (or, private) savings.
[8] Depreciation is equal to —
A.
Gross national product —Net national product
B.
Net national product —Gross national product
C.
Gross national product —Personal income
D.
Personal income — Personal taxes
Ans:
Gross national product —Net national product
Explanation :
Net national product at market price is the market value of the output of final goods and services produced at current price in one year of a country. If we subtract the depreciation charges from the gross national product, we get net national product at market price. So depreciation = Gross National Product-Net National Product,
[9] National Income Estimates in India are prepared by:
A.
National Development Council
B.
National Productivity Council
C.
National Income Committee
D.
Central Statistical Organization
Ans:
Central Statistical Organization
Explanation :
Since 1955 the national income estimates are being prepared by Central Statistical Organization. The CSO uses different methods like the Product Method, Income Method and Expenditure method for various sectors in the process of estimating the National Income.
[10] Over short period, when income rises, average propensity to consume usually -
A.
rises
B.
falls
C.
remains constant
D.
fluctuates
Ans:
falls
Explanation :
Keynes postulated that aggregate consumption is a function of aggregate current disposable income. The Keynesian consumption function is written as: C = a + eY a > 0, 0 < c < 1; where a is the intercept, a constant which measures consumption at a zero level of disposal income; c is the marginal propensity to consume (MPC); and Y is the disposal in-come. So as income increases, average propensity to consume (APC = C/Y) falls.
[11] According to Keynes, business cycles are due to variation in the rate of investment caused by fluctuations, in the -
A.
Marginal efficiency of capital
B.
Marginal propensity to save
C.
Marginal propensity to consumption
D.
Marginal efficiency to investment
Ans:
Marginal efficiency of capital
Explanation :
According to Keynes' General Theory of Employment, Interest, and Money,' business cycles are caused by variations in the rate of investment which are caused by fluctuations in the marginal efficiency of capital. Marginal efficiency of capital means the expected profits from new investments.
[12] When average product of an input is at its maximum then : (AP= Average product) (MP= Marginal product.)
A.
AP = 0
B.
AP = MP
C.
AP > MP
D.
AP < MP
Ans:
AP = MP
Explanation :
There is a close relationship between marginal product and average product because both are derived from total product. When marginal product is equal to average product, the average product is at its maxi-mum. In the short-run production function, since marginal product starts off as greater than average product and then falls below average product, we can assume that at the "cross-over point," when MP = AP, AP is at its maximum.
[13] If total product is at its maximum then: (AP= Average product) (MP= Marginal product)
A.
AF = 0
B.
AP < 0
C.
MP = 0
D.
AP = MP = 0
Ans:
MP = 0
Explanation :
Total product (TP) is the total output a production unit can produce, using different combination of factors of production. When marginal product =0 (at point D in the figure), the total product is at its maximum (as seen at point C in the figure given below). Then en as the marginal product becomes negative, the total product starts going down.
[14] The innovation theory of profit was proposed by -
A.
Marshall
B.
Clark
C.
Schumpeter
D.
Joan Robbinson
Ans:
Schumpeter
Explanation :
The Innovation Theory of Profit was proposed by Joseph. A. Schumpeter, who believed that an entrepreneur can earn economic profits by introducing successful innovations. In other words, innovation theory of profit posits that the main function of an entrepreneur is to introduce innovations and the profit in the form of reward is given for his performance.
[15] An economy in which there are no flows of labour, goods or money to and from other nations is a/an -
A.
slow economy
B.
mixed economy
C.
closed economy
D.
open economy
Ans:
closed economy
Explanation :
An economy that does not interact with the economy of any other country is known as closed economy. A closed economy is self-sufficient, meaning no imports are brought in and no exports are sent out. It is the opposite of an open economy, in which a country conducts trade with outside regions.
[16] Seawater, fresh air, etc., are regarded in Economics as -
A.
Giffen goods
B.
inferior goods
C.
free goods
D.
normal goods
Ans:
free goods
Explanation :
Free goods are what is needed by the society and is available without limits, The free good is a term used in economics to describe a good that is not scarce. A free good is available in as great a quantity as desired with zero opportunity cost to society.
[17] Which of the following does not determine supply of labour?
A.
Size and age-structure of population
B.
Nature of work
C.
Marginal productivity of labour
D.
Work-leisure ratio
Ans:
Marginal productivity of labour
Explanation :
The term 'supply of labour' refers to the number of hours of a given type of labour which will be offered for hire at different wage rates. Usually, it is found that higher the wage rates larger is the supply indicating a direct relationship that exists between the wage rate i.e. the price of labour and labour hours supplied.
[18] The 'break-even' point is where
A.
marginal revenue equals marginal cost
B.
average revenue equals average cost,
C.
total revenue equals total cost
D.
None of the above
Ans:
total revenue equals total cost
Explanation :
Break-even is the point of balance between making either a profit or a loss. In economics & business, specifically 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.
[19] The value of a commodity expressed in terms of money is known as -
A.
Price
B.
Utility
C.
Value
D.
Wealth
Ans:
Price
Explanation :
The exchange value of every commodity can be expressed in terms of money. This possibility has enabled money to become a medium for expressing values when the growing elaboration of the scale of values which resulted from the development of exchange necessitated a revision of the technique of valuation. When value is expressed in terms of money, it is called price. Thus, price can be defined as exchange value of a commodity expressed in terms of money.
[20] Total fixed cost curve is -
A.
Vertical
B.
Horizontal
C.
Positively Sloping
D.
Negatively sloping
Ans:
Horizontal
Explanation :
The Total Fixed Cost Curve is a curve that graphically represents the relation between total fixed cost incurred by a firm in the short-run product of a good or service and the quantity produced. This curve is constructed to capture the relation between total fixed cost and the level of output, holding other variables, like technology and resource prices, constant. Because total fixed cost are, in fact, fixed, the total fixed cost curve is, in fact, a horizontal line.
[21] Economic rent does not arise when the supply of a factor unit is -
A.
Perfectly inelastic
B.
Perfectly elastic
C.
Relatively elastic
D.
Relatively inelastic
Ans:
Perfectly elastic
Explanation :
Economic rent in the sense of surplus over transfer earnings arise when the supply of the factor units is less than perfectly elastic or not perfectly elastic. When the supply of factor units is perfectly elastic, there is no surplus or economic rent and the actual earnings and transfer earnings are equal. In such a scenario, at a given price or remuneration, the entrepreneur can engage any number of factor units.
[22] The supply of labour in the economy depends on -
A.
Population
B.
National income
C.
Per capita income
D.
Natural resources
Ans:
Population
Explanation :
The supply curve for labor depends on variables such as population, wage rates, etc. in developing countries, the vast population base explains the relatively lower wage rates and easy accessibility to labour supply. This is just the opposite in the case of developed countries.
[23] Which one of the following pairs of goods is an example for Joint Supply?
A.
Coffee and Tea
B.
Ink and Pen
C.
Tooth brush and Paste
D.
Wool and Mutton
Ans:
Wool and Mutton
Explanation :
The production of two or more goods simultaneously from the same imputs is called Joint Supply. Wool and Mutton are an example for joint supply.
[24] Goods which are meant either for consumption or for investment are called -
A.
Final goods
B.
Giffen goods
C.
Inferior goods
D.
Intermediate goods
Ans:
Final goods
Explanation :
All goods which are meant either (i) for consumption by consumers or (ii) for investment by firms are called final goods. They are finished goods, meant for final use. These are neither resold nor do they enter into further stages of production. Cars, television sets, cloth, food, machinery, equipments etc. are final goods.
