introduction to micro economics section 2 Practice Questions Answers Test with Solutions & More Shortcuts

Answer: (a)

Adam Smith, a Scottish moral philosopher and a pioneer of political economy, is cited as the “father of modern economics.”

He is best known for two classic works:

1. The Theory of Moral Sentiments (1759), and
2. An Inquiry into the Nature and Causes of the Wealth of Nations (1776).

The Wealth of Nations is considered the first modern work of economics.

Answer: (d)

Average fixed cost curve is never ‘U’ shaped. Since total fixed costs are unchanged as output rises, the average fixed cost curve falls continuously as output is increased.

Answer: (c)

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: (a)

The fundamental condition of perfect competition is that there must be a large number of sellers or firms. Homogeneous Commodity is the second fundamental condition of a perfect market.

The products of all firms in the industry are homogeneous and identical. In other words, they are perfect substitutes for one another.

Answer: (a)

Any straight-line supply curve passing through the origin has an elasticity of supply equal to 1. The different types of price elasticity of supply are listed below: