introduction to micro economics section 2 MCQ Questions & Answers Detailed Explanation
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The following question based on Introduction to Micro Economics topic of indian economy mcq
(a) equal to unity
(b) less than unity
(c) infinitely large
(d) greater than unity
The correct answers to the above question in:
Answer: (a)
Any straight-line supply curve passing through the origin has an elasticity of supply equal to 1. The different types of price elasticity of supply are listed below:
Elasticity | Description | Effect on quantity supply of 1% increase in price |
Zero | Perfectly inelastic (vertical straight line) | |
Between 0 and 1 | Inelastic | Increased by less than 1% |
1 | Unitary elastic | Increased by exactly 1% |
Greater than 1 | Elastic | Increased by more than 1 % |
Infinity | Perfectly elastic (horizontal straight line) | Infinite increase |
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Read more introduction to micro economics Based Indian Economy Questions and Answers
Question : 1
A refrigerator operating in a chemist’s shop is an example of
a) consumer’s good
b) free good
c) final good
d) producers good
Answer »Answer: (c)
Final goods are goods that are ultimately consumed rather than used in the production of another good. For example, a car sold to a consumer is a final good; the components such as tires sold to the car manufacturer are not; they are intermediate goods used to make the final good.
Question : 2
Economic problem arises mainly due to
a) lack of industries
b) overpopulation
c) unemployment
d) scarcity of resources
Answer »Answer: (d)
The theory of Economic problems states that there is scarcity, or that the finite resources available are insufficient to satisfy all human wants and needs.
The problem then becomes how to determine what is to be produced and how the factors of production (such as capital and labour) are to be allocated.
Question : 3
Extreme forms of markets are
a) Perfect competition; Monopolistic competition
b) Perfect competition; Oligopoly
c) Oligopoly; Monopoly
d) Perfect competition; Monopoly
Answer »Answer: (d)
There are two extreme forms of market structure: monopoly and, its opposite, perfect competition.
Perfect competition is characterized by many buyers and sellers, many products that are similar in nature and, as a result, many substitutes.
A monopoly is a market structure in which there is only one producer/ seller for a product.
Question : 4
Different firms constituting the industry, produce homogeneous goods under
a) perfect competition
b) monopoly
c) monopolistic competition
d) oligopoly
Answer »Answer: (a)
The fundamental condition of perfect competition is that there must be a large number of sellers or firms. Homogeneous Commodity is the second fundamental condition of a perfect market.
The products of all firms in the industry are homogeneous and identical. In other words, they are perfect substitutes for one another.
Question : 5
The ‘break-even point’ is where
a) None of these
b) marginal revenue equals marginal cost
c) average revenue equals average cost
d) total revenue equals total cost
Answer »Answer: (c)
The break-even point (BEP) is the point at which cost or expenses and revenue are equal: there is no net loss or gain, and one has “broken even”.
A profit or a loss has not been made, although opportunity costs have been “paid”, and capital has received the risk-adjusted, expected return.
Question : 6
Which of the following cost curve is never ‘U’ shaped ?
a) Average cost curve
b) Marginal cost curve
c) Average variable cost curve
d) Average fixed cost curve
Answer »Answer: (d)
Average fixed cost curve is never ‘U’ shaped. Since total fixed costs are unchanged as output rises, the average fixed cost curve falls continuously as output is increased.
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
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introduction to micro economics section 8
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