[25] Which is the most essential function of an entrepreneur?
A.
Supervision
B.
Management
C.
Marketing
D.
Risk bearing
Ans:
Risk bearing
Explanation :
An entrepreneur performs a series of functions necessary right from the genesis of an idea up to the establishment and effective operation of an enterprise. The functions of an entrepreneur as risk bearer are specific in nature. The entrepreneur assumes all possible risks of business which emerges due to the possibility of changes in the tastes of consumers, modem techniques of production and new inventions. Such risks are not insurable and incalculable. In simple terms such risks are known as uncertainty concerning a loss.
Explanation :
Supply-side economics emphasizes economic growth achieved by tax and fiscal policy that creates incentives to produce goods and service. It lays great emphasis on entrepreneurs, investors and producers who are treated the prime movers on which the economy depends.
[6] Which of the following is not included in the National Income?
A.
Imputed rent of owner-occupied houses
B.
Government expenditure on making new bridges
C.
Winning a lottery
D.
Commission paid to an agent for sale of house
Ans:
Winning a lottery
Explanation :
National income is the total value a country's final output of all new goods and services produced in one year. Transfer payments are not a part of the national income so they are cut from national income to get n.n.p in order to arrive national income such payments are bad debts incurred by banks, payments of pensions, charity, scholarships etc. Private-sector transfers include charitable donations and prizes to lottery winners.
[7] Personal disposable income is -
A.
always equal to personal income
B.
always more than personal income
C.
equal to personal income minus indirect taxes
D.
equal to personal income minus direct taxes
Ans:
equal to personal income minus direct taxes
Explanation :
Disposable income is total personal income minus personal current taxes. In national accounts definitions, personal income, minus personal current taxes equals disposable personal income. Subtracting personal outlays (which includes the major category of personal (or, private) consumption expenditure) yields personal (or, private) savings.
[8] Depreciation is equal to —
A.
Gross national product —Net national product
B.
Net national product —Gross national product
C.
Gross national product —Personal income
D.
Personal income — Personal taxes
Ans:
Gross national product —Net national product
Explanation :
Net national product at market price is the market value of the output of final goods and services produced at current price in one year of a country. If we subtract the depreciation charges from the gross national product, we get net national product at market price. So depreciation = Gross National Product-Net National Product,
[9] National Income Estimates in India are prepared by:
A.
National Development Council
B.
National Productivity Council
C.
National Income Committee
D.
Central Statistical Organization
Ans:
Central Statistical Organization
Explanation :
Since 1955 the national income estimates are being prepared by Central Statistical Organization. The CSO uses different methods like the Product Method, Income Method and Expenditure method for various sectors in the process of estimating the National Income.
[10] Over short period, when income rises, average propensity to consume usually -
A.
rises
B.
falls
C.
remains constant
D.
fluctuates
Ans:
falls
Explanation :
Keynes postulated that aggregate consumption is a function of aggregate current disposable income. The Keynesian consumption function is written as: C = a + eY a > 0, 0 < c < 1; where a is the intercept, a constant which measures consumption at a zero level of disposal income; c is the marginal propensity to consume (MPC); and Y is the disposal in-come. So as income increases, average propensity to consume (APC = C/Y) falls.
[11] According to Keynes, business cycles are due to variation in the rate of investment caused by fluctuations, in the -
A.
Marginal efficiency of capital
B.
Marginal propensity to save
C.
Marginal propensity to consumption
D.
Marginal efficiency to investment
Ans:
Marginal efficiency of capital
Explanation :
According to Keynes' General Theory of Employment, Interest, and Money,' business cycles are caused by variations in the rate of investment which are caused by fluctuations in the marginal efficiency of capital. Marginal efficiency of capital means the expected profits from new investments.
[12] When average product of an input is at its maximum then : (AP= Average product) (MP= Marginal product.)
A.
AP = 0
B.
AP = MP
C.
AP > MP
D.
AP < MP
Ans:
AP = MP
Explanation :
There is a close relationship between marginal product and average product because both are derived from total product. When marginal product is equal to average product, the average product is at its maxi-mum. In the short-run production function, since marginal product starts off as greater than average product and then falls below average product, we can assume that at the "cross-over point," when MP = AP, AP is at its maximum.
[13] If total product is at its maximum then: (AP= Average product) (MP= Marginal product)
A.
AF = 0
B.
AP < 0
C.
MP = 0
D.
AP = MP = 0
Ans:
MP = 0
Explanation :
Total product (TP) is the total output a production unit can produce, using different combination of factors of production. When marginal product =0 (at point D in the figure), the total product is at its maximum (as seen at point C in the figure given below). Then en as the marginal product becomes negative, the total product starts going down.
[14] The innovation theory of profit was proposed by -
A.
Marshall
B.
Clark
C.
Schumpeter
D.
Joan Robbinson
Ans:
Schumpeter
Explanation :
The Innovation Theory of Profit was proposed by Joseph. A. Schumpeter, who believed that an entrepreneur can earn economic profits by introducing successful innovations. In other words, innovation theory of profit posits that the main function of an entrepreneur is to introduce innovations and the profit in the form of reward is given for his performance.
[15] An economy in which there are no flows of labour, goods or money to and from other nations is a/an -
A.
slow economy
B.
mixed economy
C.
closed economy
D.
open economy
Ans:
closed economy
Explanation :
An economy that does not interact with the economy of any other country is known as closed economy. A closed economy is self-sufficient, meaning no imports are brought in and no exports are sent out. It is the opposite of an open economy, in which a country conducts trade with outside regions.
[16] Seawater, fresh air, etc., are regarded in Economics as -
A.
Giffen goods
B.
inferior goods
C.
free goods
D.
normal goods
Ans:
free goods
Explanation :
Free goods are what is needed by the society and is available without limits, The free good is a term used in economics to describe a good that is not scarce. A free good is available in as great a quantity as desired with zero opportunity cost to society.
[17] Which of the following does not determine supply of labour?
A.
Size and age-structure of population
B.
Nature of work
C.
Marginal productivity of labour
D.
Work-leisure ratio
Ans:
Marginal productivity of labour
Explanation :
The term 'supply of labour' refers to the number of hours of a given type of labour which will be offered for hire at different wage rates. Usually, it is found that higher the wage rates larger is the supply indicating a direct relationship that exists between the wage rate i.e. the price of labour and labour hours supplied.
[18] The 'break-even' point is where
A.
marginal revenue equals marginal cost
B.
average revenue equals average cost,
C.
total revenue equals total cost
D.
None of the above
Ans:
total revenue equals total cost
Explanation :
Break-even is the point of balance between making either a profit or a loss. In economics & business, specifically 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.
[19] The value of a commodity expressed in terms of money is known as -
A.
Price
B.
Utility
C.
Value
D.
Wealth
Ans:
Price
Explanation :
The exchange value of every commodity can be expressed in terms of money. This possibility has enabled money to become a medium for expressing values when the growing elaboration of the scale of values which resulted from the development of exchange necessitated a revision of the technique of valuation. When value is expressed in terms of money, it is called price. Thus, price can be defined as exchange value of a commodity expressed in terms of money.
[20] Total fixed cost curve is -
A.
Vertical
B.
Horizontal
C.
Positively Sloping
D.
Negatively sloping
Ans:
Horizontal
Explanation :
The Total Fixed Cost Curve is a curve that graphically represents the relation between total fixed cost incurred by a firm in the short-run product of a good or service and the quantity produced. This curve is constructed to capture the relation between total fixed cost and the level of output, holding other variables, like technology and resource prices, constant. Because total fixed cost are, in fact, fixed, the total fixed cost curve is, in fact, a horizontal line.
