introduction to micro economics section 4 MCQ Questions & Answers Detailed Explanation
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The following question based on Introduction to Micro Economics topic of indian economy mcq
(a) Retired persons
(b) Consuming units
(c) Producing units
(d) Banking units
The correct answers to the above question in:
Answer: (c)
A subsidy is essentially a payment by the government to suppliers/producers that reduce their costs of production and encourages them to increase output.
Examples include a guaranteed payment on the factor cost of a product –
e.g. a guaranteed minimum price offered to farmers; an input subsidy that subsidizes the cost of inputs used in production, etc. However, subsidies can be given to consuming units as well. Either way, it benefits the end-user or consumer.
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Read more introduction to micro economics Based Indian Economy Questions and Answers
Question : 1
It is prudent to determine the size of the output when the industry is operating in the stage of
a) negative returns
b) increasing returns
c) constant returns
d) diminishing returns
Answer »Answer: (d)
In economics, diminishing returns (also called diminishing marginal returns) is the decrease in the marginal (per-unit) output of a production process as the amount of a single factor of production is increased, while the amounts of all other factors of production stay constant.
This law plays a central role in production theory.
Question : 2
The situation in which total Revenues equals total cost, is known as :
a) Perfect competition
b) Monopolistic competition
c) Equilibrium level of output
d) Break even point
Answer »Answer: (d)
In economics and cost accounting, 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.”
Question : 3
In the case of an inferior good, the income elasticity of demand is :
a) Positive
b) Zero
c) Negative
d) Infinite
Answer »Answer: (c)
Negative income elasticity of demand is associated with inferior goods; an increase in income will lead to a fall in the demand and may lead to changes to more luxurious substitutes.
Positive income elasticity of demand is associated with normal goods; an increase in income will lead to a rise in demand.
Question : 4
Exploitation of labour is said to exist when
a) Marginal Revenue Product = 0
b) Wage = Marginal Revenue Product
c) Wage < Marginal Revenue Product
d) Wage > Marginal Revenue Product
Answer »Answer: (c)
The term "exploitation" is used to denote the payment to labour of a wage less than its marginal revenue product. Under monopolistic competition, all factors are exploited in this sense.
All firms hire labour until the marginal revenue product equals the marginal factor cost.
Question : 5
An increase in the quantity supplied suggests :
a) a rightward shift of the supply curve
b) a leftward shift of the supply curve
c) a movement up along the supply curve
d) a movement down along the supply curve
Answer »Answer: (c)
Like the law of demand, the law of supply demonstrates the quantities that will be sold at a certain price. But unlike the law of demand, the supply relationship shows an upward slope.
This means that the higher the price, the higher the quantity supplied. Producers supply more at a higher price because selling a higher quantity at a higher price increases revenue.
Question : 6
In the law of demand, the statement “Other things remain constant” means
a) All of the above
b) income of consumer should not change
c) price of other goods should not change
d) taste of consumer should not change
Answer »Answer: (a)
In economics, the law of demand is an economic law, which states that consumers buy more of a good when its price is lower and less when its price is higher (ceteris paribus).
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 number of goods demanded by the consumer will be negatively correlated to the change in the price of the good.
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
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introduction to micro economics section 8
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