introduction to macro economics section 3 MCQ Questions & Answers Detailed Explanation

Answer: (c)

Such a scenario is seen in the case of primary economic activities such as agriculture in the developing countries like India. Most of the primary activities are labour intensive where the volume of manpower substitutes the lack of technology. Besides, farmers are ‘self-employed.’

Answer: (c)

There is a close relationship between marginal product and average product because both are derived from the total product. When marginal product is equal to average product, the average product is at its maximum.

In the short-run production function, since marginal product starts off as greater than average product and then falls below average product, we can assume that at the “cross-over point,”

when MP = AP, AP is at its maximum.

Answer: (d)

In economics, an inferior good is a good that decreases in demand when consumer income rises (or rises in demand when consumer income decreases), unlike normal goods, for which the opposite is observed.

Normal goods are those for which consumers’ demand increases when their income increases. Cheaper cars are examples of inferior goods.