[21] Economic rent does not arise when the supply of a factor unit is -
A.
Perfectly inelastic
B.
Perfectly elastic
C.
Relatively elastic
D.
Relatively inelastic
Ans:
Perfectly elastic
Explanation :
Economic rent in the sense of surplus over transfer earnings arise when the supply of the factor units is less than perfectly elastic or not perfectly elastic. When the supply of factor units is perfectly elastic, there is no surplus or economic rent and the actual earnings and transfer earnings are equal. In such a scenario, at a given price or remuneration, the entrepreneur can engage any number of factor units.
[22] The supply of labour in the economy depends on -
A.
Population
B.
National income
C.
Per capita income
D.
Natural resources
Ans:
Population
Explanation :
The supply curve for labor depends on variables such as population, wage rates, etc. in developing countries, the vast population base explains the relatively lower wage rates and easy accessibility to labour supply. This is just the opposite in the case of developed countries.
[23] Which one of the following pairs of goods is an example for Joint Supply?
A.
Coffee and Tea
B.
Ink and Pen
C.
Tooth brush and Paste
D.
Wool and Mutton
Ans:
Wool and Mutton
Explanation :
The production of two or more goods simultaneously from the same imputs is called Joint Supply. Wool and Mutton are an example for joint supply.
[24] Goods which are meant either for consumption or for investment are called -
A.
Final goods
B.
Giffen goods
C.
Inferior goods
D.
Intermediate goods
Ans:
Final goods
Explanation :
All goods which are meant either (i) for consumption by consumers or (ii) for investment by firms are called final goods. They are finished goods, meant for final use. These are neither resold nor do they enter into further stages of production. Cars, television sets, cloth, food, machinery, equipments etc. are final goods.
[25] Which is the most essential function of an entrepreneur?
A.
Supervision
B.
Management
C.
Marketing
D.
Risk bearing
Ans:
Risk bearing
Explanation :
An entrepreneur performs a series of functions necessary right from the genesis of an idea up to the establishment and effective operation of an enterprise. The functions of an entrepreneur as risk bearer are specific in nature. The entrepreneur assumes all possible risks of business which emerges due to the possibility of changes in the tastes of consumers, modem techniques of production and new inventions. Such risks are not insurable and incalculable. In simple terms such risks are known as uncertainty concerning a loss.
Explanation :
Disposable income is total personal income minus personal current taxes. In national accounts definitions, personal income, minus personal current taxes equals disposable personal income. Subtracting personal outlays (which includes the major category of personal (or, private) consumption expenditure) yields personal (or, private) savings.
[8] Depreciation is equal to —
A.
Gross national product —Net national product
B.
Net national product —Gross national product
C.
Gross national product —Personal income
D.
Personal income — Personal taxes
Ans:
Gross national product —Net national product
Explanation :
Net national product at market price is the market value of the output of final goods and services produced at current price in one year of a country. If we subtract the depreciation charges from the gross national product, we get net national product at market price. So depreciation = Gross National Product-Net National Product,
[9] National Income Estimates in India are prepared by:
A.
National Development Council
B.
National Productivity Council
C.
National Income Committee
D.
Central Statistical Organization
Ans:
Central Statistical Organization
Explanation :
Since 1955 the national income estimates are being prepared by Central Statistical Organization. The CSO uses different methods like the Product Method, Income Method and Expenditure method for various sectors in the process of estimating the National Income.
[10] Over short period, when income rises, average propensity to consume usually -
A.
rises
B.
falls
C.
remains constant
D.
fluctuates
Ans:
falls
Explanation :
Keynes postulated that aggregate consumption is a function of aggregate current disposable income. The Keynesian consumption function is written as: C = a + eY a > 0, 0 < c < 1; where a is the intercept, a constant which measures consumption at a zero level of disposal income; c is the marginal propensity to consume (MPC); and Y is the disposal in-come. So as income increases, average propensity to consume (APC = C/Y) falls.
[11] According to Keynes, business cycles are due to variation in the rate of investment caused by fluctuations, in the -
A.
Marginal efficiency of capital
B.
Marginal propensity to save
C.
Marginal propensity to consumption
D.
Marginal efficiency to investment
Ans:
Marginal efficiency of capital
Explanation :
According to Keynes' General Theory of Employment, Interest, and Money,' business cycles are caused by variations in the rate of investment which are caused by fluctuations in the marginal efficiency of capital. Marginal efficiency of capital means the expected profits from new investments.
[12] When average product of an input is at its maximum then : (AP= Average product) (MP= Marginal product.)
A.
AP = 0
B.
AP = MP
C.
AP > MP
D.
AP < MP
Ans:
AP = MP
Explanation :
There is a close relationship between marginal product and average product because both are derived from total product. When marginal product is equal to average product, the average product is at its maxi-mum. In the short-run production function, since marginal product starts off as greater than average product and then falls below average product, we can assume that at the "cross-over point," when MP = AP, AP is at its maximum.
[13] If total product is at its maximum then: (AP= Average product) (MP= Marginal product)
A.
AF = 0
B.
AP < 0
C.
MP = 0
D.
AP = MP = 0
Ans:
MP = 0
Explanation :
Total product (TP) is the total output a production unit can produce, using different combination of factors of production. When marginal product =0 (at point D in the figure), the total product is at its maximum (as seen at point C in the figure given below). Then en as the marginal product becomes negative, the total product starts going down.
[14] The innovation theory of profit was proposed by -
A.
Marshall
B.
Clark
C.
Schumpeter
D.
Joan Robbinson
Ans:
Schumpeter
Explanation :
The Innovation Theory of Profit was proposed by Joseph. A. Schumpeter, who believed that an entrepreneur can earn economic profits by introducing successful innovations. In other words, innovation theory of profit posits that the main function of an entrepreneur is to introduce innovations and the profit in the form of reward is given for his performance.
[15] An economy in which there are no flows of labour, goods or money to and from other nations is a/an -
A.
slow economy
B.
mixed economy
C.
closed economy
D.
open economy
Ans:
closed economy
Explanation :
An economy that does not interact with the economy of any other country is known as closed economy. A closed economy is self-sufficient, meaning no imports are brought in and no exports are sent out. It is the opposite of an open economy, in which a country conducts trade with outside regions.
[16] Seawater, fresh air, etc., are regarded in Economics as -
A.
Giffen goods
B.
inferior goods
C.
free goods
D.
normal goods
Ans:
free goods
Explanation :
Free goods are what is needed by the society and is available without limits, The free good is a term used in economics to describe a good that is not scarce. A free good is available in as great a quantity as desired with zero opportunity cost to society.
[17] Which of the following does not determine supply of labour?
A.
Size and age-structure of population
B.
Nature of work
C.
Marginal productivity of labour
D.
Work-leisure ratio
Ans:
Marginal productivity of labour
Explanation :
The term 'supply of labour' refers to the number of hours of a given type of labour which will be offered for hire at different wage rates. Usually, it is found that higher the wage rates larger is the supply indicating a direct relationship that exists between the wage rate i.e. the price of labour and labour hours supplied.
[18] The 'break-even' point is where
A.
marginal revenue equals marginal cost
B.
average revenue equals average cost,
C.
total revenue equals total cost
D.
None of the above
Ans:
total revenue equals total cost
Explanation :
Break-even is the point of balance between making either a profit or a loss. In economics & business, specifically 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.
[19] The value of a commodity expressed in terms of money is known as -
A.
Price
B.
Utility
C.
Value
D.
