introduction to micro economics section 5 MCQ Questions & Answers Detailed Explanation
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The following question based on Introduction to Micro Economics topic of indian economy mcq
(a) Positive
(b) Zero
(c) Negative
(d) Infinite
The correct answers to the above question in:
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.
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Read more introduction to micro economics Based Indian Economy Questions and Answers
Question : 1
The relationship between the value of money and the price level in an economy is
a) Stable
b) Direct
c) Inverse
d) Proportional
Answer »Answer: (c)
The basic causal relationship between the price level and the value of money is that as the price level goes up, the value of money goes down.
The "value of money" refers to what a unit of money can buy whereas the "price level" refers to the average of all of the prices of goods and services in a given economy.
Question : 2
The theory of monopolistic competition has been formulated in the United States of America by
a) Joseph Schumpeter
b) Joan Robinson
c) Edward Chamberlin
d) John Bates Clark
Answer »Answer: (c)
In treatments of monopolistic competition, Edward Chamberlin and Joan Robinson are usually credited with simultaneously and independently developing the theory of monopolistic or imperfect competition.
Chamberlin published his book ‘The Theory of Monopolistic Competition’ in 1933, the same year that Joan Robinson published her book on the same topic: ‘The Economics of Imperfect Competition,’ so these two economists can be regarded as the parents of the modern study of imperfect competition.
Question : 3
The principle of maximum social advantage is the basic principle of
a) Environmental Economics
b) Micro Economics
c) Macro Economics
d) Fiscal Economics
Answer »Answer: (d)
The ‘Principle of Maximum Social Advantage’, introduced by British economist Hugh Dalton, is the fundamental principle of Public Finance which implies that all the financial operations of the state should aim at maximization of net social benefit.
It takes into consideration both the aspects of public finance that is the government revenue or taxation as well as government expenditure. Since it studies problems related to government taxation and spending, it comes under the domain of fiscal economics.
Question : 4
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 : 5
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.
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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