introduction to micro economics section 1 MCQ Questions & Answers Detailed Explanation
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The following question based on Introduction to Micro Economics topic of indian economy mcq
(a) Equality in the distribution of the income and wealth
(b) The distribution of assets
(c) The distribution of income
(d) The distribution of factor payments
The correct answers to the above question in:
Answer: (a)
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?
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Read more introduction to micro economics Based Indian Economy Questions and Answers
Question : 1
The demand curve facing a perfectly competitive firm is
a) perfectly elastic
b) downward sloping
c) perfectly inelastic
d) a concave curve
Answer »Answer: (a)
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.
Question : 2
In which market structure is the demand curve of the market represented by the demand curve of the firm ?
a) Perfect Competition
b) Monopoly
c) Oligopoly
d) Duopoly
Answer »Answer: (b)
Because the monopolist is the market's only supplier, the demand curve the monopolist faces is the market demand curve.
The market demand curve is downward sloping, reflecting the law of demand.
The fact that the monopolist faces a downward-sloping demand curve implies that the price a monopolist can expect to receive for its output will not remain constant as the monopolist increases its output.
Question : 3
All of the goods which are scarce and limited in supply are called
a) Economic goods
b) Luxury goods
c) Expensive goods
d) Capital goods
Answer »Answer: (a)
In economics, a good is something that is intended to satisfy some wants or needs of a consumer and thus has economic utility.
An economic good is a consumable item that is useful to people but scarce in relation to its demand so that human effort is required to obtain it.
In contrast, free goods (such as air) are naturally in abundant supply and need no conscious effort to obtain them.
Question : 4
A unit price elastic demand curve will touch
a) only quantity axis
b) both price and quantity axis
c) neither price axis, nor quantity axis
d) only price axis
Answer »Answer: (c)
Unit elastic refers to An elasticity alternative in which any percentage change in price causes an equal percentage change in quantity.
In other words, any change in price, whether big or small, triggers exactly the same percentage change in quantity.
However, the unit price elastic demand curve does not touch either the price axis or quantity axis.
Question : 5
‘Law of demand’ implies that when there is excess demand for a commodity, then
a) quantity demanded of the commodity falls
b) price of the commodity falls
c) price of the commodity remains same
d) price of the commodity rises
Answer »Answer: (d)
The Law of demand states that the quantity demanded and the price of a commodity are inversely related, other things remaining constant.
That is, if the income of the consumer, prices of the related goods, and preferences of the consumer remain unchanged, then the change in the quantity of goods demanded by the consumer will be negatively correlated to the change in the price of the good.
When there is excess demand for the commodity the price starts rising and it continues to rise till equilibrium price is reached.
Question : 6
The demand of a factor of production is
a) discretion of the producer
b) direct
c) derived
d) neutral
Answer »Answer: (c)
There are 4 factors of production;
- land,
- labour,
- capital and
- entrepreneurship.
The demand for the factors of production is a derived demand. That means these factors of production are demanded because there is a demand for the end product they produce.
GET Introduction to Micro Economics PRACTICE TEST EXERCISES
introduction to micro economics section 1
introduction to micro economics section 2
introduction to micro economics section 3
introduction to micro economics section 4
introduction to micro economics section 5
introduction to micro economics section 6
introduction to micro economics section 7
introduction to micro economics section 8
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