Wealth
Ans:
Price
Explanation :
The exchange value of every commodity can be expressed in terms of money. This possibility has enabled money to become a medium for expressing values when the growing elaboration of the scale of values which resulted from the development of exchange necessitated a revision of the technique of valuation. When value is expressed in terms of money, it is called price. Thus, price can be defined as exchange value of a commodity expressed in terms of money.
[20] Total fixed cost curve is -
A.
Vertical
B.
Horizontal
C.
Positively Sloping
D.
Negatively sloping
Ans:
Horizontal
Explanation :
The Total Fixed Cost Curve is a curve that graphically represents the relation between total fixed cost incurred by a firm in the short-run product of a good or service and the quantity produced. This curve is constructed to capture the relation between total fixed cost and the level of output, holding other variables, like technology and resource prices, constant. Because total fixed cost are, in fact, fixed, the total fixed cost curve is, in fact, a horizontal line.
[21] Economic rent does not arise when the supply of a factor unit is -
A.
Perfectly inelastic
B.
Perfectly elastic
C.
Relatively elastic
D.
Relatively inelastic
Ans:
Perfectly elastic
Explanation :
Economic rent in the sense of surplus over transfer earnings arise when the supply of the factor units is less than perfectly elastic or not perfectly elastic. When the supply of factor units is perfectly elastic, there is no surplus or economic rent and the actual earnings and transfer earnings are equal. In such a scenario, at a given price or remuneration, the entrepreneur can engage any number of factor units.
[22] The supply of labour in the economy depends on -
A.
Population
B.
National income
C.
Per capita income
D.
Natural resources
Ans:
Population
Explanation :
The supply curve for labor depends on variables such as population, wage rates, etc. in developing countries, the vast population base explains the relatively lower wage rates and easy accessibility to labour supply. This is just the opposite in the case of developed countries.
[23] Which one of the following pairs of goods is an example for Joint Supply?
A.
Coffee and Tea
B.
Ink and Pen
C.
Tooth brush and Paste
D.
Wool and Mutton
Ans:
Wool and Mutton
Explanation :
The production of two or more goods simultaneously from the same imputs is called Joint Supply. Wool and Mutton are an example for joint supply.
[24] Goods which are meant either for consumption or for investment are called -
A.
Final goods
B.
Giffen goods
C.
Inferior goods
D.
Intermediate goods
Ans:
Final goods
Explanation :
All goods which are meant either (i) for consumption by consumers or (ii) for investment by firms are called final goods. They are finished goods, meant for final use. These are neither resold nor do they enter into further stages of production. Cars, television sets, cloth, food, machinery, equipments etc. are final goods.
[25] Which is the most essential function of an entrepreneur?
A.
Supervision
B.
Management
C.
Marketing
D.
Risk bearing
Ans:
Risk bearing
Explanation :
An entrepreneur performs a series of functions necessary right from the genesis of an idea up to the establishment and effective operation of an enterprise. The functions of an entrepreneur as risk bearer are specific in nature. The entrepreneur assumes all possible risks of business which emerges due to the possibility of changes in the tastes of consumers, modem techniques of production and new inventions. Such risks are not insurable and incalculable. In simple terms such risks are known as uncertainty concerning a loss.
Explanation :
Since 1955 the national income estimates are being prepared by Central Statistical Organization. The CSO uses different methods like the Product Method, Income Method and Expenditure method for various sectors in the process of estimating the National Income.
[10] Over short period, when income rises, average propensity to consume usually -
A.
rises
B.
falls
C.
remains constant
D.
fluctuates
Ans:
falls
Explanation :
Keynes postulated that aggregate consumption is a function of aggregate current disposable income. The Keynesian consumption function is written as: C = a + eY a > 0, 0 < c < 1; where a is the intercept, a constant which measures consumption at a zero level of disposal income; c is the marginal propensity to consume (MPC); and Y is the disposal in-come. So as income increases, average propensity to consume (APC = C/Y) falls.
[11] According to Keynes, business cycles are due to variation in the rate of investment caused by fluctuations, in the -
A.
Marginal efficiency of capital
B.
Marginal propensity to save
C.
Marginal propensity to consumption
D.
Marginal efficiency to investment
Ans:
Marginal efficiency of capital
Explanation :
According to Keynes' General Theory of Employment, Interest, and Money,' business cycles are caused by variations in the rate of investment which are caused by fluctuations in the marginal efficiency of capital. Marginal efficiency of capital means the expected profits from new investments.
[12] When average product of an input is at its maximum then : (AP= Average product) (MP= Marginal product.)
A.
AP = 0
B.
AP = MP
C.
AP > MP
D.
AP < MP
Ans:
AP = MP
Explanation :
There is a close relationship between marginal product and average product because both are derived from total product. When marginal product is equal to average product, the average product is at its maxi-mum. In the short-run production function, since marginal product starts off as greater than average product and then falls below average product, we can assume that at the "cross-over point," when MP = AP, AP is at its maximum.
[13] If total product is at its maximum then: (AP= Average product) (MP= Marginal product)
A.
AF = 0
B.
AP < 0
C.
MP = 0
D.
AP = MP = 0
Ans:
MP = 0
Explanation :
Total product (TP) is the total output a production unit can produce, using different combination of factors of production. When marginal product =0 (at point D in the figure), the total product is at its maximum (as seen at point C in the figure given below). Then en as the marginal product becomes negative, the total product starts going down.
[14] The innovation theory of profit was proposed by -
A.
Marshall
B.
Clark
C.
Schumpeter
D.
Joan Robbinson
Ans:
Schumpeter
Explanation :
The Innovation Theory of Profit was proposed by Joseph. A. Schumpeter, who believed that an entrepreneur can earn economic profits by introducing successful innovations. In other words, innovation theory of profit posits that the main function of an entrepreneur is to introduce innovations and the profit in the form of reward is given for his performance.
[15] An economy in which there are no flows of labour, goods or money to and from other nations is a/an -
A.
slow economy
B.
mixed economy
C.
closed economy
D.
open economy
Ans:
closed economy
Explanation :
An economy that does not interact with the economy of any other country is known as closed economy. A closed economy is self-sufficient, meaning no imports are brought in and no exports are sent out. It is the opposite of an open economy, in which a country conducts trade with outside regions.
[16] Seawater, fresh air, etc., are regarded in Economics as -
A.
Giffen goods
B.
inferior goods
C.
free goods
D.
normal goods
Ans:
free goods
Explanation :
Free goods are what is needed by the society and is available without limits, The free good is a term used in economics to describe a good that is not scarce. A free good is available in as great a quantity as desired with zero opportunity cost to society.
[17] Which of the following does not determine supply of labour?
A.
Size and age-structure of population
B.
Nature of work
C.
Marginal productivity of labour
D.
Work-leisure ratio
Ans:
Marginal productivity of labour
Explanation :
The term 'supply of labour' refers to the number of hours of a given type of labour which will be offered for hire at different wage rates. Usually, it is found that higher the wage rates larger is the supply indicating a direct relationship that exists between the wage rate i.e. the price of labour and labour hours supplied.
[18] The 'break-even' point is where
A.
marginal revenue equals marginal cost
B.
average revenue equals average cost,
C.
total revenue equals total cost
D.
None of the above
Ans:
total revenue equals total cost
Explanation :
Break-even is the point of balance between making either a profit or a loss. In economics & business, specifically 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.
[19] The value of a commodity expressed in terms of money is known as -
A.
Price
B.
Utility
C.
Value
D.
