introduction to macro economics section 5 MCQ Questions & Answers Detailed Explanation
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The following question based on Introduction to Macro Economics topic of indian economy mcq
(a) Schumpeter
(b) Joan Robbinson
(c) Clark
(d) Marshall
The correct answers to the above question in:
Answer: (a)
The Innovation Theory of Profit was proposed by Joseph. A. Schumpeter, who believed that an entrepreneur can earn economic profits by introducing successful innovations.
In other words, the innovation theory of profit posits that the main function of an entrepreneur is to introduce innovations and the profit in the form of reward is given for his performance.
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Read more introduction to macro economics Based Indian Economy Questions and Answers
Question : 1
If total product is at its maximum then: (AP= Average product) (MP= Marginal product)
a) MP = 0
b) AP = MP = 0
c) AP < 0
d) AP = 0
Answer »Answer: (a)
Total product (TP) is the total output a production unit can produce, using different combinations of factors of production.
When marginal product =0 (at point D in the figure), the total product is at its maximum (as seen at point C in the figure given below). Then en as the marginal product becomes negative, the total product starts going down.
Question : 2
Which one of the following is not a feature of monopoly ?
a) Barriers to entry of new firms
b) Price discriminations
c) Heavy selling costs
d) Single seller of the product
Answer »Answer: (c)
Heavy selling cost is one of the defining features of an oligopoly. Firms resort to heavy selling costs to attract customers.
Under this market form, the firms have to compete to promote their sale by largely homogenous products, differentiated mainly by heavy advertising and promotional expenditure that ultimately adds to the total selling cost.
Question : 3
Which one of the following is not a method of estimating National Income ?
a) Matrix method
b) Income method
c) Product method
d) Expenditure method
Answer »Answer: (a)
The matrix method is a structural analysis method used as a fundamental principle in many applications in civil engineering. The method is carried out, using either a stiffness matrix or a flexibility matrix.
Primarily there are three methods of measuring national income. The methods are product method, income method and expenditure method.
Question : 4
When aggregate supply exceeds aggregate demand
a) inventories accumulate
b) unemployment develops
c) prices rise
d) unemployment falls
Answer »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.
Question : 5
If a change in all inputs leads to a proportionate change in output, it is case of
a) Increasing returns to scale
b) Variable returns to scale
c) Diminishing returns to scale
d) Constant returns to scale
Answer »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).
Question : 6
Market segmentation is:
a) Market Division
b) Market Space
c) Dividing target groups as per their needs
d) Group of Sales Persons
Answer »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.
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introduction to macro economics section 1
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introduction to macro economics section 3
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introduction to macro economics section 6
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