Practice Quiz set 6 - indian economy mcq Online Quiz (set-1) For All Competitive Exams
Q-1) Who said, “Economics is the Science of Wealth” ?
(a)
(b)
(c)
(d)
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.”
Q-2) Economics classifies the manmade instrument of production as :
(a)
(b)
(c)
(d)
Some economists have classified factors into two categories, land and labour (or nature and man) on the ground that they are the only original or primary factors.
It is said that capital has no independent origin and is merely the outcome of combined efforts of land and labour.
However, other economists include all man-made instruments for production in the category of Capital. It includes machines, tools, factories, buildings, canals, roads, raw materials, etc, which play a vital role in production.
Factors of Production:
- Land -.All free gifts of nature, i.e., soil, forests, mountains, seas. etc.
- Labour - Human, a physical or mental effort done for income or material benefit
- Capital - All man-made means of production like machines, tools, buildings, roads, raw materials, etc
- Entrepreneur - Human resource that helps to organize production, i.e., takes the risk and combines land, labour and capital to produce.
Q-3) In Economics, production means
(a)
(b)
(c)
(d)
All factors of production like land, labour, capital and entrepreneur are required in combination at a time to produce a commodity.
Production means the creation or an addition of utility. Factors of production (or productive ‘inputs’ or ‘resources’) are any commodities or services used to produce goods and services.
Q-4) In the long-run equilibrium, a competitive firm earns
(a)
(b)
(c)
(d)
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 the movement of firms in and out of the industry and a long-run equilibrium has been established.
Q-5) Demand for complementary goods is known as
(a)
(b)
(c)
(d)
Demand for complementary goods is called Joint Demand. Joint Demand is the demand in which goods are related in such a way that an increase in the demand for one causes an increase in the demand for the other.
Q-6) When marginal utility is zero, the total utility is
(a)
(b)
(c)
(d)
Marginal utility measures the extra utility (or satisfaction) from consuming an additional unit of a product. Total utility is the total satisfaction from the consumption of the product.
According to the Law of Diminishing Marginal Utility, total utility increases at a diminishing rate. When marginal utility is 0 this means there is no increase in total satisfaction from the consumption of that unit. So the total unit is at maximum.
Q-7) Purchasing Power Parity theory is related with
(a)
(b)
(c)
(d)
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.
Q-8) Seawater, fresh air, etc., are regarded in Economics as
(a)
(b)
(c)
(d)
Free goods are what is needed by society and is available without limits. The free good is a term used in economics to describe a good that is not scarce.
A free good is available in as great a quantity as desired with zero opportunity cost to society.
Q-9) The degree of monopoly power is to be measured in terms of the firm’s
(a)
(b)
(c)
(d)
Monopoly power implies the amount of discretion that a monopolist possesses to fix up the prices of his products and the degree of control over his output decisions.
According to J.S. Bains, the degree of monopoly power can be measured by the monopoly firm's super-normal profit.
Q-10) Minimum payment to factor of production is called
(a)
(b)
(c)
(d)
In economics, factors of production are the inputs to the production process.
There are three basic factors of production:
- land,
- labour,
- capital.
The payment for use and the received income of a landowner is rent. The payment for someone else’s labour and all income received from one’s own labour is wages. The modern theory of rent is that it is the difference between the actual earning of a factor unit over its transfer earnings.
So the Transfer earnings are the minimum payment required to keep a factor of production in its present use. It is also known as opportunity cost.