introduction to micro economics section 7 MCQ Questions & Answers Detailed Explanation
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The following question based on Introduction to Micro Economics topic of indian economy mcq
(a) use of a product
(b) destruction of utility
(c) creation of utilities
(d) exchange value
The correct answers to the above question in:
Answer: (c)
Production refers to “the creation of utility having value-in-exchange.” The process of production may create six types of utilities: form utility, time utility, place utility, ownership utility, service utility and knowledge utility.
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Read more introduction to micro economics Based Indian Economy Questions and Answers
Question : 1
Cross demand expresses the functional relationship between
a) demand and supply,
b) demand and prices of related commodities.
c) demand and income.
d) demand and prices.
Answer »Answer: (b)
Other things being constant, cross demand expresses the relation between demand for good ‘A’ due to change in the price of its related good ‘B’. It shows that at different prices of good ‘B’ what different quantities of good A’ will be demanded.
Question : 2
Equilibrium is a condition that can
a) change only if government policies change
b) never change
c) change only if some outside factor changes
d) change only if some internal factor changes
Answer »Answer: (d)
In economics, economic equilibrium is a state of the world where economic forces are balanced and in the absence of external influences, the (equilibrium) values of economic variables will not change.
For example, in the standard textbook model of perfect competition, equilibrium occurs at the point at which quantity demanded and quantity supplied is equal.
Equilibrium can change if there is a change in demand or supply conditions which are internal factor changes. In equilibrium, the price is endogenous because producers change their price
Question : 3
An exceptional demand curve is one that moves
a) vertically
b) upward to the right
c) downward to the right
d) horizontally
Answer »Answer: (c)
A demand curve that violates the law of demand is termed an exceptional demand curve. If a household expects the price of a commodity to increase, it may start purchasing a greater amount of the commodity even at the presently increased price. Similarly, if the household expects the price of the commodity to decrease, it may postpone its purchases.
Thus, the law of demand is violated in such cases. In this case, the demand curve does not slope down from left to right; instead, it presents a backward slope from the top right to down left. This curve is known as an exceptional demand curve.
Question : 4
Which is the most essential function of an entrepreneur ?
a) Risk bearing
b) Supervision
c) Management
d) Marketing
Answer »Answer: (a)
An entrepreneur performs a series of functions necessary right from the genesis of an idea up to the establishment and effective operation of an enterprise.
The functions of an entrepreneur as a risk bearer are specific in nature. The entrepreneur assumes all possible risks of business that emerges due to the possibility of changes in the tastes of consumers, modern techniques of production and new inventions.
Such risks are not insurable and incalculable. In simple terms, such risks are known as uncertainty concerning a loss.
Question : 5
Name the curve which shows the quantity of products a seller wishes to sell at a given price level.
a) None of these
b) Demand curve
c) Cost curve
d) Supply curve
Answer »Answer: (d)
The supply curve shows the relationship between the price of a good and the quantity supplied, holding constant the values of all other variables that affect supply.
Each point on the curve shows the quantity that sellers would choose to sell at a specific price.
Question : 6
Under Perfect Competition
a) Average Revenue is more than the Marginal Revenue
b) Marginal Revenue is less than the Average Revenue
c) Average Revenue is less than the Marginal Revenue
d) Average Revenue is equal to the Marginal Revenue
Answer »Answer: (d)
Perfect competition describes markets such that no participants are large enough to have the market power to set the price of a homogeneous product.
In the short run, perfectly competitive markets are not productively efficient as output will not occur where marginal cost is equal to average cost (MC=AC).
They are allocatively efficient, as output will always occur where marginal cost is equal to marginal revenue (MC=MR).
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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