[1] In terms of economics, if it is possible to make someone better off without making someone worse off, then the situation is -
A.
Inefficient
B.
Efficient
C.
Optimal
D.
Paretosuperior
Ans:
Inefficient
Explanation :
Pareto efficiency is said to occur when it is impossible to make one party better off without making some-one worse off. An inefficient situation is one where it possible to make some people better off without making anyone else worse off.
[2] The theory of distribution relates to which of the following?
A.
The distribution of assets
B.
The distribution of income
C.
The distribution of factor payments
D.
Equality in the distribution of the income and wealth
Ans:
Equality in the distribution of the income and wealth
Explanation :
In economics, distribution theory is the systematic attempt to account for the sharing of the national income among the owners of the factors of production—land, labour, and capital. Traditionally, economists have studied how the costs of these factors and the size of their return—rent, wages, and profits—are fixed. The theory of distribution involves three distinguishable sets of questions. First, how is the national income distributed among persons? Second, what determines the prices of the factors of production? Third, how is the national income distributed proportionally among the factors of production?
[3] Knowledge, technical skill, education etc. in economics, are regarded as -
A.
social-overhead capital
B.
human capital
C.
tangible physical capital
D.
working capital
Ans:
human capital
Explanation :
Human capital is the stock of competencies, knowledge, social and personality attributes, including creativity, embodied in the ability to perform labor so as to produce economic value. It is an aggregate economic view of the human being acting within economies, which is an attempt to capture the social, biological, cultural and psychological complexity as they interact in explicit and/or economic transactions.
[4] Purchasing Power Parity theory is related with -
A.
Interest rate
B.
Bank rate
C.
Wage rate
D.
Exchange rate
Ans:
Exchange rate
Explanation :
Purchasing power parity (PPP) is an economic theory and a technique used to determine the relative value of currencies, estimating the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to (or on par with) each currency's purchasing power. It asks how much money would be needed to purchase the same goods and services in two countries, and uses that to calculate an implicit foreign exchange rate. Using that PPP rate, an amount of money thus has the same purchasing power in different countries.
[5] The demand for which of the fallowing commodity will not rise in spite of a fall in its price?
A.
Television
B.
Refrigerator
C.
Salt
D.
Meat
Ans:
Salt
Explanation :
For certain goods called necessities; demand is not related to income. Demand for salt does not increase with the increase in income & does not decrease with the decrease in income. It means that it is irrespective of income. The demand curve slopes downward for goods like salt, but it is inelastic.
[6] In the long-run equilibrium, a competitive firm earns -
A.
Super-normal profit
B.
Profits equal to other firms
C.
Normal profit
D.
No profit
Ans:
Normal profit
Explanation :
Making the assumption that the market demand curve remains unchanged, higher market supply will reduce the equilibrium market price until the price = long run average cost. At this point each firm is making normal profits only. There is no further incentive for movement of firms in and out of the industry and a long-run equilibrium has been established.
[7] What is selling cost?
A.
Cost incurred on transportation of commodities to market
B.
Cost incurred on promoting the sale of the product
C.
Cost incurred on commission and salaries personnel
D.
Cost incurred on advertisement
Ans:
Cost incurred on promoting the sale of the product
Explanation :
Selling cost is total cost of marketing, advertising, and selling a product. It differs from the production cost which is incurred to produce goods.
[8] Who said, "Economics is the Science of Wealth"?
A.
Robbins
B.
J.S. Mill
C.
Adam Smith
D.
Keynes
Ans:
Adam Smith
Explanation :
It was Adam Smith who conceptualized Economics as a science of wealth. Elaborating upon the scope and fundamental conceptualizations of the new science, he then called political economy as "an inquiry into the nature and causes of the wealth of nations."
[9] The addition to total cost by producing an additional unit of output by a firm is called -
A.
Variable cost
B.
Average cost
C.
Marginal cost
D.
Opportunity cost
Ans:
Marginal cost
Explanation :
The addition to total cost by producing an additional unit of output by a firm is called Marginal cost. Average cost is the total cost of producing a given output divided by that output.
[10] In a perfectly competitive market, a firm's -
A.
Average Revenue is always equal to Marginal Revenue
B.
Marginal Revenue is more than Average Revenue
C.
Average Revenue is more than Marginal Revenue
D.
Marginal Revenue and Average Revenue are never equal
Ans:
Average Revenue is always equal to Marginal Revenue
Explanation :
Average revenue is the amount money received by a firm per unit of output sold. Marginal revenue is the change in total revenue resulting from a small change in the quantity sold. In a perfectly competitive market, a firm's Average Revenue is always equal to Marginal Revenue.
[11] An increase in the quantity supplied suggests -
A.
a leftward shift of the supply curve
B.
a movement up along the supply curve
C.
a movement down along the supply curve
D.
a rightward shift of the supply curve
Ans:
a movement up along the supply curve
Explanation :
Like the law of demand, the law of supply demonstrates the quantities that will be sold at a certain price. But unlike the law of demand, the supply relationship shows an upward slope. This means that the higher the price, the higher the quantity supplied. Producers supply more at a higher price because selling a higher quantity at an higher price increases revenue.
[12] Price and output are determinates in market structure other than -
A.
monopoly
B.
perfect competition
C.
oligopoly
D.
monopsony
Ans:
perfect competition
Explanation :
Perfect competition is a form of market in which there are a large number of buyers and sellers competing with each other in the purchase and sale of goods, respectively and no individual buyer or seller has any influence over the price and output. Each firm’s output is a perfect substitute for the output of the other firms, so the demand for each firm’s output is perfectly elastic. Product differentiation holds the key in this type of market structure.
[13] Bilateral monopoly situation is
A.
when there are only two sellers of a product
B.
when there are only two buyers of a product
C.
when there is only one buyer and one seller of a product
D.
when there are two buyers and two sellers of a product
Ans:
when there is only one buyer and one seller of a product
Explanation :
Bilateral monopoly is a market consisting of a single seller (monopolist) and a single buyer (monopsonist). For example, if a single firm produced all the copper in a country and if only one firm used this metal, the copper market would be a bilateral monopoly market. The equilibrium in such a market cannot be determined by the traditional tools of demand and supply.
[14] A 'Market Economy' is one which -
A.
is controlled by the Government
B.
is free from the Government control
C.
in influenced by international market forces
D.
All of these
Ans:
is free from the Government control
Explanation :
A market economy is an economic system in which economic decisions and the pricing of goods and services are guided solely by the aggregate interactions of a country's individual citizens and businesses. There is little government intervention or central planning. The United States is the world's premier market economy
[15] The law of demand states that -
A.
if the price of a good increases, the demand for that good decreases.
B.
if the price of a good increases, the demand for that good increases.
C.
if the price of a good increases, the quantity demanded of that good decreases
D.
if the price of a good increases, the quantity demanded of that good increases.
Ans:
if the price of a good increases, the quantity demanded of that good decreases
Explanation :
The law of demand states that, other things remaining the same, the quantity demanded of a commodity is inversely related to its price. Thus, according to the law of demand, there is an inverse relationship between price and quantity demanded, other things remaining the same.
[16] The demand curve facing a perfectly competitive firm is -
A.
downward sloping
B.
perfectly inelastic
C.
a concave curve
D.
perfectly elastic
Ans:
perfectly elastic
Explanation :
A perfectly competitive industry is comprised of a large number of relatively small firms that sell identical products. Each perfectly competitive firm is so small relative to the size of the market that it has no market control, it has no ability to control the price. In other words, it can sell any quantity of output it wants at the going market price. This translates into a horizontal or perfectly elastic demand curve.
[17] If average cost falls, marginal cost -
A.
increases at a higher rate
B.
falls at the same rate
C.
increases at a lower rate
D.
falls at a higher rate
Ans:
falls at the same rate
Explanation :
Average cost is the per unit cost incurred in the production of a good or service. It is specified as the total cost divided by the quantity of output. The marginal cost (the additional, cost of producing one more unit of output) and average cost are related. So when average total cost rises, marginal cost also rises; when average cost curve falls with the increase in output, the marginal cost also rises.
[18] Consumer gets maximum satisfaction at the point where -
A.
Marginal Utility = Price
B.
Marginal Utility > Price
C.
Marginal Utility < Price
D.
Marginal Cost = Price
Ans:
Marginal Utility = Price
Explanation :
As per the law of diminishing marginal utility, the utility of each successive unit goes on diminishing as more and more units of a commodity are consumed. A rational consumer will consume the commodity up to a point where the marginal utility of the final unit of the commodity is equal to the marginal utility of money (in terms of price) paid for it. In this way, the consumer will get the maximum satisfaction and will be in equilibrium.
[19] Micro-economics is also called :
A.
Income theory
B.
Investment theory
C.
Price theory
D.
Expenditure theory
Ans:
Price theory
Explanation :
Microeconomics is the branch of economics concerned with isolated parts of the economy, for example, individual people, firms or industries. It involves such topics as the theory of prices and of the firm.
[20] Demand in Economics means :
A.
Aggregate demand
B.
Market demand
C.
Individual demand
D.
Demand backed by purchasing power
Ans:
Demand backed by purchasing power
Explanation :
Demand ' in Economics refers to the quantity of a good or service consumers ate able and willing to buy at a given price in a given market during a specified time period , other things beings equal.
[21] A fall in demand or rise in supply of a commodity—
A.
Increases the price of that commodity
B.
decreases the price of that commodity
C.
neutralizes the changes in the price
D.
determines" the price elasticity
Ans:
decreases the price of that commodity
Explanation :
The four basic laws of supply and demand are: (1) If demand increases and supply remains unchanged, a shortage occurs, leading to a higher price: (2) If demand decreases and supply remains unchanged, a surplus occurs, leading to a lower price; (3) If demand remains unchanged and supply increases, a surplus occurs, leading to a lower price; and (4) If demand remains unchanged and supply decreases, a shortage occurs, leading to a higher price.
[22] The relationship between the value of money and the price level in an economy is -
A.
Direct
B.
Inverse
C.
Proportional
D.
Stable
Ans:
Inverse
Explanation :
The basic causal relationship between the price level and the value of money is that as the price level goes up, the value of money goes down. The "value of money" refers to what a unit of money can buy whereas the "price level" refers to the average of all of the prices of goods and services in a given economy.
[23] Production function relates -
A.
Cost to output
B.
Cost to input
C.
Wages to profit
D.
Inputs to output
Ans:
Inputs to output
Explanation :
Production function specifies the output of a firm, an industry, or an entire economy for all combinations of inputs. The relationship of output to inputs is non-monetary; that is, a production function relates physical inputs to physical outputs, and prices and costs are not reflected in the function.
