introduction to micro economics section 3 Practice Questions Answers Test with Solutions & More Shortcuts

Answer: (b)

In economics, a cost curve is a graph of the costs of production as a function of the total quantity produced. Both the Short-run average total cost curve (SRAC) and Long-run average cost curve (LRAC) curves are typically expressed as U-shaped.

However, the shapes of the curves are not due to the same factors.

Answer: (b)

Marshall was the first economist who analyzed the importance of time in price determination. The market period is a very short period in which supply being fixed, price is determined by demand.

The time period is of few days or weeks in which the supply of a product can be amplified out of given stock to match the demand. This is possible for durable goods.

Answer: (b)

“Need,” “Want,” and “Demand” are the three key concepts of marketing. Needs are the basic human requirements. These needs become wants when they are directed to specific objects that might satisfy the need, though these wants in themselves are not essential for living. Wants are therefore shaped by one’s society and surroundings.

The third concept, demands, are wanted for specific products backed by an ability to pay. Many people want a luxury car or a weekend break in the Caribbean, but only a few people are willing and able to buy one.

In business terms, companies must measure not only how many people want their product but also how many would actually be willing and able to buy it.

Answer: (b)

In economics, the study of factor pricing is related to the theory of functional distribution which attempts to explain the prices of land, labour, and capital.

It sees the demand for land, labour, and capital as derived demand, stemming from the demand for final goods.

Answer: (c)

The kinked demand curve theory is an economic theory regarding oligopoly and monopolistic competition. Kinked demand was an initial attempt to explain sticky prices.