introduction to micro economics section 7 Practice Questions Answers Test with Solutions & More Shortcuts

Answer: (a)

Services done by a house-wife in her own house are not included in production.

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).

Answer: (c)

In economics, the demand curve is the graph depicting the relationship between the price of a certain commodity and the amount of it that consumers are willing and able to purchase at that given price. The shift of a demand curve takes place when there is a change in any non-price determinant of demand, resulting in a new demand curve.

There is movement along a demand curve when a change in price causes the quantity demanded to change. When there is a change in an influencing factor other than price, there may be a shift in the demand curve to the left or to the right, as the quantity demanded increases or decreases at a given price.

For example, if there is a positive news report about the product, the quantity demanded at each price may increase, as demonstrated by the demand curve shifting to the right.