[24] If total utility is maximum at a point, then marginal utility is -
A.
positive
B.
zero
C.
negative
D.
positive but decreasing
Ans:
zero
Explanation :
Marginal utility of a good or service is the gain (or loss) from an increase (or decrease) in the consumption of that good or service. As the rate of commodity acquisition increases, marginal utility decreases. If commodity consumption continues to rise, marginal utility at some point falls to zero, reaching maximum total utility. Further increase in consumption of units of commodities causes marginal utility to become negative; this signifies dissatisfaction.
[25] Economies of Scale means reduction in -
A.
unit cost of production
B.
unit cost of distribution
C.
total cost of production
D.
total cost of distribution
Ans:
unit cost of production
Explanation :
In microeconomics, economies of scale are the cost advantages that an enterprise obtains due to expansion. "Economies of scale" is a long run concept and refers to reductions in unit cost as the size of a facility and the usage levels of other inputs increase.
Explanation :
Pareto efficiency is said to occur when it is impossible to make one party better off without making some-one worse off. An inefficient situation is one where it possible to make some people better off without making anyone else worse off.
[2] The theory of distribution relates to which of the following?
A.
The distribution of assets
B.
The distribution of income
C.
The distribution of factor payments
D.
Equality in the distribution of the income and wealth
Ans:
Equality in the distribution of the income and wealth
Explanation :
In economics, distribution theory is the systematic attempt to account for the sharing of the national income among the owners of the factors of production—land, labour, and capital. Traditionally, economists have studied how the costs of these factors and the size of their return—rent, wages, and profits—are fixed. The theory of distribution involves three distinguishable sets of questions. First, how is the national income distributed among persons? Second, what determines the prices of the factors of production? Third, how is the national income distributed proportionally among the factors of production?
[3] Knowledge, technical skill, education etc. in economics, are regarded as -
A.
social-overhead capital
B.
human capital
C.
tangible physical capital
D.
working capital
Ans:
human capital
Explanation :
Human capital is the stock of competencies, knowledge, social and personality attributes, including creativity, embodied in the ability to perform labor so as to produce economic value. It is an aggregate economic view of the human being acting within economies, which is an attempt to capture the social, biological, cultural and psychological complexity as they interact in explicit and/or economic transactions.
[4] Purchasing Power Parity theory is related with -
A.
Interest rate
B.
Bank rate
C.
Wage rate
D.
Exchange rate
Ans:
Exchange rate
Explanation :
Purchasing power parity (PPP) is an economic theory and a technique used to determine the relative value of currencies, estimating the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to (or on par with) each currency's purchasing power. It asks how much money would be needed to purchase the same goods and services in two countries, and uses that to calculate an implicit foreign exchange rate. Using that PPP rate, an amount of money thus has the same purchasing power in different countries.
[5] The demand for which of the fallowing commodity will not rise in spite of a fall in its price?
A.
Television
B.
Refrigerator
C.
Salt
D.
Meat
Ans:
Salt
Explanation :
For certain goods called necessities; demand is not related to income. Demand for salt does not increase with the increase in income & does not decrease with the decrease in income. It means that it is irrespective of income. The demand curve slopes downward for goods like salt, but it is inelastic.
[6] In the long-run equilibrium, a competitive firm earns -
A.
Super-normal profit
B.
Profits equal to other firms
C.
Normal profit
D.
No profit
Ans:
Normal profit
Explanation :
Making the assumption that the market demand curve remains unchanged, higher market supply will reduce the equilibrium market price until the price = long run average cost. At this point each firm is making normal profits only. There is no further incentive for movement of firms in and out of the industry and a long-run equilibrium has been established.
[7] What is selling cost?
A.
Cost incurred on transportation of commodities to market
B.
Cost incurred on promoting the sale of the product
C.
Cost incurred on commission and salaries personnel
D.
Cost incurred on advertisement
Ans:
Cost incurred on promoting the sale of the product
Explanation :
Selling cost is total cost of marketing, advertising, and selling a product. It differs from the production cost which is incurred to produce goods.
[8] Who said, "Economics is the Science of Wealth"?
A.
Robbins
B.
J.S. Mill
C.
Adam Smith
D.
Keynes
Ans:
Adam Smith
Explanation :
It was Adam Smith who conceptualized Economics as a science of wealth. Elaborating upon the scope and fundamental conceptualizations of the new science, he then called political economy as "an inquiry into the nature and causes of the wealth of nations."
[9] The addition to total cost by producing an additional unit of output by a firm is called -
A.
Variable cost
B.
Average cost
C.
Marginal cost
D.
Opportunity cost
Ans:
Marginal cost
Explanation :
The addition to total cost by producing an additional unit of output by a firm is called Marginal cost. Average cost is the total cost of producing a given output divided by that output.
[10] In a perfectly competitive market, a firm's -
A.
Average Revenue is always equal to Marginal Revenue
B.
Marginal Revenue is more than Average Revenue
C.
Average Revenue is more than Marginal Revenue
D.
Marginal Revenue and Average Revenue are never equal
Ans:
Average Revenue is always equal to Marginal Revenue
Explanation :
Average revenue is the amount money received by a firm per unit of output sold. Marginal revenue is the change in total revenue resulting from a small change in the quantity sold. In a perfectly competitive market, a firm's Average Revenue is always equal to Marginal Revenue.
[11] An increase in the quantity supplied suggests -
A.
a leftward shift of the supply curve
B.
a movement up along the supply curve
C.
a movement down along the supply curve
D.
a rightward shift of the supply curve
Ans:
a movement up along the supply curve
Explanation :
Like the law of demand, the law of supply demonstrates the quantities that will be sold at a certain price. But unlike the law of demand, the supply relationship shows an upward slope. This means that the higher the price, the higher the quantity supplied. Producers supply more at a higher price because selling a higher quantity at an higher price increases revenue.
[12] Price and output are determinates in market structure other than -
A.
monopoly
B.
perfect competition
C.
oligopoly
D.
monopsony
Ans:
perfect competition
Explanation :
Perfect competition is a form of market in which there are a large number of buyers and sellers competing with each other in the purchase and sale of goods, respectively and no individual buyer or seller has any influence over the price and output. Each firm’s output is a perfect substitute for the output of the other firms, so the demand for each firm’s output is perfectly elastic. Product differentiation holds the key in this type of market structure.
[13] Bilateral monopoly situation is
A.
when there are only two sellers of a product
B.
when there are only two buyers of a product
C.
when there is only one buyer and one seller of a product
D.
when there are two buyers and two sellers of a product
Ans:
when there is only one buyer and one seller of a product
Explanation :
Bilateral monopoly is a market consisting of a single seller (monopolist) and a single buyer (monopsonist). For example, if a single firm produced all the copper in a country and if only one firm used this metal, the copper market would be a bilateral monopoly market. The equilibrium in such a market cannot be determined by the traditional tools of demand and supply.
[14] A 'Market Economy' is one which -
A.
is controlled by the Government
B.
is free from the Government control
C.
in influenced by international market forces
D.
All of these
Ans:
is free from the Government control
Explanation :
A market economy is an economic system in which economic decisions and the pricing of goods and services are guided solely by the aggregate interactions of a country's individual citizens and businesses. There is little government intervention or central planning. The United States is the world's premier market economy
[15] The law of demand states that -
A.
if the price of a good increases, the demand for that good decreases.
B.
if the price of a good increases, the demand for that good increases.
C.
if the price of a good increases, the quantity demanded of that good decreases
D.
if the price of a good increases, the quantity demanded of that good increases.
Ans:
if the price of a good increases, the quantity demanded of that good decreases
Explanation :
The law of demand states that, other things remaining the same, the quantity demanded of a commodity is inversely related to its price. Thus, according to the law of demand, there is an inverse relationship between price and quantity demanded, other things remaining the same.
[16] The demand curve facing a perfectly competitive firm is -
A.
downward sloping
B.
perfectly inelastic
C.
a concave curve
D.
perfectly elastic
Ans:
perfectly elastic
Explanation :
A perfectly competitive industry is comprised of a large number of relatively small firms that sell identical products. Each perfectly competitive firm is so small relative to the size of the market that it has no market control, it has no ability to control the price. In other words, it can sell any quantity of output it wants at the going market price. This translates into a horizontal or perfectly elastic demand curve.
[17] If average cost falls, marginal cost -
A.
increases at a higher rate
B.
falls at the same rate
C.
increases at a lower rate
D.
falls at a higher rate
Ans:
falls at the same rate
Explanation :
Average cost is the per unit cost incurred in the production of a good or service. It is specified as the total cost divided by the quantity of output. The marginal cost (the additional, cost of producing one more unit of output) and average cost are related. So when average total cost rises, marginal cost also rises; when average cost curve falls with the increase in output, the marginal cost also rises.
[18] Consumer gets maximum satisfaction at the point where -
A.
Marginal Utility = Price
B.
Marginal Utility > Price
C.
Marginal Utility < Price
D.
Marginal Cost = Price
Ans:
Marginal Utility = Price
Explanation :
As per the law of diminishing marginal utility, the utility of each successive unit goes on diminishing as more and more units of a commodity are consumed. A rational consumer will consume the commodity up to a point where the marginal utility of the final unit of the commodity is equal to the marginal utility of money (in terms of price) paid for it. In this way, the consumer will get the maximum satisfaction and will be in equilibrium.
[19] Micro-economics is also called :
A.
Income theory
B.
Investment theory
C.
Price theory
D.
Expenditure theory
Ans:
Price theory
Explanation :
Microeconomics is the branch of economics concerned with isolated parts of the economy, for example, individual people, firms or industries. It involves such topics as the theory of prices and of the firm.
[20] Demand in Economics means :
A.
Aggregate demand
B.
Market demand
C.
Individual demand
D.
Demand backed by purchasing power
Ans:
Demand backed by purchasing power
Explanation :
Demand ' in Economics refers to the quantity of a good or service consumers ate able and willing to buy at a given price in a given market during a specified time period , other things beings equal.
[21] A fall in demand or rise in supply of a commodity—
A.
Increases the price of that commodity
B.
decreases the price of that commodity
C.
neutralizes the changes in the price
D.
determines" the price elasticity
Ans:
decreases the price of that commodity
Explanation :
The four basic laws of supply and demand are: (1) If demand increases and supply remains unchanged, a shortage occurs, leading to a higher price: (2) If demand decreases and supply remains unchanged, a surplus occurs, leading to a lower price; (3) If demand remains unchanged and supply increases, a surplus occurs, leading to a lower price; and (4) If demand remains unchanged and supply decreases, a shortage occurs, leading to a higher price.
[22] The relationship between the value of money and the price level in an economy is -
A.
Direct
B.
Inverse
C.
Proportional
D.