Wealth
Ans:
Price
Explanation :
The exchange value of every commodity can be expressed in terms of money. This possibility has enabled money to become a medium for expressing values when the growing elaboration of the scale of values which resulted from the development of exchange necessitated a revision of the technique of valuation. When value is expressed in terms of money, it is called price. Thus, price can be defined as exchange value of a commodity expressed in terms of money.
[20] Total fixed cost curve is -
A.
Vertical
B.
Horizontal
C.
Positively Sloping
D.
Negatively sloping
Ans:
Horizontal
Explanation :
The Total Fixed Cost Curve is a curve that graphically represents the relation between total fixed cost incurred by a firm in the short-run product of a good or service and the quantity produced. This curve is constructed to capture the relation between total fixed cost and the level of output, holding other variables, like technology and resource prices, constant. Because total fixed cost are, in fact, fixed, the total fixed cost curve is, in fact, a horizontal line.
[21] Economic rent does not arise when the supply of a factor unit is -
A.
Perfectly inelastic
B.
Perfectly elastic
C.
Relatively elastic
D.
Relatively inelastic
Ans:
Perfectly elastic
Explanation :
Economic rent in the sense of surplus over transfer earnings arise when the supply of the factor units is less than perfectly elastic or not perfectly elastic. When the supply of factor units is perfectly elastic, there is no surplus or economic rent and the actual earnings and transfer earnings are equal. In such a scenario, at a given price or remuneration, the entrepreneur can engage any number of factor units.
[22] The supply of labour in the economy depends on -
A.
Population
B.
National income
C.
Per capita income
D.
Natural resources
Ans:
Population
Explanation :
The supply curve for labor depends on variables such as population, wage rates, etc. in developing countries, the vast population base explains the relatively lower wage rates and easy accessibility to labour supply. This is just the opposite in the case of developed countries.
[23] Which one of the following pairs of goods is an example for Joint Supply?
A.
Coffee and Tea
B.
Ink and Pen
C.
Tooth brush and Paste
D.
Wool and Mutton
Ans:
Wool and Mutton
Explanation :
The production of two or more goods simultaneously from the same imputs is called Joint Supply. Wool and Mutton are an example for joint supply.
[24] Goods which are meant either for consumption or for investment are called -
A.
Final goods
B.
Giffen goods
C.
Inferior goods
D.
Intermediate goods
Ans:
Final goods
Explanation :
All goods which are meant either (i) for consumption by consumers or (ii) for investment by firms are called final goods. They are finished goods, meant for final use. These are neither resold nor do they enter into further stages of production. Cars, television sets, cloth, food, machinery, equipments etc. are final goods.
[25] Which is the most essential function of an entrepreneur?
A.
Supervision
B.
Management
C.
Marketing
D.
Risk bearing
Ans:
Risk bearing
Explanation :
An entrepreneur performs a series of functions necessary right from the genesis of an idea up to the establishment and effective operation of an enterprise. The functions of an entrepreneur as risk bearer are specific in nature. The entrepreneur assumes all possible risks of business which emerges due to the possibility of changes in the tastes of consumers, modem techniques of production and new inventions. Such risks are not insurable and incalculable. In simple terms such risks are known as uncertainty concerning a loss.
Explanation :
According to Keynes' General Theory of Employment, Interest, and Money,' business cycles are caused by variations in the rate of investment which are caused by fluctuations in the marginal efficiency of capital. Marginal efficiency of capital means the expected profits from new investments.
[12] When average product of an input is at its maximum then : (AP= Average product) (MP= Marginal product.)
A.
AP = 0
B.
AP = MP
C.
AP > MP
D.
AP < MP
Ans:
AP = MP
Explanation :
There is a close relationship between marginal product and average product because both are derived from total product. When marginal product is equal to average product, the average product is at its maxi-mum. In the short-run production function, since marginal product starts off as greater than average product and then falls below average product, we can assume that at the "cross-over point," when MP = AP, AP is at its maximum.
[13] If total product is at its maximum then: (AP= Average product) (MP= Marginal product)
A.
AF = 0
B.
AP < 0
C.
MP = 0
D.
AP = MP = 0
Ans:
MP = 0
Explanation :
Total product (TP) is the total output a production unit can produce, using different combination of factors of production. When marginal product =0 (at point D in the figure), the total product is at its maximum (as seen at point C in the figure given below). Then en as the marginal product becomes negative, the total product starts going down.
[14] The innovation theory of profit was proposed by -
A.
Marshall
B.
Clark
C.
Schumpeter
D.
Joan Robbinson
Ans:
Schumpeter
Explanation :
The Innovation Theory of Profit was proposed by Joseph. A. Schumpeter, who believed that an entrepreneur can earn economic profits by introducing successful innovations. In other words, innovation theory of profit posits that the main function of an entrepreneur is to introduce innovations and the profit in the form of reward is given for his performance.
[15] An economy in which there are no flows of labour, goods or money to and from other nations is a/an -
A.
slow economy
B.
mixed economy
C.
closed economy
D.
open economy
Ans:
closed economy
Explanation :
An economy that does not interact with the economy of any other country is known as closed economy. A closed economy is self-sufficient, meaning no imports are brought in and no exports are sent out. It is the opposite of an open economy, in which a country conducts trade with outside regions.
[16] Seawater, fresh air, etc., are regarded in Economics as -
A.
Giffen goods
B.
inferior goods
C.
free goods
D.
normal goods
Ans:
free goods
Explanation :
Free goods are what is needed by the society and is available without limits, The free good is a term used in economics to describe a good that is not scarce. A free good is available in as great a quantity as desired with zero opportunity cost to society.
[17] Which of the following does not determine supply of labour?
A.
Size and age-structure of population
B.
Nature of work
C.
Marginal productivity of labour
D.
Work-leisure ratio
Ans:
Marginal productivity of labour
Explanation :
The term 'supply of labour' refers to the number of hours of a given type of labour which will be offered for hire at different wage rates. Usually, it is found that higher the wage rates larger is the supply indicating a direct relationship that exists between the wage rate i.e. the price of labour and labour hours supplied.
[18] The 'break-even' point is where
A.
marginal revenue equals marginal cost
B.
average revenue equals average cost,
C.
total revenue equals total cost
D.
None of the above
Ans:
total revenue equals total cost
Explanation :
Break-even is the point of balance between making either a profit or a loss. In economics & business, specifically 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.
[19] The value of a commodity expressed in terms of money is known as -
A.
Price
B.
Utility
C.
Value
D.
Wealth
Ans:
Price
Explanation :
The exchange value of every commodity can be expressed in terms of money. This possibility has enabled money to become a medium for expressing values when the growing elaboration of the scale of values which resulted from the development of exchange necessitated a revision of the technique of valuation. When value is expressed in terms of money, it is called price. Thus, price can be defined as exchange value of a commodity expressed in terms of money.
[20] Total fixed cost curve is -
A.
Vertical
B.
Horizontal
C.
Positively Sloping
D.
Negatively sloping
Ans:
Horizontal
Explanation :
The Total Fixed Cost Curve is a curve that graphically represents the relation between total fixed cost incurred by a firm in the short-run product of a good or service and the quantity produced. This curve is constructed to capture the relation between total fixed cost and the level of output, holding other variables, like technology and resource prices, constant. Because total fixed cost are, in fact, fixed, the total fixed cost curve is, in fact, a horizontal line.
[21] Economic rent does not arise when the supply of a factor unit is -
A.
Perfectly inelastic
B.
Perfectly elastic
C.
Relatively elastic
D.
