introduction to micro economics section 6 MCQ Questions & Answers Detailed Explanation
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The following question based on Introduction to Micro Economics topic of indian economy mcq
(a) Decreasing
(b) Minimum
(c) Increasing
(d) Maximum
The correct answers to the above question in:
Answer: (d)
Marginal utility measures the extra utility (or satisfaction) from consuming an additional unit of a product. Total utility is the total satisfaction from the consumption of the product.
According to the Law of Diminishing Marginal Utility, total utility increases at a diminishing rate. When marginal utility is 0 this means there is no increase in total satisfaction from the consumption of that unit. So the total unit is at maximum.
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Read more introduction to micro economics Based Indian Economy Questions and Answers
Question : 1
One of the essential conditions of Monopolistic competition is
a) Homogeneous product
b) Many buyers but one seller
c) Price discrimination
d) Product differentiation
Answer »Answer: (d)
Monopolistic competition is a type of imperfect competition such that many producers sell products that are differentiated from one another as goods but not perfect substitutes (such as from branding, quality, or location).
In monopolistic competition, a firm takes the prices charged by its rivals as given and ignores the impact of its own prices on the prices of other firms. In a monopolistically competitive market, firms can behave like monopolies in the short run, including by using market power to generate profit.
In the long run, however, other firms enter the market and the benefits of differentiation decrease with the competition; the market becomes more like a perfectly competitive one where firms cannot gain economic profit.
Question : 2
The marginal revenue of a monopolist is:
a) less than marginal cost
b) more than price
c) equal to price
d) less than price
Answer »Answer: (d)
A monopolist's marginal revenue is always less than or equal to the price of the good. Marginal revenue is the amount of revenue the firm receives for each additional unit of output.
It is the difference between total revenue - price times quantity - at the new level of output and total revenue at the previous output (one unit less).
Question : 3
Minimum payment to factor of production is called
a) Transfer Payment
b) Quasi Rent
c) Rent
d) Wages
Answer »Answer: (a)
In economics, factors of production are the inputs to the production process.
There are three basic factors of production:
- land,
- labour,
- capital.
The payment for use and the received income of a landowner is rent. The payment for someone else’s labour and all income received from one’s own labour is wages. The modern theory of rent is that it is the difference between the actual earning of a factor unit over its transfer earnings.
So the Transfer earnings are the minimum payment required to keep a factor of production in its present use. It is also known as opportunity cost.
Question : 4
Who said, “Economics is the Science of Wealth” ?
a) Keynes
b) Robbins
c) J.S. Mill
d) Adam Smith
Answer »Answer: (d)
It was Adam Smith who conceptualized Economics as a science of wealth. Elaborating upon the scope and fundamental conceptualizations of the new science, he then called political economy as "an inquiry into the nature and causes of the wealth of nations.”
Question : 5
If total utility is maximum at a point, then marginal utility is
a) positive but decreasing
b) positive
c) zero
d) negative
Answer »Answer: (c)
Marginal utility of a good or service is the gain (or loss) from an increase (or decrease) in the consumption of that good or service.
As the rate of commodity acquisition increases, marginal utility decreases. If commodity consumption continues to rise, marginal utility at some point falls to zero, reaching maximum total utility.
Further increase in consumption of units of commodities causes the marginal utility to become negative; this signifies dissatisfaction.
Question : 6
When the total product rises at an increasing rate, the
a) marginal product remains constant
b) marginal product is zero
c) marginal product is rising
d) marginal product is falling
Answer »Answer: (c)
The marginal product of an input (factor of production) is the extra output that can be produced by using one more unit of the input (for instance, the difference in output when a firm’s labour usage is increased from five to six units), assuming that the quantities of no other inputs to a production change.
Marginal product, which occasionally goes by the alias marginal physical product (MPP), is one of two measures derived from the total product. The other is an average product. Marginal product is directly proportional to total product.
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
Introduction to Micro Economics Shortcuts and Techniques with Examples
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