Stable
Ans:
Inverse
Explanation :
The basic causal relationship between the price level and the value of money is that as the price level goes up, the value of money goes down. The "value of money" refers to what a unit of money can buy whereas the "price level" refers to the average of all of the prices of goods and services in a given economy.
[23] Production function relates -
A.
Cost to output
B.
Cost to input
C.
Wages to profit
D.
Inputs to output
Ans:
Inputs to output
Explanation :
Production function specifies the output of a firm, an industry, or an entire economy for all combinations of inputs. The relationship of output to inputs is non-monetary; that is, a production function relates physical inputs to physical outputs, and prices and costs are not reflected in the function.
[24] If total utility is maximum at a point, then marginal utility is -
A.
positive
B.
zero
C.
negative
D.
positive but decreasing
Ans:
zero
Explanation :
Marginal utility of a good or service is the gain (or loss) from an increase (or decrease) in the consumption of that good or service. As the rate of commodity acquisition increases, marginal utility decreases. If commodity consumption continues to rise, marginal utility at some point falls to zero, reaching maximum total utility. Further increase in consumption of units of commodities causes marginal utility to become negative; this signifies dissatisfaction.
[25] Economies of Scale means reduction in -
A.
unit cost of production
B.
unit cost of distribution
C.
total cost of production
D.
total cost of distribution
Ans:
unit cost of production
Explanation :
In microeconomics, economies of scale are the cost advantages that an enterprise obtains due to expansion. "Economies of scale" is a long run concept and refers to reductions in unit cost as the size of a facility and the usage levels of other inputs increase.
Explanation :
Human capital is the stock of competencies, knowledge, social and personality attributes, including creativity, embodied in the ability to perform labor so as to produce economic value. It is an aggregate economic view of the human being acting within economies, which is an attempt to capture the social, biological, cultural and psychological complexity as they interact in explicit and/or economic transactions.
[4] Purchasing Power Parity theory is related with -
A.
Interest rate
B.
Bank rate
C.
Wage rate
D.
Exchange rate
Ans:
Exchange rate
Explanation :
Purchasing power parity (PPP) is an economic theory and a technique used to determine the relative value of currencies, estimating the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to (or on par with) each currency's purchasing power. It asks how much money would be needed to purchase the same goods and services in two countries, and uses that to calculate an implicit foreign exchange rate. Using that PPP rate, an amount of money thus has the same purchasing power in different countries.
[5] The demand for which of the fallowing commodity will not rise in spite of a fall in its price?
A.
Television
B.
Refrigerator
C.
Salt
D.
Meat
Ans:
Salt
Explanation :
For certain goods called necessities; demand is not related to income. Demand for salt does not increase with the increase in income & does not decrease with the decrease in income. It means that it is irrespective of income. The demand curve slopes downward for goods like salt, but it is inelastic.
[6] In the long-run equilibrium, a competitive firm earns -
A.
Super-normal profit
B.
Profits equal to other firms
C.
Normal profit
D.
No profit
Ans:
Normal profit
Explanation :
Making the assumption that the market demand curve remains unchanged, higher market supply will reduce the equilibrium market price until the price = long run average cost. At this point each firm is making normal profits only. There is no further incentive for movement of firms in and out of the industry and a long-run equilibrium has been established.
[7] What is selling cost?
A.
Cost incurred on transportation of commodities to market
B.
Cost incurred on promoting the sale of the product
C.
Cost incurred on commission and salaries personnel
D.
Cost incurred on advertisement
Ans:
Cost incurred on promoting the sale of the product
Explanation :
Selling cost is total cost of marketing, advertising, and selling a product. It differs from the production cost which is incurred to produce goods.
[8] Who said, "Economics is the Science of Wealth"?
A.
Robbins
B.
J.S. Mill
C.
Adam Smith
D.
Keynes
Ans:
Adam Smith
Explanation :
It was Adam Smith who conceptualized Economics as a science of wealth. Elaborating upon the scope and fundamental conceptualizations of the new science, he then called political economy as "an inquiry into the nature and causes of the wealth of nations."
[9] The addition to total cost by producing an additional unit of output by a firm is called -
A.
Variable cost
B.
Average cost
C.
Marginal cost
D.
Opportunity cost
Ans:
Marginal cost
Explanation :
The addition to total cost by producing an additional unit of output by a firm is called Marginal cost. Average cost is the total cost of producing a given output divided by that output.
[10] In a perfectly competitive market, a firm's -
A.
Average Revenue is always equal to Marginal Revenue
B.
Marginal Revenue is more than Average Revenue
C.
Average Revenue is more than Marginal Revenue
D.
Marginal Revenue and Average Revenue are never equal
Ans:
Average Revenue is always equal to Marginal Revenue
Explanation :
Average revenue is the amount money received by a firm per unit of output sold. Marginal revenue is the change in total revenue resulting from a small change in the quantity sold. In a perfectly competitive market, a firm's Average Revenue is always equal to Marginal Revenue.
[11] An increase in the quantity supplied suggests -
A.
a leftward shift of the supply curve
B.
a movement up along the supply curve
C.
a movement down along the supply curve
D.
a rightward shift of the supply curve
Ans:
a movement up along the supply curve
Explanation :
Like the law of demand, the law of supply demonstrates the quantities that will be sold at a certain price. But unlike the law of demand, the supply relationship shows an upward slope. This means that the higher the price, the higher the quantity supplied. Producers supply more at a higher price because selling a higher quantity at an higher price increases revenue.
[12] Price and output are determinates in market structure other than -
A.
monopoly
B.
perfect competition
C.
oligopoly
D.
monopsony
Ans:
perfect competition
Explanation :
Perfect competition is a form of market in which there are a large number of buyers and sellers competing with each other in the purchase and sale of goods, respectively and no individual buyer or seller has any influence over the price and output. Each firm’s output is a perfect substitute for the output of the other firms, so the demand for each firm’s output is perfectly elastic. Product differentiation holds the key in this type of market structure.
[13] Bilateral monopoly situation is
A.
when there are only two sellers of a product
B.
when there are only two buyers of a product
C.
when there is only one buyer and one seller of a product
D.
when there are two buyers and two sellers of a product
Ans:
when there is only one buyer and one seller of a product
Explanation :
Bilateral monopoly is a market consisting of a single seller (monopolist) and a single buyer (monopsonist). For example, if a single firm produced all the copper in a country and if only one firm used this metal, the copper market would be a bilateral monopoly market. The equilibrium in such a market cannot be determined by the traditional tools of demand and supply.
[14] A 'Market Economy' is one which -
A.
is controlled by the Government
B.
is free from the Government control
C.
in influenced by international market forces
D.
All of these
Ans:
is free from the Government control
Explanation :
A market economy is an economic system in which economic decisions and the pricing of goods and services are guided solely by the aggregate interactions of a country's individual citizens and businesses. There is little government intervention or central planning. The United States is the world's premier market economy
[15] The law of demand states that -
A.
if the price of a good increases, the demand for that good decreases.
B.
if the price of a good increases, the demand for that good increases.
C.
if the price of a good increases, the quantity demanded of that good decreases
D.
if the price of a good increases, the quantity demanded of that good increases.
Ans:
if the price of a good increases, the quantity demanded of that good decreases
Explanation :
The law of demand states that, other things remaining the same, the quantity demanded of a commodity is inversely related to its price. Thus, according to the law of demand, there is an inverse relationship between price and quantity demanded, other things remaining the same.
[16] The demand curve facing a perfectly competitive firm is -
A.
downward sloping
B.
perfectly inelastic
C.
a concave curve
D.
perfectly elastic
Ans:
perfectly elastic
Explanation :
A perfectly competitive industry is comprised of a large number of relatively small firms that sell identical products. Each perfectly competitive firm is so small relative to the size of the market that it has no market control, it has no ability to control the price. In other words, it can sell any quantity of output it wants at the going market price. This translates into a horizontal or perfectly elastic demand curve.
[17] If average cost falls, marginal cost -
A.
increases at a higher rate
B.
falls at the same rate
C.
increases at a lower rate
D.
falls at a higher rate
Ans:
falls at the same rate
Explanation :
Average cost is the per unit cost incurred in the production of a good or service. It is specified as the total cost divided by the quantity of output. The marginal cost (the additional, cost of producing one more unit of output) and average cost are related. So when average total cost rises, marginal cost also rises; when average cost curve falls with the increase in output, the marginal cost also rises.
[18] Consumer gets maximum satisfaction at the point where -
A.
Marginal Utility = Price
B.
Marginal Utility > Price
C.
Marginal Utility < Price
D.
Marginal Cost = Price
Ans:
Marginal Utility = Price
Explanation :
As per the law of diminishing marginal utility, the utility of each successive unit goes on diminishing as more and more units of a commodity are consumed. A rational consumer will consume the commodity up to a point where the marginal utility of the final unit of the commodity is equal to the marginal utility of money (in terms of price) paid for it. In this way, the consumer will get the maximum satisfaction and will be in equilibrium.
[19] Micro-economics is also called :
A.
Income theory
B.
Investment theory
C.
Price theory
D.
Expenditure theory
Ans:
Price theory
Explanation :
Microeconomics is the branch of economics concerned with isolated parts of the economy, for example, individual people, firms or industries. It involves such topics as the theory of prices and of the firm.
[20] Demand in Economics means :
A.
Aggregate demand
B.
Market demand
C.
Individual demand
D.
Demand backed by purchasing power
Ans:
Demand backed by purchasing power
Explanation :
Demand ' in Economics refers to the quantity of a good or service consumers ate able and willing to buy at a given price in a given market during a specified time period , other things beings equal.
[21] A fall in demand or rise in supply of a commodity—
A.
Increases the price of that commodity
B.
decreases the price of that commodity
C.
neutralizes the changes in the price
D.
determines" the price elasticity
Ans:
decreases the price of that commodity
Explanation :
The four basic laws of supply and demand are: (1) If demand increases and supply remains unchanged, a shortage occurs, leading to a higher price: (2) If demand decreases and supply remains unchanged, a surplus occurs, leading to a lower price; (3) If demand remains unchanged and supply increases, a surplus occurs, leading to a lower price; and (4) If demand remains unchanged and supply decreases, a shortage occurs, leading to a higher price.
[22] The relationship between the value of money and the price level in an economy is -
A.
Direct
B.
Inverse
C.
Proportional
D.
Stable
Ans:
Inverse
Explanation :
The basic causal relationship between the price level and the value of money is that as the price level goes up, the value of money goes down. The "value of money" refers to what a unit of money can buy whereas the "price level" refers to the average of all of the prices of goods and services in a given economy.
[23] Production function relates -
A.
Cost to output
B.
Cost to input
C.
Wages to profit
D.
Inputs to output
Ans:
Inputs to output
Explanation :
Production function specifies the output of a firm, an industry, or an entire economy for all combinations of inputs. The relationship of output to inputs is non-monetary; that is, a production function relates physical inputs to physical outputs, and prices and costs are not reflected in the function.
