introduction to micro economics section 8 Practice Questions Answers Test with Solutions & More Shortcuts

Answer: (c)

In economics, utility is a representation of preferences over some set of goods and services. Preferences have a utility representation so long as they are transitive, complete, and continuous.

Usefulness refers to which extent something is useful and the utility is the quality of that piece in practical use. Both are inter-related terms.

The utility is a factor of usefulness term. Usefulness means having the practical utility of a piece that is beneficial, pertinent and functional.

Answer: (b)

Factors of Production is an economic term to describe the inputs that are used in the production of goods or services in the attempt to make an economic profit.

Resources required for the generation of goods or services, generally classified into four major groups:

1. Land (including all natural resources),
2. Labor (including all human resources),
3. Capital (including all man-made resources), and
4. Enterprise (which brings all the previous resources together for production).

Answer: (a)

Rent accrues to land which is fixed in supply even in the longer run. It is permanent. In contrast to it is a quasi rent, introduced by Marshall, which is inelastic in the short run, but elastic in the longer run.

Answer: (d)

Microeconomics is the branch of economics concerned with isolated parts of the economy, for example, individual people, firms or industries. It involves such topics as the theory of prices and of the firm.

Answer: (b)

Demand for a commodity refers to the quantity of the commodity that people are willing to purchase at a specific price per unit of time, other factors (such as the price of related goods, income, tastes and preferences, advertising, etc) being constant.

Demand includes the desire to buy the commodity accompanied by the willingness to buy it and sufficient purchasing power to purchase it. So changes in the unit price of a commodity lead to either extension or contraction in demand.

The law of demand states that there is an inverse relationship between the quantity demanded of a commodity and its price, other factors being constant. In other words, the higher the price, the lower the demand and vice versa, other things remaining constant.