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) less than marginal cost
(b) more than price
(c) equal to price
(d) less than price
The correct answers to the above question in:
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).
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Read more introduction to micro economics Based Indian Economy Questions and Answers
Question : 1
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 : 2
Other things being equal, a decrease in quantity demanded of a commodity can be caused by
a) a fall in the income of the consumer
b) a rise in the price of the commodity
c) a rise in the income of the consumer
d) a fall in the price of a commodity
Answer »Answer: (b)
In economics, the law states that all else being equal, as the price of a product increases, quantity demanded falls; likewise, as the price of a product decreases, quantity demanded increases.
So basically the quantity demanded and the price of a commodity is inversely related, other things remaining constant.
Question : 3
In Economics, production means
a) farming
b) manufacturing
c) making
d) creating utility
Answer »Answer: (d)
All factors of production like land, labour, capital and entrepreneur are required in combination at a time to produce a commodity.
Production means the creation or an addition of utility. Factors of production (or productive ‘inputs’ or ‘resources’) are any commodities or services used to produce goods and services.
Question : 4
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 : 5
When marginal utility is zero, the total utility is
a) Decreasing
b) Minimum
c) Increasing
d) Maximum
Answer »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.
Question : 6
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.”
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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