[24] If total utility is maximum at a point, then marginal utility is -
A.
positive
B.
zero
C.
negative
D.
positive but decreasing
Ans:
zero
Explanation :
Marginal utility of a good or service is the gain (or loss) from an increase (or decrease) in the consumption of that good or service. As the rate of commodity acquisition increases, marginal utility decreases. If commodity consumption continues to rise, marginal utility at some point falls to zero, reaching maximum total utility. Further increase in consumption of units of commodities causes marginal utility to become negative; this signifies dissatisfaction.
[25] Economies of Scale means reduction in -
A.
unit cost of production
B.
unit cost of distribution
C.
total cost of production
D.
total cost of distribution
Ans:
unit cost of production
Explanation :
In microeconomics, economies of scale are the cost advantages that an enterprise obtains due to expansion. "Economies of scale" is a long run concept and refers to reductions in unit cost as the size of a facility and the usage levels of other inputs increase.
Explanation :
For certain goods called necessities; demand is not related to income. Demand for salt does not increase with the increase in income & does not decrease with the decrease in income. It means that it is irrespective of income. The demand curve slopes downward for goods like salt, but it is inelastic.
[6] In the long-run equilibrium, a competitive firm earns -
A.
Super-normal profit
B.
Profits equal to other firms
C.
Normal profit
D.
No profit
Ans:
Normal profit
Explanation :
Making the assumption that the market demand curve remains unchanged, higher market supply will reduce the equilibrium market price until the price = long run average cost. At this point each firm is making normal profits only. There is no further incentive for movement of firms in and out of the industry and a long-run equilibrium has been established.
[7] What is selling cost?
A.
Cost incurred on transportation of commodities to market
B.
Cost incurred on promoting the sale of the product
C.
Cost incurred on commission and salaries personnel
D.
Cost incurred on advertisement
Ans:
Cost incurred on promoting the sale of the product
Explanation :
Selling cost is total cost of marketing, advertising, and selling a product. It differs from the production cost which is incurred to produce goods.
[8] Who said, "Economics is the Science of Wealth"?
A.
Robbins
B.
J.S. Mill
C.
Adam Smith
D.
Keynes
Ans:
Adam Smith
Explanation :
It was Adam Smith who conceptualized Economics as a science of wealth. Elaborating upon the scope and fundamental conceptualizations of the new science, he then called political economy as "an inquiry into the nature and causes of the wealth of nations."
[9] The addition to total cost by producing an additional unit of output by a firm is called -
A.
Variable cost
B.
Average cost
C.
Marginal cost
D.
Opportunity cost
Ans:
Marginal cost
Explanation :
The addition to total cost by producing an additional unit of output by a firm is called Marginal cost. Average cost is the total cost of producing a given output divided by that output.
[10] In a perfectly competitive market, a firm's -
A.
Average Revenue is always equal to Marginal Revenue
B.
Marginal Revenue is more than Average Revenue
C.
Average Revenue is more than Marginal Revenue
D.
Marginal Revenue and Average Revenue are never equal
Ans:
Average Revenue is always equal to Marginal Revenue
Explanation :
Average revenue is the amount money received by a firm per unit of output sold. Marginal revenue is the change in total revenue resulting from a small change in the quantity sold. In a perfectly competitive market, a firm's Average Revenue is always equal to Marginal Revenue.
[11] An increase in the quantity supplied suggests -
A.
a leftward shift of the supply curve
B.
a movement up along the supply curve
C.
a movement down along the supply curve
D.
a rightward shift of the supply curve
Ans:
a movement up along the supply curve
Explanation :
Like the law of demand, the law of supply demonstrates the quantities that will be sold at a certain price. But unlike the law of demand, the supply relationship shows an upward slope. This means that the higher the price, the higher the quantity supplied. Producers supply more at a higher price because selling a higher quantity at an higher price increases revenue.
[12] Price and output are determinates in market structure other than -
A.
monopoly
B.
perfect competition
C.
oligopoly
D.
monopsony
Ans:
perfect competition
Explanation :
Perfect competition is a form of market in which there are a large number of buyers and sellers competing with each other in the purchase and sale of goods, respectively and no individual buyer or seller has any influence over the price and output. Each firm’s output is a perfect substitute for the output of the other firms, so the demand for each firm’s output is perfectly elastic. Product differentiation holds the key in this type of market structure.
[13] Bilateral monopoly situation is
A.
when there are only two sellers of a product
B.
when there are only two buyers of a product
C.
when there is only one buyer and one seller of a product
D.
when there are two buyers and two sellers of a product
Ans:
when there is only one buyer and one seller of a product
Explanation :
Bilateral monopoly is a market consisting of a single seller (monopolist) and a single buyer (monopsonist). For example, if a single firm produced all the copper in a country and if only one firm used this metal, the copper market would be a bilateral monopoly market. The equilibrium in such a market cannot be determined by the traditional tools of demand and supply.
[14] A 'Market Economy' is one which -
A.
is controlled by the Government
B.
is free from the Government control
C.
in influenced by international market forces
D.
All of these
Ans:
is free from the Government control
Explanation :
A market economy is an economic system in which economic decisions and the pricing of goods and services are guided solely by the aggregate interactions of a country's individual citizens and businesses. There is little government intervention or central planning. The United States is the world's premier market economy
[15] The law of demand states that -
A.
if the price of a good increases, the demand for that good decreases.
B.
if the price of a good increases, the demand for that good increases.
C.
if the price of a good increases, the quantity demanded of that good decreases
D.
if the price of a good increases, the quantity demanded of that good increases.
Ans:
if the price of a good increases, the quantity demanded of that good decreases
Explanation :
The law of demand states that, other things remaining the same, the quantity demanded of a commodity is inversely related to its price. Thus, according to the law of demand, there is an inverse relationship between price and quantity demanded, other things remaining the same.
[16] The demand curve facing a perfectly competitive firm is -
A.
downward sloping
B.
perfectly inelastic
C.
a concave curve
D.
perfectly elastic
Ans:
perfectly elastic
Explanation :
A perfectly competitive industry is comprised of a large number of relatively small firms that sell identical products. Each perfectly competitive firm is so small relative to the size of the market that it has no market control, it has no ability to control the price. In other words, it can sell any quantity of output it wants at the going market price. This translates into a horizontal or perfectly elastic demand curve.
[17] If average cost falls, marginal cost -
A.
increases at a higher rate
B.
falls at the same rate
C.
increases at a lower rate
D.
falls at a higher rate
Ans:
falls at the same rate
Explanation :
Average cost is the per unit cost incurred in the production of a good or service. It is specified as the total cost divided by the quantity of output. The marginal cost (the additional, cost of producing one more unit of output) and average cost are related. So when average total cost rises, marginal cost also rises; when average cost curve falls with the increase in output, the marginal cost also rises.
[18] Consumer gets maximum satisfaction at the point where -
A.
Marginal Utility = Price
B.
Marginal Utility > Price
C.
Marginal Utility < Price
D.
Marginal Cost = Price
Ans:
Marginal Utility = Price
Explanation :
As per the law of diminishing marginal utility, the utility of each successive unit goes on diminishing as more and more units of a commodity are consumed. A rational consumer will consume the commodity up to a point where the marginal utility of the final unit of the commodity is equal to the marginal utility of money (in terms of price) paid for it. In this way, the consumer will get the maximum satisfaction and will be in equilibrium.
[19] Micro-economics is also called :
A.
Income theory
B.
Investment theory
C.
Price theory
D.
Expenditure theory
Ans:
Price theory
Explanation :
Microeconomics is the branch of economics concerned with isolated parts of the economy, for example, individual people, firms or industries. It involves such topics as the theory of prices and of the firm.
[20] Demand in Economics means :
A.
Aggregate demand
B.
Market demand
C.
Individual demand
D.
Demand backed by purchasing power
Ans:
Demand backed by purchasing power
Explanation :
Demand ' in Economics refers to the quantity of a good or service consumers ate able and willing to buy at a given price in a given market during a specified time period , other things beings equal.
[21] A fall in demand or rise in supply of a commodity—
A.
Increases the price of that commodity
B.
decreases the price of that commodity
C.
neutralizes the changes in the price
D.
determines" the price elasticity
Ans:
decreases the price of that commodity
Explanation :
The four basic laws of supply and demand are: (1) If demand increases and supply remains unchanged, a shortage occurs, leading to a higher price: (2) If demand decreases and supply remains unchanged, a surplus occurs, leading to a lower price; (3) If demand remains unchanged and supply increases, a surplus occurs, leading to a lower price; and (4) If demand remains unchanged and supply decreases, a shortage occurs, leading to a higher price.
[22] The relationship between the value of money and the price level in an economy is -
A.
Direct
B.
Inverse
C.
Proportional
D.
Stable
Ans:
Inverse
Explanation :
The basic causal relationship between the price level and the value of money is that as the price level goes up, the value of money goes down. The "value of money" refers to what a unit of money can buy whereas the "price level" refers to the average of all of the prices of goods and services in a given economy.
[23] Production function relates -
A.
Cost to output
B.
Cost to input
C.
Wages to profit
D.
Inputs to output
Ans:
Inputs to output
Explanation :
Production function specifies the output of a firm, an industry, or an entire economy for all combinations of inputs. The relationship of output to inputs is non-monetary; that is, a production function relates physical inputs to physical outputs, and prices and costs are not reflected in the function.
[24] If total utility is maximum at a point, then marginal utility is -
A.
positive
B.
zero
C.
negative
D.
positive but decreasing
Ans:
zero
Explanation :
Marginal utility of a good or service is the gain (or loss) from an increase (or decrease) in the consumption of that good or service. As the rate of commodity acquisition increases, marginal utility decreases. If commodity consumption continues to rise, marginal utility at some point falls to zero, reaching maximum total utility. Further increase in consumption of units of commodities causes marginal utility to become negative; this signifies dissatisfaction.
[25] Economies of Scale means reduction in -
A.
unit cost of production
B.
unit cost of distribution
C.
total cost of production
D.
total cost of distribution
Ans:
unit cost of production
Explanation :
In microeconomics, economies of scale are the cost advantages that an enterprise obtains due to expansion. "Economies of scale" is a long run concept and refers to reductions in unit cost as the size of a facility and the usage levels of other inputs increase.
Explanation :
Selling cost is total cost of marketing, advertising, and selling a product. It differs from the production cost which is incurred to produce goods.
[8] Who said, "Economics is the Science of Wealth"?
A.
Robbins
B.
J.S. Mill
C.
Adam Smith
D.
