introduction to micro economics section 1 MCQ Questions & Answers Detailed Explanation

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.

Answer: (d)

Goods that are neither indestructible nor lasting are defined as Semi Durable Goods.

They fall in the category between Durable Goods and Non Durable Goods. Some common Semi Durable Goods are clothing or preserved foods; vehicles and electronic home appliances are classified as Durable Goods.

Answer: (b)

Under Perfect Competition, the firm faces a horizontal demand curve. It can sell any quantity desired at the market price, but cannot sell anything above the market price.

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.

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?

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.