introduction to micro economics section 7 MCQ Questions & Answers Detailed Explanation

Answer: (b)

Operating surplus is an accounting concept used in national accounts statistics (such as United Nations System of National Accounts (UNSNA) and in corporate and government accounts. It is the balancing item of the Generation of Income Account in the UNSNA.

It may be used in macroeconomics as a proxy for total pre-tax profit income, although entrepreneurial income may provide a better measure of business profits.

In UNSNA, “implicit (imputed) rents” on land owned by the enterprise and the “implicit (imputed) interest” chargeable on the use of the enterprise’s own funds are excluded from operating surplus.

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".

A profit or a loss has not been made, although opportunity costs have been "paid", and capital has received the risk-adjusted, expected return.

Answer: (b)

The supply function expresses the relationship between the total quantity supplied and the price received by all suppliers per unit of time, holding other factors constant. It illustrates the relationship between price and supply.

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The diagram (Price is shown on the Y-axis and Quantity per day on the X-axis) shows that suppliers will produce quantity Q1 units of a good if the price they receive is P1.

As the price keeps decreasing, the quantity produced also keeps on decreasing. So though the supply function has to do with supply and price, it can be perceived to express the similar functional relationship between price and output (in terms of quantity that will be produced).