Keynes
Ans:
Adam Smith
Explanation :
It was Adam Smith who conceptualized Economics as a science of wealth. Elaborating upon the scope and fundamental conceptualizations of the new science, he then called political economy as "an inquiry into the nature and causes of the wealth of nations."
[9] The addition to total cost by producing an additional unit of output by a firm is called -
A.
Variable cost
B.
Average cost
C.
Marginal cost
D.
Opportunity cost
Ans:
Marginal cost
Explanation :
The addition to total cost by producing an additional unit of output by a firm is called Marginal cost. Average cost is the total cost of producing a given output divided by that output.
[10] In a perfectly competitive market, a firm's -
A.
Average Revenue is always equal to Marginal Revenue
B.
Marginal Revenue is more than Average Revenue
C.
Average Revenue is more than Marginal Revenue
D.
Marginal Revenue and Average Revenue are never equal
Ans:
Average Revenue is always equal to Marginal Revenue
Explanation :
Average revenue is the amount money received by a firm per unit of output sold. Marginal revenue is the change in total revenue resulting from a small change in the quantity sold. In a perfectly competitive market, a firm's Average Revenue is always equal to Marginal Revenue.
[11] An increase in the quantity supplied suggests -
A.
a leftward shift of the supply curve
B.
a movement up along the supply curve
C.
a movement down along the supply curve
D.
a rightward shift of the supply curve
Ans:
a movement up along the supply curve
Explanation :
Like the law of demand, the law of supply demonstrates the quantities that will be sold at a certain price. But unlike the law of demand, the supply relationship shows an upward slope. This means that the higher the price, the higher the quantity supplied. Producers supply more at a higher price because selling a higher quantity at an higher price increases revenue.
[12] Price and output are determinates in market structure other than -
A.
monopoly
B.
perfect competition
C.
oligopoly
D.
monopsony
Ans:
perfect competition
Explanation :
Perfect competition is a form of market in which there are a large number of buyers and sellers competing with each other in the purchase and sale of goods, respectively and no individual buyer or seller has any influence over the price and output. Each firm’s output is a perfect substitute for the output of the other firms, so the demand for each firm’s output is perfectly elastic. Product differentiation holds the key in this type of market structure.
[13] Bilateral monopoly situation is
A.
when there are only two sellers of a product
B.
when there are only two buyers of a product
C.
when there is only one buyer and one seller of a product
D.
when there are two buyers and two sellers of a product
Ans:
when there is only one buyer and one seller of a product
Explanation :
Bilateral monopoly is a market consisting of a single seller (monopolist) and a single buyer (monopsonist). For example, if a single firm produced all the copper in a country and if only one firm used this metal, the copper market would be a bilateral monopoly market. The equilibrium in such a market cannot be determined by the traditional tools of demand and supply.
[14] A 'Market Economy' is one which -
A.
is controlled by the Government
B.
is free from the Government control
C.
in influenced by international market forces
D.
All of these
Ans:
is free from the Government control
Explanation :
A market economy is an economic system in which economic decisions and the pricing of goods and services are guided solely by the aggregate interactions of a country's individual citizens and businesses. There is little government intervention or central planning. The United States is the world's premier market economy
[15] The law of demand states that -
A.
if the price of a good increases, the demand for that good decreases.
B.
if the price of a good increases, the demand for that good increases.
C.
if the price of a good increases, the quantity demanded of that good decreases
D.
if the price of a good increases, the quantity demanded of that good increases.
Ans:
if the price of a good increases, the quantity demanded of that good decreases
Explanation :
The law of demand states that, other things remaining the same, the quantity demanded of a commodity is inversely related to its price. Thus, according to the law of demand, there is an inverse relationship between price and quantity demanded, other things remaining the same.
[16] The demand curve facing a perfectly competitive firm is -
A.
downward sloping
B.
perfectly inelastic
C.
a concave curve
D.
perfectly elastic
Ans:
perfectly elastic
Explanation :
A perfectly competitive industry is comprised of a large number of relatively small firms that sell identical products. Each perfectly competitive firm is so small relative to the size of the market that it has no market control, it has no ability to control the price. In other words, it can sell any quantity of output it wants at the going market price. This translates into a horizontal or perfectly elastic demand curve.
[17] If average cost falls, marginal cost -
A.
increases at a higher rate
B.
falls at the same rate
C.
increases at a lower rate
D.
falls at a higher rate
Ans:
falls at the same rate
Explanation :
Average cost is the per unit cost incurred in the production of a good or service. It is specified as the total cost divided by the quantity of output. The marginal cost (the additional, cost of producing one more unit of output) and average cost are related. So when average total cost rises, marginal cost also rises; when average cost curve falls with the increase in output, the marginal cost also rises.
[18] Consumer gets maximum satisfaction at the point where -
A.
Marginal Utility = Price
B.
Marginal Utility > Price
C.
Marginal Utility < Price
D.
Marginal Cost = Price
Ans:
Marginal Utility = Price
Explanation :
As per the law of diminishing marginal utility, the utility of each successive unit goes on diminishing as more and more units of a commodity are consumed. A rational consumer will consume the commodity up to a point where the marginal utility of the final unit of the commodity is equal to the marginal utility of money (in terms of price) paid for it. In this way, the consumer will get the maximum satisfaction and will be in equilibrium.
[19] Micro-economics is also called :
A.
Income theory
B.
Investment theory
C.
Price theory
D.
Expenditure theory
Ans:
Price theory
Explanation :
Microeconomics is the branch of economics concerned with isolated parts of the economy, for example, individual people, firms or industries. It involves such topics as the theory of prices and of the firm.
[20] Demand in Economics means :
A.
Aggregate demand
B.
Market demand
C.
Individual demand
D.
Demand backed by purchasing power
Ans:
Demand backed by purchasing power
Explanation :
Demand ' in Economics refers to the quantity of a good or service consumers ate able and willing to buy at a given price in a given market during a specified time period , other things beings equal.
[21] A fall in demand or rise in supply of a commodity—
A.
Increases the price of that commodity
B.
decreases the price of that commodity
C.
neutralizes the changes in the price
D.
determines" the price elasticity
Ans:
decreases the price of that commodity
Explanation :
The four basic laws of supply and demand are: (1) If demand increases and supply remains unchanged, a shortage occurs, leading to a higher price: (2) If demand decreases and supply remains unchanged, a surplus occurs, leading to a lower price; (3) If demand remains unchanged and supply increases, a surplus occurs, leading to a lower price; and (4) If demand remains unchanged and supply decreases, a shortage occurs, leading to a higher price.
[22] The relationship between the value of money and the price level in an economy is -
A.
Direct
B.
Inverse
C.
Proportional
D.
Stable
Ans:
Inverse
Explanation :
The basic causal relationship between the price level and the value of money is that as the price level goes up, the value of money goes down. The "value of money" refers to what a unit of money can buy whereas the "price level" refers to the average of all of the prices of goods and services in a given economy.
[23] Production function relates -
A.
Cost to output
B.
Cost to input
C.
Wages to profit
D.
Inputs to output
Ans:
Inputs to output
Explanation :
Production function specifies the output of a firm, an industry, or an entire economy for all combinations of inputs. The relationship of output to inputs is non-monetary; that is, a production function relates physical inputs to physical outputs, and prices and costs are not reflected in the function.
[24] If total utility is maximum at a point, then marginal utility is -
A.
positive
B.
zero
C.
negative
D.
positive but decreasing
Ans:
zero
Explanation :
Marginal utility of a good or service is the gain (or loss) from an increase (or decrease) in the consumption of that good or service. As the rate of commodity acquisition increases, marginal utility decreases. If commodity consumption continues to rise, marginal utility at some point falls to zero, reaching maximum total utility. Further increase in consumption of units of commodities causes marginal utility to become negative; this signifies dissatisfaction.
[25] Economies of Scale means reduction in -
A.
unit cost of production
B.
unit cost of distribution
C.
total cost of production
D.
total cost of distribution
Ans:
unit cost of production
Explanation :
In microeconomics, economies of scale are the cost advantages that an enterprise obtains due to expansion. "Economies of scale" is a long run concept and refers to reductions in unit cost as the size of a facility and the usage levels of other inputs increase.
Explanation :
The addition to total cost by producing an additional unit of output by a firm is called Marginal cost. Average cost is the total cost of producing a given output divided by that output.
[10] In a perfectly competitive market, a firm's -
A.
Average Revenue is always equal to Marginal Revenue
B.
Marginal Revenue is more than Average Revenue
C.
Average Revenue is more than Marginal Revenue
D.
Marginal Revenue and Average Revenue are never equal
Ans:
Average Revenue is always equal to Marginal Revenue
Explanation :
Average revenue is the amount money received by a firm per unit of output sold. Marginal revenue is the change in total revenue resulting from a small change in the quantity sold. In a perfectly competitive market, a firm's Average Revenue is always equal to Marginal Revenue.
[11] An increase in the quantity supplied suggests -
A.
a leftward shift of the supply curve
B.
a movement up along the supply curve
C.
a movement down along the supply curve
D.
a rightward shift of the supply curve
Ans:
a movement up along the supply curve
Explanation :
Like the law of demand, the law of supply demonstrates the quantities that will be sold at a certain price. But unlike the law of demand, the supply relationship shows an upward slope. This means that the higher the price, the higher the quantity supplied. Producers supply more at a higher price because selling a higher quantity at an higher price increases revenue.
[12] Price and output are determinates in market structure other than -
A.
monopoly
B.
perfect competition
C.
oligopoly
D.
monopsony
Ans:
perfect competition
Explanation :
Perfect competition is a form of market in which there are a large number of buyers and sellers competing with each other in the purchase and sale of goods, respectively and no individual buyer or seller has any influence over the price and output. Each firm’s output is a perfect substitute for the output of the other firms, so the demand for each firm’s output is perfectly elastic. Product differentiation holds the key in this type of market structure.
[13] Bilateral monopoly situation is
A.
when there are only two sellers of a product
B.
when there are only two buyers of a product
C.
when there is only one buyer and one seller of a product
D.
when there are two buyers and two sellers of a product
Ans:
when there is only one buyer and one seller of a product
Explanation :
Bilateral monopoly is a market consisting of a single seller (monopolist) and a single buyer (monopsonist). For example, if a single firm produced all the copper in a country and if only one firm used this metal, the copper market would be a bilateral monopoly market. The equilibrium in such a market cannot be determined by the traditional tools of demand and supply.
[14] A 'Market Economy' is one which -
A.
is controlled by the Government
B.
is free from the Government control
C.
in influenced by international market forces
D.
All of these
Ans:
is free from the Government control
Explanation :
A market economy is an economic system in which economic decisions and the pricing of goods and services are guided solely by the aggregate interactions of a country's individual citizens and businesses. There is little government intervention or central planning. The United States is the world's premier market economy
[15] The law of demand states that -
A.
if the price of a good increases, the demand for that good decreases.
