introduction to micro economics section 8 MCQ Questions & Answers Detailed Explanation
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The following question based on Introduction to Micro Economics topic of indian economy mcq
(a) inelastic
(b) perfectly inelastic
(c) elastic
(d) perlectly elastic
The correct answers to the above question in:
Answer: (d)
If quantity demanded changes by a very large percentage as a result of a tiny percentage change in price, then the demand is said to be perfectly elastic.
It reflects the fact that the quantity demanded is extremely responsive to even a small change in price.
Technically, the elasticity in this extreme case would be undefined but it approaches negative infinity as demand becomes more elastic.
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Read more introduction to micro economics Based Indian Economy Questions and Answers
Question : 1
Which one of the following pairs of goods is an example for Joint Supply ?
a) Wool and Mutton
b) Coffee and Tea
c) Ink and Pen
d) Tooth brush and Paste
Answer »Answer: (a)
The production of two or more goods simultaneously from the same imputs is called Joint Supply. Wool and Mutton are an example for joint supply.
Question : 2
The term “market” in Economics means
a) Shops and super bazars
b) A central place
c) Presence of competition
d) Place where goods are stored
Answer »Answer: (b)
The most important defining characteristic of a market in economics is that it allows buyers and sellers to exchange any type of goods, services and information.
According to Walter Christaller’s ‘Central Place Theory,’ a central place is a market centre for the exchange of goods and services by people attracted from the surrounding area.
The central place is so-called because it is centrally located to maximize accessibility from the surrounding region.
Question : 3
Cost of production of the producer is given by:
a) sum of wages, interest, rent and normal profit.
b) sum of wages paid to labourers.
c) sum of wages and interest paid on capital.
d) sum of wages, interest, rent and supernormal profit.
Answer »Answer: (a)
The following elements are included in the cost of production:
- Purchase of raw machinery,
- Installation of plant and machinery,
- Wages of labour,
- Rent of Building,
- Interest on capital,
- Wear and tear of the machinery and building,
- Advertisement expenses,
- Insurance charges,
- Payment of taxes,
- In the cost of production, the imputed value of the factor of production owned by the firm itself is also added,
- The normal profit of the entrepreneur is also included In the cost of production.
Question : 4
The expenses on advertising is called
a) Selling cost
b) Implicit cost
c) Surplus cost
d) Fixed cost
Answer »Answer: (a)
Selling cost is total cost of marketing, advertising, and selling a product. It differs from the production cost which is incurred to produce goods. Selling cost influences the commercial desire to purchase a commodity.
Question : 5
If the price of an inferior good falls, its demand
a) can be any of the above
b) rises
c) falls
d) remains constant
Answer »Answer: (b)
Some goods are known as inferior goods. With inferior goods, there is an inverse relationship between real income and the demand for the good in question.
If real incomes rise, the demand for an inferior good will fall. If real incomes fall (in a recession, for instance), the demand for an inferior good will rise.
Example: Bus travel. As people get richer, they are more likely to buy themselves a car, or use a taxi, rather than rely on the more inferior bus, so the demand for bus travel falls as real incomes rise.
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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