introduction to macro economics section 4 MCQ Questions & Answers Detailed Explanation

Answer: (c)

Market segmentation is a marketing strategy that refers to the aggregating of prospective buyers into groups, or segments, having similar needs, wants, or demand characteristics.

Its objective is to design a marketing mix that precisely matches the expectations of customers in the targeted segment.

Answer: (d)

If output increases by that same proportional change as all inputs change then there are constant returns to scale (CRS).

If output increases by less than that proportional change in inputs, there are decreasing returns to scale (DRS). If output increases by more than that proportional change in inputs, there are increasing returns to scale (IRS).

Answer: (a)

Deflation sets in when aggregate supply exceeds aggregate demand. Recession sets in.

This will lead to a buildup in stocks (inventories) and this sends a signal to producers either to cut prices (to stimulate an increase in demand) or to reduce output so as to reduce the buildup of excess stocks.

Either way - there is a tendency for output to move closer to the current level of demand.

Answer: (b)

Collective consumption is a concept that refers to the many goods and services that are produced and consumed on a collective level, such as in cities or countries.

These include schools, libraries, roads, bridges, public transportation, health care, welfare, fire and police protection, etc.

Answer: (a)

In the words of McConnell, the demand for factors of production is a derived demand that is derived from the finished goods and services which resources help to produce.

While the demand for goods is direct demand, demand for factors is derived from demand. It is based on the productivity of the factors.

Answer: (b)

Gross National Product (GNP) is defined as “the market value of all goods and services produced in one year by labour and property supplied by the residents of a country.”

It is contrasted to Gross domestic product (GDP), defined as “the value of all final goods and services produced in a country in 1 year.”