Relatively inelastic
Ans:
Perfectly elastic
Explanation :
Economic rent in the sense of surplus over transfer earnings arise when the supply of the factor units is less than perfectly elastic or not perfectly elastic. When the supply of factor units is perfectly elastic, there is no surplus or economic rent and the actual earnings and transfer earnings are equal. In such a scenario, at a given price or remuneration, the entrepreneur can engage any number of factor units.
[22] The supply of labour in the economy depends on -
A.
Population
B.
National income
C.
Per capita income
D.
Natural resources
Ans:
Population
Explanation :
The supply curve for labor depends on variables such as population, wage rates, etc. in developing countries, the vast population base explains the relatively lower wage rates and easy accessibility to labour supply. This is just the opposite in the case of developed countries.
[23] Which one of the following pairs of goods is an example for Joint Supply?
A.
Coffee and Tea
B.
Ink and Pen
C.
Tooth brush and Paste
D.
Wool and Mutton
Ans:
Wool and Mutton
Explanation :
The production of two or more goods simultaneously from the same imputs is called Joint Supply. Wool and Mutton are an example for joint supply.
[24] Goods which are meant either for consumption or for investment are called -
A.
Final goods
B.
Giffen goods
C.
Inferior goods
D.
Intermediate goods
Ans:
Final goods
Explanation :
All goods which are meant either (i) for consumption by consumers or (ii) for investment by firms are called final goods. They are finished goods, meant for final use. These are neither resold nor do they enter into further stages of production. Cars, television sets, cloth, food, machinery, equipments etc. are final goods.
[25] Which is the most essential function of an entrepreneur?
A.
Supervision
B.
Management
C.
Marketing
D.
Risk bearing
Ans:
Risk bearing
Explanation :
An entrepreneur performs a series of functions necessary right from the genesis of an idea up to the establishment and effective operation of an enterprise. The functions of an entrepreneur as risk bearer are specific in nature. The entrepreneur assumes all possible risks of business which emerges due to the possibility of changes in the tastes of consumers, modem techniques of production and new inventions. Such risks are not insurable and incalculable. In simple terms such risks are known as uncertainty concerning a loss.
Explanation :
Total product (TP) is the total output a production unit can produce, using different combination of factors of production. When marginal product =0 (at point D in the figure), the total product is at its maximum (as seen at point C in the figure given below). Then en as the marginal product becomes negative, the total product starts going down.
[14] The innovation theory of profit was proposed by -
A.
Marshall
B.
Clark
C.
Schumpeter
D.
Joan Robbinson
Ans:
Schumpeter
Explanation :
The Innovation Theory of Profit was proposed by Joseph. A. Schumpeter, who believed that an entrepreneur can earn economic profits by introducing successful innovations. In other words, innovation theory of profit posits that the main function of an entrepreneur is to introduce innovations and the profit in the form of reward is given for his performance.
[15] An economy in which there are no flows of labour, goods or money to and from other nations is a/an -
A.
slow economy
B.
mixed economy
C.
closed economy
D.
open economy
Ans:
closed economy
Explanation :
An economy that does not interact with the economy of any other country is known as closed economy. A closed economy is self-sufficient, meaning no imports are brought in and no exports are sent out. It is the opposite of an open economy, in which a country conducts trade with outside regions.
[16] Seawater, fresh air, etc., are regarded in Economics as -
A.
Giffen goods
B.
inferior goods
C.
free goods
D.
normal goods
Ans:
free goods
Explanation :
Free goods are what is needed by the society and is available without limits, The free good is a term used in economics to describe a good that is not scarce. A free good is available in as great a quantity as desired with zero opportunity cost to society.
[17] Which of the following does not determine supply of labour?
A.
Size and age-structure of population
B.
Nature of work
C.
Marginal productivity of labour
D.
Work-leisure ratio
Ans:
Marginal productivity of labour
Explanation :
The term 'supply of labour' refers to the number of hours of a given type of labour which will be offered for hire at different wage rates. Usually, it is found that higher the wage rates larger is the supply indicating a direct relationship that exists between the wage rate i.e. the price of labour and labour hours supplied.
[18] The 'break-even' point is where
A.
marginal revenue equals marginal cost
B.
average revenue equals average cost,
C.
total revenue equals total cost
D.
None of the above
Ans:
total revenue equals total cost
Explanation :
Break-even is the point of balance between making either a profit or a loss. In economics & business, specifically 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.
[19] The value of a commodity expressed in terms of money is known as -
A.
Price
B.
Utility
C.
Value
D.
Wealth
Ans:
Price
Explanation :
The exchange value of every commodity can be expressed in terms of money. This possibility has enabled money to become a medium for expressing values when the growing elaboration of the scale of values which resulted from the development of exchange necessitated a revision of the technique of valuation. When value is expressed in terms of money, it is called price. Thus, price can be defined as exchange value of a commodity expressed in terms of money.
[20] Total fixed cost curve is -
A.
Vertical
B.
Horizontal
C.
Positively Sloping
D.
Negatively sloping
Ans:
Horizontal
Explanation :
The Total Fixed Cost Curve is a curve that graphically represents the relation between total fixed cost incurred by a firm in the short-run product of a good or service and the quantity produced. This curve is constructed to capture the relation between total fixed cost and the level of output, holding other variables, like technology and resource prices, constant. Because total fixed cost are, in fact, fixed, the total fixed cost curve is, in fact, a horizontal line.
[21] Economic rent does not arise when the supply of a factor unit is -
A.
Perfectly inelastic
B.
Perfectly elastic
C.
Relatively elastic
D.
Relatively inelastic
Ans:
Perfectly elastic
Explanation :
Economic rent in the sense of surplus over transfer earnings arise when the supply of the factor units is less than perfectly elastic or not perfectly elastic. When the supply of factor units is perfectly elastic, there is no surplus or economic rent and the actual earnings and transfer earnings are equal. In such a scenario, at a given price or remuneration, the entrepreneur can engage any number of factor units.
[22] The supply of labour in the economy depends on -
A.
Population
B.
National income
C.
Per capita income
D.
Natural resources
Ans:
Population
Explanation :
The supply curve for labor depends on variables such as population, wage rates, etc. in developing countries, the vast population base explains the relatively lower wage rates and easy accessibility to labour supply. This is just the opposite in the case of developed countries.
[23] Which one of the following pairs of goods is an example for Joint Supply?
A.
Coffee and Tea
B.
Ink and Pen
C.
Tooth brush and Paste
D.
Wool and Mutton
Ans:
Wool and Mutton
Explanation :
The production of two or more goods simultaneously from the same imputs is called Joint Supply. Wool and Mutton are an example for joint supply.
[24] Goods which are meant either for consumption or for investment are called -
A.
Final goods
B.
Giffen goods
C.
Inferior goods
D.
Intermediate goods
Ans:
Final goods
Explanation :
All goods which are meant either (i) for consumption by consumers or (ii) for investment by firms are called final goods. They are finished goods, meant for final use. These are neither resold nor do they enter into further stages of production. Cars, television sets, cloth, food, machinery, equipments etc. are final goods.
[25] Which is the most essential function of an entrepreneur?
A.
Supervision
B.
Management
C.
Marketing
D.
Risk bearing
Ans:
Risk bearing
Explanation :
An entrepreneur performs a series of functions necessary right from the genesis of an idea up to the establishment and effective operation of an enterprise. The functions of an entrepreneur as risk bearer are specific in nature. The entrepreneur assumes all possible risks of business which emerges due to the possibility of changes in the tastes of consumers, modem techniques of production and new inventions. Such risks are not insurable and incalculable. In simple terms such risks are known as uncertainty concerning a loss.