B.
if the price of a good increases, the demand for that good increases.
C.
if the price of a good increases, the quantity demanded of that good decreases
D.
if the price of a good increases, the quantity demanded of that good increases.
Ans:
if the price of a good increases, the quantity demanded of that good decreases
Explanation :
The law of demand states that, other things remaining the same, the quantity demanded of a commodity is inversely related to its price. Thus, according to the law of demand, there is an inverse relationship between price and quantity demanded, other things remaining the same.
[16] The demand curve facing a perfectly competitive firm is -
A.
downward sloping
B.
perfectly inelastic
C.
a concave curve
D.
perfectly elastic
Ans:
perfectly elastic
Explanation :
A perfectly competitive industry is comprised of a large number of relatively small firms that sell identical products. Each perfectly competitive firm is so small relative to the size of the market that it has no market control, it has no ability to control the price. In other words, it can sell any quantity of output it wants at the going market price. This translates into a horizontal or perfectly elastic demand curve.
[17] If average cost falls, marginal cost -
A.
increases at a higher rate
B.
falls at the same rate
C.
increases at a lower rate
D.
falls at a higher rate
Ans:
falls at the same rate
Explanation :
Average cost is the per unit cost incurred in the production of a good or service. It is specified as the total cost divided by the quantity of output. The marginal cost (the additional, cost of producing one more unit of output) and average cost are related. So when average total cost rises, marginal cost also rises; when average cost curve falls with the increase in output, the marginal cost also rises.
[18] Consumer gets maximum satisfaction at the point where -
A.
Marginal Utility = Price
B.
Marginal Utility > Price
C.
Marginal Utility < Price
D.
Marginal Cost = Price
Ans:
Marginal Utility = Price
Explanation :
As per the law of diminishing marginal utility, the utility of each successive unit goes on diminishing as more and more units of a commodity are consumed. A rational consumer will consume the commodity up to a point where the marginal utility of the final unit of the commodity is equal to the marginal utility of money (in terms of price) paid for it. In this way, the consumer will get the maximum satisfaction and will be in equilibrium.
[19] Micro-economics is also called :
A.
Income theory
B.
Investment theory
C.
Price theory
D.
Expenditure theory
Ans:
Price theory
Explanation :
Microeconomics is the branch of economics concerned with isolated parts of the economy, for example, individual people, firms or industries. It involves such topics as the theory of prices and of the firm.
[20] Demand in Economics means :
A.
Aggregate demand
B.
Market demand
C.
Individual demand
D.
Demand backed by purchasing power
Ans:
Demand backed by purchasing power
Explanation :
Demand ' in Economics refers to the quantity of a good or service consumers ate able and willing to buy at a given price in a given market during a specified time period , other things beings equal.
[21] A fall in demand or rise in supply of a commodity—
A.
Increases the price of that commodity
B.
decreases the price of that commodity
C.
neutralizes the changes in the price
D.
determines" the price elasticity
Ans:
decreases the price of that commodity
Explanation :
The four basic laws of supply and demand are: (1) If demand increases and supply remains unchanged, a shortage occurs, leading to a higher price: (2) If demand decreases and supply remains unchanged, a surplus occurs, leading to a lower price; (3) If demand remains unchanged and supply increases, a surplus occurs, leading to a lower price; and (4) If demand remains unchanged and supply decreases, a shortage occurs, leading to a higher price.
[22] The relationship between the value of money and the price level in an economy is -
A.
Direct
B.
Inverse
C.
Proportional
D.
Stable
Ans:
Inverse
Explanation :
The basic causal relationship between the price level and the value of money is that as the price level goes up, the value of money goes down. The "value of money" refers to what a unit of money can buy whereas the "price level" refers to the average of all of the prices of goods and services in a given economy.
[23] Production function relates -
A.
Cost to output
B.
Cost to input
C.
Wages to profit
D.
Inputs to output
Ans:
Inputs to output
Explanation :
Production function specifies the output of a firm, an industry, or an entire economy for all combinations of inputs. The relationship of output to inputs is non-monetary; that is, a production function relates physical inputs to physical outputs, and prices and costs are not reflected in the function.
[24] If total utility is maximum at a point, then marginal utility is -
A.
positive
B.
zero
C.
negative
D.
positive but decreasing
Ans:
zero
Explanation :
Marginal utility of a good or service is the gain (or loss) from an increase (or decrease) in the consumption of that good or service. As the rate of commodity acquisition increases, marginal utility decreases. If commodity consumption continues to rise, marginal utility at some point falls to zero, reaching maximum total utility. Further increase in consumption of units of commodities causes marginal utility to become negative; this signifies dissatisfaction.
[25] Economies of Scale means reduction in -
A.
unit cost of production
B.
unit cost of distribution
C.
total cost of production
D.
total cost of distribution
Ans:
unit cost of production
Explanation :
In microeconomics, economies of scale are the cost advantages that an enterprise obtains due to expansion. "Economies of scale" is a long run concept and refers to reductions in unit cost as the size of a facility and the usage levels of other inputs increase.
Explanation :
Like the law of demand, the law of supply demonstrates the quantities that will be sold at a certain price. But unlike the law of demand, the supply relationship shows an upward slope. This means that the higher the price, the higher the quantity supplied. Producers supply more at a higher price because selling a higher quantity at an higher price increases revenue.
[12] Price and output are determinates in market structure other than -
A.
monopoly
B.
perfect competition
C.
oligopoly
D.
monopsony
Ans:
perfect competition
Explanation :
Perfect competition is a form of market in which there are a large number of buyers and sellers competing with each other in the purchase and sale of goods, respectively and no individual buyer or seller has any influence over the price and output. Each firm’s output is a perfect substitute for the output of the other firms, so the demand for each firm’s output is perfectly elastic. Product differentiation holds the key in this type of market structure.
[13] Bilateral monopoly situation is
A.
when there are only two sellers of a product
B.
when there are only two buyers of a product
C.
when there is only one buyer and one seller of a product
D.
when there are two buyers and two sellers of a product
Ans:
when there is only one buyer and one seller of a product
Explanation :
Bilateral monopoly is a market consisting of a single seller (monopolist) and a single buyer (monopsonist). For example, if a single firm produced all the copper in a country and if only one firm used this metal, the copper market would be a bilateral monopoly market. The equilibrium in such a market cannot be determined by the traditional tools of demand and supply.
[14] A 'Market Economy' is one which -
A.
is controlled by the Government
B.
is free from the Government control
C.
in influenced by international market forces
D.
All of these
Ans:
is free from the Government control
Explanation :
A market economy is an economic system in which economic decisions and the pricing of goods and services are guided solely by the aggregate interactions of a country's individual citizens and businesses. There is little government intervention or central planning. The United States is the world's premier market economy
[15] The law of demand states that -
A.
if the price of a good increases, the demand for that good decreases.
B.
if the price of a good increases, the demand for that good increases.
C.
if the price of a good increases, the quantity demanded of that good decreases
D.
if the price of a good increases, the quantity demanded of that good increases.
Ans:
if the price of a good increases, the quantity demanded of that good decreases
Explanation :
The law of demand states that, other things remaining the same, the quantity demanded of a commodity is inversely related to its price. Thus, according to the law of demand, there is an inverse relationship between price and quantity demanded, other things remaining the same.
[16] The demand curve facing a perfectly competitive firm is -
A.
downward sloping
B.
perfectly inelastic
C.
a concave curve
D.
perfectly elastic
Ans:
perfectly elastic
Explanation :
A perfectly competitive industry is comprised of a large number of relatively small firms that sell identical products. Each perfectly competitive firm is so small relative to the size of the market that it has no market control, it has no ability to control the price. In other words, it can sell any quantity of output it wants at the going market price. This translates into a horizontal or perfectly elastic demand curve.
[17] If average cost falls, marginal cost -
A.
increases at a higher rate
B.
falls at the same rate
C.
increases at a lower rate
D.
falls at a higher rate
Ans:
falls at the same rate
Explanation :
Average cost is the per unit cost incurred in the production of a good or service. It is specified as the total cost divided by the quantity of output. The marginal cost (the additional, cost of producing one more unit of output) and average cost are related. So when average total cost rises, marginal cost also rises; when average cost curve falls with the increase in output, the marginal cost also rises.
[18] Consumer gets maximum satisfaction at the point where -
A.
Marginal Utility = Price
B.
Marginal Utility > Price
C.
Marginal Utility < Price
D.
Marginal Cost = Price
Ans:
Marginal Utility = Price
Explanation :
As per the law of diminishing marginal utility, the utility of each successive unit goes on diminishing as more and more units of a commodity are consumed. A rational consumer will consume the commodity up to a point where the marginal utility of the final unit of the commodity is equal to the marginal utility of money (in terms of price) paid for it. In this way, the consumer will get the maximum satisfaction and will be in equilibrium.
[19] Micro-economics is also called :
A.
Income theory
B.
Investment theory
C.
Price theory
D.
Expenditure theory
Ans:
Price theory
Explanation :
Microeconomics is the branch of economics concerned with isolated parts of the economy, for example, individual people, firms or industries. It involves such topics as the theory of prices and of the firm.
[20] Demand in Economics means :
A.
Aggregate demand
B.
Market demand
C.
Individual demand
D.
Demand backed by purchasing power
Ans:
Demand backed by purchasing power
Explanation :
Demand ' in Economics refers to the quantity of a good or service consumers ate able and willing to buy at a given price in a given market during a specified time period , other things beings equal.
[21] A fall in demand or rise in supply of a commodity—
A.
Increases the price of that commodity
B.
decreases the price of that commodity
C.
neutralizes the changes in the price
D.
determines" the price elasticity
Ans:
decreases the price of that commodity
Explanation :
The four basic laws of supply and demand are: (1) If demand increases and supply remains unchanged, a shortage occurs, leading to a higher price: (2) If demand decreases and supply remains unchanged, a surplus occurs, leading to a lower price; (3) If demand remains unchanged and supply increases, a surplus occurs, leading to a lower price; and (4) If demand remains unchanged and supply decreases, a shortage occurs, leading to a higher price.
[22] The relationship between the value of money and the price level in an economy is -
A.
Direct
B.
Inverse
C.
Proportional
D.
Stable
Ans:
Inverse
Explanation :
The basic causal relationship between the price level and the value of money is that as the price level goes up, the value of money goes down. The "value of money" refers to what a unit of money can buy whereas the "price level" refers to the average of all of the prices of goods and services in a given economy.
[23] Production function relates -
A.
Cost to output
B.
Cost to input
C.
Wages to profit
D.
Inputs to output
Ans:
Inputs to output
Explanation :
Production function specifies the output of a firm, an industry, or an entire economy for all combinations of inputs. The relationship of output to inputs is non-monetary; that is, a production function relates physical inputs to physical outputs, and prices and costs are not reflected in the function.
