introduction to micro economics section 3 MCQ Questions & Answers Detailed Explanation

Answer: (b)

In economics, a cost curve is a graph of the costs of production as a function of the total quantity produced. Both the Short-run average total cost curve (SRAC) and Long-run average cost curve (LRAC) curves are typically expressed as U-shaped.

However, the shapes of the curves are not due to the same factors.

Answer: (b)

Marshall was the first economist who analyzed the importance of time in price determination. The market period is a very short period in which supply being fixed, price is determined by demand.

The time period is of few days or weeks in which the supply of a product can be amplified out of given stock to match the demand. This is possible for durable goods.

Answer: (b)

“Need,” “Want,” and “Demand” are the three key concepts of marketing. Needs are the basic human requirements. These needs become wants when they are directed to specific objects that might satisfy the need, though these wants in themselves are not essential for living. Wants are therefore shaped by one’s society and surroundings.

The third concept, demands, are wanted for specific products backed by an ability to pay. Many people want a luxury car or a weekend break in the Caribbean, but only a few people are willing and able to buy one.

In business terms, companies must measure not only how many people want their product but also how many would actually be willing and able to buy it.

Answer: (a)

The average cost is the total cost per unit of output. Marginal cost, on the other hand, is the addition to the total cost by producing one more unit of output.

Economies of scale are said to exist if an additional unit of output can be produced for less than the average of all previous units— that is, if long-run marginal cost is below long-run average cost, so the latter is falling.

Conversely, there may be levels of production where marginal cost is higher than average cost, and the average cost is an increasing function of output.

Answer: (a)

‘ Demand ’ in Economics refers to the quantity of a good or service consumers ate able and willing to buy at a given price in a given market during a specified time period , other things beings equal.

Answer: (c)

Economic rent is the revenue that can be earned from the land or other natural resource for which there is a fixed supply — as economists like to say, the supply is perfectly inelastic.

Because the supply is perfectly inelastic, the amount of its supply does not depend on any income that the resource can produce.