Explanation :
An economy that does not interact with the economy of any other country is known as closed economy. A closed economy is self-sufficient, meaning no imports are brought in and no exports are sent out. It is the opposite of an open economy, in which a country conducts trade with outside regions.
[16] Seawater, fresh air, etc., are regarded in Economics as -
A.
Giffen goods
B.
inferior goods
C.
free goods
D.
normal goods
Ans:
free goods
Explanation :
Free goods are what is needed by the society and is available without limits, The free good is a term used in economics to describe a good that is not scarce. A free good is available in as great a quantity as desired with zero opportunity cost to society.
[17] Which of the following does not determine supply of labour?
A.
Size and age-structure of population
B.
Nature of work
C.
Marginal productivity of labour
D.
Work-leisure ratio
Ans:
Marginal productivity of labour
Explanation :
The term 'supply of labour' refers to the number of hours of a given type of labour which will be offered for hire at different wage rates. Usually, it is found that higher the wage rates larger is the supply indicating a direct relationship that exists between the wage rate i.e. the price of labour and labour hours supplied.
[18] The 'break-even' point is where
A.
marginal revenue equals marginal cost
B.
average revenue equals average cost,
C.
total revenue equals total cost
D.
None of the above
Ans:
total revenue equals total cost
Explanation :
Break-even is the point of balance between making either a profit or a loss. In economics & business, specifically 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.
[19] The value of a commodity expressed in terms of money is known as -
A.
Price
B.
Utility
C.
Value
D.
Wealth
Ans:
Price
Explanation :
The exchange value of every commodity can be expressed in terms of money. This possibility has enabled money to become a medium for expressing values when the growing elaboration of the scale of values which resulted from the development of exchange necessitated a revision of the technique of valuation. When value is expressed in terms of money, it is called price. Thus, price can be defined as exchange value of a commodity expressed in terms of money.
[20] Total fixed cost curve is -
A.
Vertical
B.
Horizontal
C.
Positively Sloping
D.
Negatively sloping
Ans:
Horizontal
Explanation :
The Total Fixed Cost Curve is a curve that graphically represents the relation between total fixed cost incurred by a firm in the short-run product of a good or service and the quantity produced. This curve is constructed to capture the relation between total fixed cost and the level of output, holding other variables, like technology and resource prices, constant. Because total fixed cost are, in fact, fixed, the total fixed cost curve is, in fact, a horizontal line.
[21] Economic rent does not arise when the supply of a factor unit is -
A.
Perfectly inelastic
B.
Perfectly elastic
C.
Relatively elastic
D.
Relatively inelastic
Ans:
Perfectly elastic
Explanation :
Economic rent in the sense of surplus over transfer earnings arise when the supply of the factor units is less than perfectly elastic or not perfectly elastic. When the supply of factor units is perfectly elastic, there is no surplus or economic rent and the actual earnings and transfer earnings are equal. In such a scenario, at a given price or remuneration, the entrepreneur can engage any number of factor units.
[22] The supply of labour in the economy depends on -
A.
Population
B.
National income
C.
Per capita income
D.
Natural resources
Ans:
Population
Explanation :
The supply curve for labor depends on variables such as population, wage rates, etc. in developing countries, the vast population base explains the relatively lower wage rates and easy accessibility to labour supply. This is just the opposite in the case of developed countries.
[23] Which one of the following pairs of goods is an example for Joint Supply?
A.
Coffee and Tea
B.
Ink and Pen
C.
Tooth brush and Paste
D.
Wool and Mutton
Ans:
Wool and Mutton
Explanation :
The production of two or more goods simultaneously from the same imputs is called Joint Supply. Wool and Mutton are an example for joint supply.
[24] Goods which are meant either for consumption or for investment are called -
A.
Final goods
B.
Giffen goods
C.
Inferior goods
D.
Intermediate goods
Ans:
Final goods
Explanation :
All goods which are meant either (i) for consumption by consumers or (ii) for investment by firms are called final goods. They are finished goods, meant for final use. These are neither resold nor do they enter into further stages of production. Cars, television sets, cloth, food, machinery, equipments etc. are final goods.
[25] Which is the most essential function of an entrepreneur?
A.
Supervision
B.
Management
C.
Marketing
D.
Risk bearing
Ans:
Risk bearing
Explanation :
An entrepreneur performs a series of functions necessary right from the genesis of an idea up to the establishment and effective operation of an enterprise. The functions of an entrepreneur as risk bearer are specific in nature. The entrepreneur assumes all possible risks of business which emerges due to the possibility of changes in the tastes of consumers, modem techniques of production and new inventions. Such risks are not insurable and incalculable. In simple terms such risks are known as uncertainty concerning a loss.
Explanation :
The term 'supply of labour' refers to the number of hours of a given type of labour which will be offered for hire at different wage rates. Usually, it is found that higher the wage rates larger is the supply indicating a direct relationship that exists between the wage rate i.e. the price of labour and labour hours supplied.
[18] The 'break-even' point is where
A.
marginal revenue equals marginal cost
B.
average revenue equals average cost,
C.
total revenue equals total cost
D.
None of the above
Ans:
total revenue equals total cost
Explanation :
Break-even is the point of balance between making either a profit or a loss. In economics & business, specifically 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.
[19] The value of a commodity expressed in terms of money is known as -
A.
Price
B.
Utility
C.
Value
D.
Wealth
Ans:
Price
Explanation :
The exchange value of every commodity can be expressed in terms of money. This possibility has enabled money to become a medium for expressing values when the growing elaboration of the scale of values which resulted from the development of exchange necessitated a revision of the technique of valuation. When value is expressed in terms of money, it is called price. Thus, price can be defined as exchange value of a commodity expressed in terms of money.
[20] Total fixed cost curve is -
A.
Vertical
B.
Horizontal
C.
Positively Sloping
D.
Negatively sloping
Ans:
Horizontal
Explanation :
The Total Fixed Cost Curve is a curve that graphically represents the relation between total fixed cost incurred by a firm in the short-run product of a good or service and the quantity produced. This curve is constructed to capture the relation between total fixed cost and the level of output, holding other variables, like technology and resource prices, constant. Because total fixed cost are, in fact, fixed, the total fixed cost curve is, in fact, a horizontal line.
[21] Economic rent does not arise when the supply of a factor unit is -
A.
Perfectly inelastic
B.
Perfectly elastic
C.
Relatively elastic
D.
Relatively inelastic
Ans:
Perfectly elastic
Explanation :
Economic rent in the sense of surplus over transfer earnings arise when the supply of the factor units is less than perfectly elastic or not perfectly elastic. When the supply of factor units is perfectly elastic, there is no surplus or economic rent and the actual earnings and transfer earnings are equal. In such a scenario, at a given price or remuneration, the entrepreneur can engage any number of factor units.
[22] The supply of labour in the economy depends on -
A.
Population
B.
National income
C.
Per capita income
D.
Natural resources
Ans:
Population
Explanation :
The supply curve for labor depends on variables such as population, wage rates, etc. in developing countries, the vast population base explains the relatively lower wage rates and easy accessibility to labour supply. This is just the opposite in the case of developed countries.
[23] Which one of the following pairs of goods is an example for Joint Supply?
A.
Coffee and Tea
B.
Ink and Pen
C.
Tooth brush and Paste
D.
Wool and Mutton
Ans:
Wool and Mutton
Explanation :
The production of two or more goods simultaneously from the same imputs is called Joint Supply. Wool and Mutton are an example for joint supply.
[24] Goods which are meant either for consumption or for investment are called -
A.
Final goods
B.
Giffen goods
C.
Inferior goods
D.