[24] If total utility is maximum at a point, then marginal utility is -
A.
positive
B.
zero
C.
negative
D.
positive but decreasing
Ans:
zero
Explanation :
Marginal utility of a good or service is the gain (or loss) from an increase (or decrease) in the consumption of that good or service. As the rate of commodity acquisition increases, marginal utility decreases. If commodity consumption continues to rise, marginal utility at some point falls to zero, reaching maximum total utility. Further increase in consumption of units of commodities causes marginal utility to become negative; this signifies dissatisfaction.
[25] Economies of Scale means reduction in -
A.
unit cost of production
B.
unit cost of distribution
C.
total cost of production
D.
total cost of distribution
Ans:
unit cost of production
Explanation :
In microeconomics, economies of scale are the cost advantages that an enterprise obtains due to expansion. "Economies of scale" is a long run concept and refers to reductions in unit cost as the size of a facility and the usage levels of other inputs increase.
Explanation :
Bilateral monopoly is a market consisting of a single seller (monopolist) and a single buyer (monopsonist). For example, if a single firm produced all the copper in a country and if only one firm used this metal, the copper market would be a bilateral monopoly market. The equilibrium in such a market cannot be determined by the traditional tools of demand and supply.
[14] A 'Market Economy' is one which -
A.
is controlled by the Government
B.
is free from the Government control
C.
in influenced by international market forces
D.
All of these
Ans:
is free from the Government control
Explanation :
A market economy is an economic system in which economic decisions and the pricing of goods and services are guided solely by the aggregate interactions of a country's individual citizens and businesses. There is little government intervention or central planning. The United States is the world's premier market economy
[15] The law of demand states that -
A.
if the price of a good increases, the demand for that good decreases.
B.
if the price of a good increases, the demand for that good increases.
C.
if the price of a good increases, the quantity demanded of that good decreases
D.
if the price of a good increases, the quantity demanded of that good increases.
Ans:
if the price of a good increases, the quantity demanded of that good decreases
Explanation :
The law of demand states that, other things remaining the same, the quantity demanded of a commodity is inversely related to its price. Thus, according to the law of demand, there is an inverse relationship between price and quantity demanded, other things remaining the same.
[16] The demand curve facing a perfectly competitive firm is -
A.
downward sloping
B.
perfectly inelastic
C.
a concave curve
D.
perfectly elastic
Ans:
perfectly elastic
Explanation :
A perfectly competitive industry is comprised of a large number of relatively small firms that sell identical products. Each perfectly competitive firm is so small relative to the size of the market that it has no market control, it has no ability to control the price. In other words, it can sell any quantity of output it wants at the going market price. This translates into a horizontal or perfectly elastic demand curve.
[17] If average cost falls, marginal cost -
A.
increases at a higher rate
B.
falls at the same rate
C.
increases at a lower rate
D.
falls at a higher rate
Ans:
falls at the same rate
Explanation :
Average cost is the per unit cost incurred in the production of a good or service. It is specified as the total cost divided by the quantity of output. The marginal cost (the additional, cost of producing one more unit of output) and average cost are related. So when average total cost rises, marginal cost also rises; when average cost curve falls with the increase in output, the marginal cost also rises.
[18] Consumer gets maximum satisfaction at the point where -
A.
Marginal Utility = Price
B.
Marginal Utility > Price
C.
Marginal Utility < Price
D.
Marginal Cost = Price
Ans:
Marginal Utility = Price
Explanation :
As per the law of diminishing marginal utility, the utility of each successive unit goes on diminishing as more and more units of a commodity are consumed. A rational consumer will consume the commodity up to a point where the marginal utility of the final unit of the commodity is equal to the marginal utility of money (in terms of price) paid for it. In this way, the consumer will get the maximum satisfaction and will be in equilibrium.
[19] Micro-economics is also called :
A.
Income theory
B.
Investment theory
C.
Price theory
D.
Expenditure theory
Ans:
Price theory
Explanation :
Microeconomics is the branch of economics concerned with isolated parts of the economy, for example, individual people, firms or industries. It involves such topics as the theory of prices and of the firm.
[20] Demand in Economics means :
A.
Aggregate demand
B.
Market demand
C.
Individual demand
D.
Demand backed by purchasing power
Ans:
Demand backed by purchasing power
Explanation :
Demand ' in Economics refers to the quantity of a good or service consumers ate able and willing to buy at a given price in a given market during a specified time period , other things beings equal.
[21] A fall in demand or rise in supply of a commodity—
A.
Increases the price of that commodity
B.
decreases the price of that commodity
C.
neutralizes the changes in the price
D.
determines" the price elasticity
Ans:
decreases the price of that commodity
Explanation :
The four basic laws of supply and demand are: (1) If demand increases and supply remains unchanged, a shortage occurs, leading to a higher price: (2) If demand decreases and supply remains unchanged, a surplus occurs, leading to a lower price; (3) If demand remains unchanged and supply increases, a surplus occurs, leading to a lower price; and (4) If demand remains unchanged and supply decreases, a shortage occurs, leading to a higher price.
[22] The relationship between the value of money and the price level in an economy is -
A.
Direct
B.
Inverse
C.
Proportional
D.
Stable
Ans:
Inverse
Explanation :
The basic causal relationship between the price level and the value of money is that as the price level goes up, the value of money goes down. The "value of money" refers to what a unit of money can buy whereas the "price level" refers to the average of all of the prices of goods and services in a given economy.
[23] Production function relates -
A.
Cost to output
B.
Cost to input
C.
Wages to profit
D.
Inputs to output
Ans:
Inputs to output
Explanation :
Production function specifies the output of a firm, an industry, or an entire economy for all combinations of inputs. The relationship of output to inputs is non-monetary; that is, a production function relates physical inputs to physical outputs, and prices and costs are not reflected in the function.
[24] If total utility is maximum at a point, then marginal utility is -
A.
positive
B.
zero
C.
negative
D.
positive but decreasing
Ans:
zero
Explanation :
Marginal utility of a good or service is the gain (or loss) from an increase (or decrease) in the consumption of that good or service. As the rate of commodity acquisition increases, marginal utility decreases. If commodity consumption continues to rise, marginal utility at some point falls to zero, reaching maximum total utility. Further increase in consumption of units of commodities causes marginal utility to become negative; this signifies dissatisfaction.
[25] Economies of Scale means reduction in -
A.
unit cost of production
B.
unit cost of distribution
C.
total cost of production
D.
total cost of distribution
Ans:
unit cost of production
Explanation :
In microeconomics, economies of scale are the cost advantages that an enterprise obtains due to expansion. "Economies of scale" is a long run concept and refers to reductions in unit cost as the size of a facility and the usage levels of other inputs increase.
Explanation :
The law of demand states that, other things remaining the same, the quantity demanded of a commodity is inversely related to its price. Thus, according to the law of demand, there is an inverse relationship between price and quantity demanded, other things remaining the same.
[16] The demand curve facing a perfectly competitive firm is -
A.
downward sloping
B.
perfectly inelastic
C.
a concave curve
D.
perfectly elastic
Ans:
perfectly elastic
Explanation :
A perfectly competitive industry is comprised of a large number of relatively small firms that sell identical products. Each perfectly competitive firm is so small relative to the size of the market that it has no market control, it has no ability to control the price. In other words, it can sell any quantity of output it wants at the going market price. This translates into a horizontal or perfectly elastic demand curve.
[17] If average cost falls, marginal cost -
A.
increases at a higher rate
B.
falls at the same rate
C.
increases at a lower rate
D.
falls at a higher rate
Ans:
falls at the same rate
Explanation :
Average cost is the per unit cost incurred in the production of a good or service. It is specified as the total cost divided by the quantity of output. The marginal cost (the additional, cost of producing one more unit of output) and average cost are related. So when average total cost rises, marginal cost also rises; when average cost curve falls with the increase in output, the marginal cost also rises.
[18] Consumer gets maximum satisfaction at the point where -
A.
Marginal Utility = Price
B.
Marginal Utility > Price
C.
Marginal Utility < Price
D.
Marginal Cost = Price
Ans:
Marginal Utility = Price
Explanation :
As per the law of diminishing marginal utility, the utility of each successive unit goes on diminishing as more and more units of a commodity are consumed. A rational consumer will consume the commodity up to a point where the marginal utility of the final unit of the commodity is equal to the marginal utility of money (in terms of price) paid for it. In this way, the consumer will get the maximum satisfaction and will be in equilibrium.
[19] Micro-economics is also called :
A.
Income theory
B.
Investment theory
C.
Price theory
D.
Expenditure theory
Ans:
Price theory
Explanation :
Microeconomics is the branch of economics concerned with isolated parts of the economy, for example, individual people, firms or industries. It involves such topics as the theory of prices and of the firm.
[20] Demand in Economics means :
A.
Aggregate demand
B.
Market demand
C.
Individual demand
D.
Demand backed by purchasing power
Ans:
Demand backed by purchasing power
Explanation :
Demand ' in Economics refers to the quantity of a good or service consumers ate able and willing to buy at a given price in a given market during a specified time period , other things beings equal.
[21] A fall in demand or rise in supply of a commodity—
A.
Increases the price of that commodity
B.
decreases the price of that commodity
C.
neutralizes the changes in the price
D.
determines" the price elasticity
Ans:
decreases the price of that commodity
Explanation :
The four basic laws of supply and demand are: (1) If demand increases and supply remains unchanged, a shortage occurs, leading to a higher price: (2) If demand decreases and supply remains unchanged, a surplus occurs, leading to a lower price; (3) If demand remains unchanged and supply increases, a surplus occurs, leading to a lower price; and (4) If demand remains unchanged and supply decreases, a shortage occurs, leading to a higher price.
[22] The relationship between the value of money and the price level in an economy is -
A.
Direct
B.
Inverse
C.
Proportional
D.
Stable
Ans:
Inverse
Explanation :
The basic causal relationship between the price level and the value of money is that as the price level goes up, the value of money goes down. The "value of money" refers to what a unit of money can buy whereas the "price level" refers to the average of all of the prices of goods and services in a given economy.
[23] Production function relates -
A.
Cost to output
B.
Cost to input
C.
Wages to profit
D.
Inputs to output
Ans:
Inputs to output
Explanation :
Production function specifies the output of a firm, an industry, or an entire economy for all combinations of inputs. The relationship of output to inputs is non-monetary; that is, a production function relates physical inputs to physical outputs, and prices and costs are not reflected in the function.