Intermediate goods
Ans:
Final goods
Explanation :
All goods which are meant either (i) for consumption by consumers or (ii) for investment by firms are called final goods. They are finished goods, meant for final use. These are neither resold nor do they enter into further stages of production. Cars, television sets, cloth, food, machinery, equipments etc. are final goods.
[25] Which is the most essential function of an entrepreneur?
A.
Supervision
B.
Management
C.
Marketing
D.
Risk bearing
Ans:
Risk bearing
Explanation :
An entrepreneur performs a series of functions necessary right from the genesis of an idea up to the establishment and effective operation of an enterprise. The functions of an entrepreneur as risk bearer are specific in nature. The entrepreneur assumes all possible risks of business which emerges due to the possibility of changes in the tastes of consumers, modem techniques of production and new inventions. Such risks are not insurable and incalculable. In simple terms such risks are known as uncertainty concerning a loss.
Explanation :
The exchange value of every commodity can be expressed in terms of money. This possibility has enabled money to become a medium for expressing values when the growing elaboration of the scale of values which resulted from the development of exchange necessitated a revision of the technique of valuation. When value is expressed in terms of money, it is called price. Thus, price can be defined as exchange value of a commodity expressed in terms of money.
[20] Total fixed cost curve is -
A.
Vertical
B.
Horizontal
C.
Positively Sloping
D.
Negatively sloping
Ans:
Horizontal
Explanation :
The Total Fixed Cost Curve is a curve that graphically represents the relation between total fixed cost incurred by a firm in the short-run product of a good or service and the quantity produced. This curve is constructed to capture the relation between total fixed cost and the level of output, holding other variables, like technology and resource prices, constant. Because total fixed cost are, in fact, fixed, the total fixed cost curve is, in fact, a horizontal line.
[21] Economic rent does not arise when the supply of a factor unit is -
A.
Perfectly inelastic
B.
Perfectly elastic
C.
Relatively elastic
D.
Relatively inelastic
Ans:
Perfectly elastic
Explanation :
Economic rent in the sense of surplus over transfer earnings arise when the supply of the factor units is less than perfectly elastic or not perfectly elastic. When the supply of factor units is perfectly elastic, there is no surplus or economic rent and the actual earnings and transfer earnings are equal. In such a scenario, at a given price or remuneration, the entrepreneur can engage any number of factor units.
[22] The supply of labour in the economy depends on -
A.
Population
B.
National income
C.
Per capita income
D.
Natural resources
Ans:
Population
Explanation :
The supply curve for labor depends on variables such as population, wage rates, etc. in developing countries, the vast population base explains the relatively lower wage rates and easy accessibility to labour supply. This is just the opposite in the case of developed countries.
[23] Which one of the following pairs of goods is an example for Joint Supply?
A.
Coffee and Tea
B.
Ink and Pen
C.
Tooth brush and Paste
D.
Wool and Mutton
Ans:
Wool and Mutton
Explanation :
The production of two or more goods simultaneously from the same imputs is called Joint Supply. Wool and Mutton are an example for joint supply.
[24] Goods which are meant either for consumption or for investment are called -
A.
Final goods
B.
Giffen goods
C.
Inferior goods
D.
Intermediate goods
Ans:
Final goods
Explanation :
All goods which are meant either (i) for consumption by consumers or (ii) for investment by firms are called final goods. They are finished goods, meant for final use. These are neither resold nor do they enter into further stages of production. Cars, television sets, cloth, food, machinery, equipments etc. are final goods.
[25] Which is the most essential function of an entrepreneur?
A.
Supervision
B.
Management
C.
Marketing
D.
Risk bearing
Ans:
Risk bearing
Explanation :
An entrepreneur performs a series of functions necessary right from the genesis of an idea up to the establishment and effective operation of an enterprise. The functions of an entrepreneur as risk bearer are specific in nature. The entrepreneur assumes all possible risks of business which emerges due to the possibility of changes in the tastes of consumers, modem techniques of production and new inventions. Such risks are not insurable and incalculable. In simple terms such risks are known as uncertainty concerning a loss.
Explanation :
Economic rent in the sense of surplus over transfer earnings arise when the supply of the factor units is less than perfectly elastic or not perfectly elastic. When the supply of factor units is perfectly elastic, there is no surplus or economic rent and the actual earnings and transfer earnings are equal. In such a scenario, at a given price or remuneration, the entrepreneur can engage any number of factor units.
[22] The supply of labour in the economy depends on -
A.
Population
B.
National income
C.
Per capita income
D.
Natural resources
Ans:
Population
Explanation :
The supply curve for labor depends on variables such as population, wage rates, etc. in developing countries, the vast population base explains the relatively lower wage rates and easy accessibility to labour supply. This is just the opposite in the case of developed countries.
[23] Which one of the following pairs of goods is an example for Joint Supply?
A.
Coffee and Tea
B.
Ink and Pen
C.
Tooth brush and Paste
D.
Wool and Mutton
Ans:
Wool and Mutton
Explanation :
The production of two or more goods simultaneously from the same imputs is called Joint Supply. Wool and Mutton are an example for joint supply.
[24] Goods which are meant either for consumption or for investment are called -
A.
Final goods
B.
Giffen goods
C.
Inferior goods
D.
Intermediate goods
Ans:
Final goods
Explanation :
All goods which are meant either (i) for consumption by consumers or (ii) for investment by firms are called final goods. They are finished goods, meant for final use. These are neither resold nor do they enter into further stages of production. Cars, television sets, cloth, food, machinery, equipments etc. are final goods.
[25] Which is the most essential function of an entrepreneur?
A.
Supervision
B.
Management
C.
Marketing
D.
Risk bearing
Ans:
Risk bearing
Explanation :
An entrepreneur performs a series of functions necessary right from the genesis of an idea up to the establishment and effective operation of an enterprise. The functions of an entrepreneur as risk bearer are specific in nature. The entrepreneur assumes all possible risks of business which emerges due to the possibility of changes in the tastes of consumers, modem techniques of production and new inventions. Such risks are not insurable and incalculable. In simple terms such risks are known as uncertainty concerning a loss.
Explanation :
The production of two or more goods simultaneously from the same imputs is called Joint Supply. Wool and Mutton are an example for joint supply.
[24] Goods which are meant either for consumption or for investment are called -
A.
Final goods
B.
Giffen goods
C.
Inferior goods
D.
Intermediate goods
Ans:
Final goods
Explanation :
All goods which are meant either (i) for consumption by consumers or (ii) for investment by firms are called final goods. They are finished goods, meant for final use. These are neither resold nor do they enter into further stages of production. Cars, television sets, cloth, food, machinery, equipments etc. are final goods.
[25] Which is the most essential function of an entrepreneur?
A.
Supervision
B.
Management
C.
Marketing
D.
Risk bearing
Ans:
Risk bearing
Explanation :
An entrepreneur performs a series of functions necessary right from the genesis of an idea up to the establishment and effective operation of an enterprise. The functions of an entrepreneur as risk bearer are specific in nature. The entrepreneur assumes all possible risks of business which emerges due to the possibility of changes in the tastes of consumers, modem techniques of production and new inventions. Such risks are not insurable and incalculable. In simple terms such risks are known as uncertainty concerning a loss.
Explanation :
An entrepreneur performs a series of functions necessary right from the genesis of an idea up to the establishment and effective operation of an enterprise. The functions of an entrepreneur as risk bearer are specific in nature. The entrepreneur assumes all possible risks of business which emerges due to the possibility of changes in the tastes of consumers, modem techniques of production and new inventions. Such risks are not insurable and incalculable. In simple terms such risks are known as uncertainty concerning a loss.