[24] If total utility is maximum at a point, then marginal utility is -
A.
positive
B.
zero
C.
negative
D.
positive but decreasing
Ans:
zero
Explanation :
Marginal utility of a good or service is the gain (or loss) from an increase (or decrease) in the consumption of that good or service. As the rate of commodity acquisition increases, marginal utility decreases. If commodity consumption continues to rise, marginal utility at some point falls to zero, reaching maximum total utility. Further increase in consumption of units of commodities causes marginal utility to become negative; this signifies dissatisfaction.
[25] Economies of Scale means reduction in -
A.
unit cost of production
B.
unit cost of distribution
C.
total cost of production
D.
total cost of distribution
Ans:
unit cost of production
Explanation :
In microeconomics, economies of scale are the cost advantages that an enterprise obtains due to expansion. "Economies of scale" is a long run concept and refers to reductions in unit cost as the size of a facility and the usage levels of other inputs increase.
Explanation :
Average cost is the per unit cost incurred in the production of a good or service. It is specified as the total cost divided by the quantity of output. The marginal cost (the additional, cost of producing one more unit of output) and average cost are related. So when average total cost rises, marginal cost also rises; when average cost curve falls with the increase in output, the marginal cost also rises.
[18] Consumer gets maximum satisfaction at the point where -
A.
Marginal Utility = Price
B.
Marginal Utility > Price
C.
Marginal Utility < Price
D.
Marginal Cost = Price
Ans:
Marginal Utility = Price
Explanation :
As per the law of diminishing marginal utility, the utility of each successive unit goes on diminishing as more and more units of a commodity are consumed. A rational consumer will consume the commodity up to a point where the marginal utility of the final unit of the commodity is equal to the marginal utility of money (in terms of price) paid for it. In this way, the consumer will get the maximum satisfaction and will be in equilibrium.
[19] Micro-economics is also called :
A.
Income theory
B.
Investment theory
C.
Price theory
D.
Expenditure theory
Ans:
Price theory
Explanation :
Microeconomics is the branch of economics concerned with isolated parts of the economy, for example, individual people, firms or industries. It involves such topics as the theory of prices and of the firm.
[20] Demand in Economics means :
A.
Aggregate demand
B.
Market demand
C.
Individual demand
D.
Demand backed by purchasing power
Ans:
Demand backed by purchasing power
Explanation :
Demand ' in Economics refers to the quantity of a good or service consumers ate able and willing to buy at a given price in a given market during a specified time period , other things beings equal.
[21] A fall in demand or rise in supply of a commodity—
A.
Increases the price of that commodity
B.
decreases the price of that commodity
C.
neutralizes the changes in the price
D.
determines" the price elasticity
Ans:
decreases the price of that commodity
Explanation :
The four basic laws of supply and demand are: (1) If demand increases and supply remains unchanged, a shortage occurs, leading to a higher price: (2) If demand decreases and supply remains unchanged, a surplus occurs, leading to a lower price; (3) If demand remains unchanged and supply increases, a surplus occurs, leading to a lower price; and (4) If demand remains unchanged and supply decreases, a shortage occurs, leading to a higher price.
[22] The relationship between the value of money and the price level in an economy is -
A.
Direct
B.
Inverse
C.
Proportional
D.
Stable
Ans:
Inverse
Explanation :
The basic causal relationship between the price level and the value of money is that as the price level goes up, the value of money goes down. The "value of money" refers to what a unit of money can buy whereas the "price level" refers to the average of all of the prices of goods and services in a given economy.
[23] Production function relates -
A.
Cost to output
B.
Cost to input
C.
Wages to profit
D.
Inputs to output
Ans:
Inputs to output
Explanation :
Production function specifies the output of a firm, an industry, or an entire economy for all combinations of inputs. The relationship of output to inputs is non-monetary; that is, a production function relates physical inputs to physical outputs, and prices and costs are not reflected in the function.
[24] If total utility is maximum at a point, then marginal utility is -
A.
positive
B.
zero
C.
negative
D.
positive but decreasing
Ans:
zero
Explanation :
Marginal utility of a good or service is the gain (or loss) from an increase (or decrease) in the consumption of that good or service. As the rate of commodity acquisition increases, marginal utility decreases. If commodity consumption continues to rise, marginal utility at some point falls to zero, reaching maximum total utility. Further increase in consumption of units of commodities causes marginal utility to become negative; this signifies dissatisfaction.
[25] Economies of Scale means reduction in -
A.
unit cost of production
B.
unit cost of distribution
C.
total cost of production
D.
total cost of distribution
Ans:
unit cost of production
Explanation :
In microeconomics, economies of scale are the cost advantages that an enterprise obtains due to expansion. "Economies of scale" is a long run concept and refers to reductions in unit cost as the size of a facility and the usage levels of other inputs increase.
Explanation :
Microeconomics is the branch of economics concerned with isolated parts of the economy, for example, individual people, firms or industries. It involves such topics as the theory of prices and of the firm.
[20] Demand in Economics means :
A.
Aggregate demand
B.
Market demand
C.
Individual demand
D.
Demand backed by purchasing power
Ans:
Demand backed by purchasing power
Explanation :
Demand ' in Economics refers to the quantity of a good or service consumers ate able and willing to buy at a given price in a given market during a specified time period , other things beings equal.
[21] A fall in demand or rise in supply of a commodity—
A.
Increases the price of that commodity
B.
decreases the price of that commodity
C.
neutralizes the changes in the price
D.
determines" the price elasticity
Ans:
decreases the price of that commodity
Explanation :
The four basic laws of supply and demand are: (1) If demand increases and supply remains unchanged, a shortage occurs, leading to a higher price: (2) If demand decreases and supply remains unchanged, a surplus occurs, leading to a lower price; (3) If demand remains unchanged and supply increases, a surplus occurs, leading to a lower price; and (4) If demand remains unchanged and supply decreases, a shortage occurs, leading to a higher price.
[22] The relationship between the value of money and the price level in an economy is -
A.
Direct
B.
Inverse
C.
Proportional
D.
Stable
Ans:
Inverse
Explanation :
The basic causal relationship between the price level and the value of money is that as the price level goes up, the value of money goes down. The "value of money" refers to what a unit of money can buy whereas the "price level" refers to the average of all of the prices of goods and services in a given economy.
[23] Production function relates -
A.
Cost to output
B.
Cost to input
C.
Wages to profit
D.
Inputs to output
Ans:
Inputs to output
Explanation :
Production function specifies the output of a firm, an industry, or an entire economy for all combinations of inputs. The relationship of output to inputs is non-monetary; that is, a production function relates physical inputs to physical outputs, and prices and costs are not reflected in the function.
[24] If total utility is maximum at a point, then marginal utility is -
A.
positive
B.
zero
C.
negative
D.
positive but decreasing
Ans:
zero
Explanation :
Marginal utility of a good or service is the gain (or loss) from an increase (or decrease) in the consumption of that good or service. As the rate of commodity acquisition increases, marginal utility decreases. If commodity consumption continues to rise, marginal utility at some point falls to zero, reaching maximum total utility. Further increase in consumption of units of commodities causes marginal utility to become negative; this signifies dissatisfaction.
[25] Economies of Scale means reduction in -
A.
unit cost of production
B.
unit cost of distribution
C.
total cost of production
D.
total cost of distribution
Ans:
unit cost of production
Explanation :
In microeconomics, economies of scale are the cost advantages that an enterprise obtains due to expansion. "Economies of scale" is a long run concept and refers to reductions in unit cost as the size of a facility and the usage levels of other inputs increase.
Explanation :
The four basic laws of supply and demand are: (1) If demand increases and supply remains unchanged, a shortage occurs, leading to a higher price: (2) If demand decreases and supply remains unchanged, a surplus occurs, leading to a lower price; (3) If demand remains unchanged and supply increases, a surplus occurs, leading to a lower price; and (4) If demand remains unchanged and supply decreases, a shortage occurs, leading to a higher price.
[22] The relationship between the value of money and the price level in an economy is -
A.
Direct
B.
Inverse
C.
Proportional
D.
Stable
Ans:
Inverse
Explanation :
The basic causal relationship between the price level and the value of money is that as the price level goes up, the value of money goes down. The "value of money" refers to what a unit of money can buy whereas the "price level" refers to the average of all of the prices of goods and services in a given economy.
[23] Production function relates -
A.
Cost to output
B.
Cost to input
C.
Wages to profit
D.
Inputs to output
Ans:
Inputs to output
Explanation :
Production function specifies the output of a firm, an industry, or an entire economy for all combinations of inputs. The relationship of output to inputs is non-monetary; that is, a production function relates physical inputs to physical outputs, and prices and costs are not reflected in the function.
[24] If total utility is maximum at a point, then marginal utility is -
A.
positive
B.
zero
C.
negative
D.
positive but decreasing
Ans:
zero
Explanation :
Marginal utility of a good or service is the gain (or loss) from an increase (or decrease) in the consumption of that good or service. As the rate of commodity acquisition increases, marginal utility decreases. If commodity consumption continues to rise, marginal utility at some point falls to zero, reaching maximum total utility. Further increase in consumption of units of commodities causes marginal utility to become negative; this signifies dissatisfaction.
[25] Economies of Scale means reduction in -
A.
unit cost of production
B.
unit cost of distribution
C.
total cost of production
D.
total cost of distribution
Ans:
unit cost of production
Explanation :
In microeconomics, economies of scale are the cost advantages that an enterprise obtains due to expansion. "Economies of scale" is a long run concept and refers to reductions in unit cost as the size of a facility and the usage levels of other inputs increase.
Explanation :
Production function specifies the output of a firm, an industry, or an entire economy for all combinations of inputs. The relationship of output to inputs is non-monetary; that is, a production function relates physical inputs to physical outputs, and prices and costs are not reflected in the function.
[24] If total utility is maximum at a point, then marginal utility is -
A.
positive
B.
zero
C.
negative
D.
positive but decreasing
Ans:
zero
Explanation :
Marginal utility of a good or service is the gain (or loss) from an increase (or decrease) in the consumption of that good or service. As the rate of commodity acquisition increases, marginal utility decreases. If commodity consumption continues to rise, marginal utility at some point falls to zero, reaching maximum total utility. Further increase in consumption of units of commodities causes marginal utility to become negative; this signifies dissatisfaction.
[25] Economies of Scale means reduction in -
A.
unit cost of production
B.
unit cost of distribution
C.
total cost of production
D.
total cost of distribution
Ans:
unit cost of production
Explanation :
In microeconomics, economies of scale are the cost advantages that an enterprise obtains due to expansion. "Economies of scale" is a long run concept and refers to reductions in unit cost as the size of a facility and the usage levels of other inputs increase.
Explanation :
In microeconomics, economies of scale are the cost advantages that an enterprise obtains due to expansion. "Economies of scale" is a long run concept and refers to reductions in unit cost as the size of a facility and the usage levels of other inputs increase.