Question 1

The Wealth of Nations is the work of:&#10;A)Marshall&#10;B)J.S. Mill&#10;C)Adam Smith&#10;D)Lionel Robins

Accepted Answer

Adam Smith is the author of "The Wealth of Nations," which is considered a foundational work in classical economics.

Question 2

Indifference Approach is related with:&#10;A)Marshall&#10;B)J.R. Hicks&#10;C)Samuelson&#10;D)Sismondi

Accepted Answer

The Indifference Approach, also known as Indifference Curve Analysis, is primarily associated with J.R. Hicks. It was developed by Hicks and R.G.D. Allen to refine and further the utility theory of consumer demand, moving away from the cardinal utility approach of Alfred Marshall to an ordinal utility framework.

Question 3

Which one of the following is an example of close substitute:&#10;A)Tea and Coffee&#10;B)Milk and water&#10;C)Bread and Butter&#10;D)Pen and pencil

Accepted Answer

Tea and coffee are considered close substitutes because they both serve similar purposes as caffeinated beverages, often consumed for a similar experience or effect, such as an energy boost or enjoyment.

Question 4

The addition to the total revenue by the sale of an additional unit is:&#10;A)Total revenue&#10;B)Average revenue&#10;C)Value added&#10;D)Marginal revenue

Accepted Answer

Marginal revenue is defined as the increase in total revenue that results from the sale of one additional unit of a product or service. It is a key concept in economics and business, particularly in the context of pricing and production decisions.

Question 5

Which cost is to be incurred by a firm even if output is zero:&#10;A)Opportunity cost&#10;B)Fixed cost&#10;C)Variable Cost&#10;D)Total cost

Accepted Answer

Fixed costs are incurred by a firm regardless of its level of production, including when output is zero. These costs, such as rent, salaries, and insurance, do not vary with the level of production.

Question 6

The marginal utility theory is contributed by:&#10;A)Marshall&#10;B)David Ricardo&#10;C)Adam Smith&#10;D)Samuelson

Accepted Answer

Marshall is credited with the development of the marginal utility theory, which is a core concept in microeconomics that explains how individuals make decisions based on the additional benefit (utility) gained from consuming an extra unit of a good or service.

Question 7

The factor earning of entrepreneur is:&#10;A)Rent&#10;B)Wage&#10;C)Interest&#10;D)Profit

Accepted Answer

The factor earning of an entrepreneur is profit. This is because entrepreneurs earn income through the profits generated by their businesses, after paying for all other costs, including wages, rent, and interest on loans.

Question 8

The Scarcity definition of Economics is the contribution of:&#10;A)Samuelson&#10;B)Adam Smith&#10;C)Lionel Robbins&#10;D)Marshall

Accepted Answer

Lionel Robbins defined economics as the science which studies human behavior as a relationship between ends and scarce means which have alternative uses. This definition emphasizes the scarcity aspect and the need for allocation of resources.

Question 9

Average Revenue is equal to:&#10;A)Price&#10;B)Cost&#10;C)Profit&#10;D)None of these

Accepted Answer

Average Revenue (AR) is defined as the revenue earned per unit of output sold. It is calculated by dividing the total revenue by the quantity of goods sold. Since price is the amount of money received for each unit sold, average revenue is essentially the same as the price of the good.

Question 10

Total Revenue is the maximum when Marginal Revenue is ----------&#10;A)Positive&#10;B)Negative&#10;C)One&#10;D)Zero

Accepted Answer

Total Revenue is maximized when Marginal Revenue equals zero. This is because Marginal Revenue represents the change in total revenue from selling one more unit of a good or service. When it's zero, it indicates that selling additional units will not increase total revenue, marking the point of maximum total revenue.

Question 11

Market economy is also known as:&#10;A)Socialist economy&#10;B)Capitalist economy&#10;C)Mixed economy&#10;D)Developing economy

Accepted Answer

The answer of Market economy is also known as:&#10;A)Socialist economy&#10;B)Capitalist...

Question 12

For complementary goods, the cross elasticity of demand:&#10;A)Positive&#10;B)Negative&#10;C)Zero&#10;D)None

Accepted Answer

The answer of For complementary goods, the cross elasticity of...

Question 13

The demand curve for Giffen's goods:&#10;A)Vertical&#10;B)Horizontal&#10;C)Negative slope&#10;D)Positive slope

Accepted Answer

The answer of The demand curve for Giffen's goods:&#10;A)Vertical&#10;B)Horizontal&#10;C)Negative slope&#10;D)Positive...

Question 14

Income elasticity of demand for inferior goods is:&#10;A)Negative&#10;B)Positive&#10;C)Zero&#10;D)Unity

Accepted Answer

The answer of Income elasticity of demand for inferior goods...

Question 15

The change in demand is due to the change in :&#10;A)Income&#10;B)Own price&#10;C)Prices of related products&#10;D)Expectations

Accepted Answer

The answer of The change in demand is due to...

Question 16

A market:&#10;A)Necessarily refers to a meeting place between buyer and sellers&#10;B)Does not necessarily refers to a meeting place between buyer and sellers&#10;C)Extends over the entire country&#10;D)Extends over a city

Accepted Answer

The answer of A market:&#10;A)Necessarily refers to a meeting place...

Question 17

A fall in the price of the commodity holding everything else constant results in:&#10;A)Increase in demand&#10;B)Decrease in demand&#10;C)Increase in quantity demanded&#10;D)Decrease in quantity demanded

Accepted Answer

The answer of A fall in the price of the...

Deck 6: Economics: Demand, Supply, and Market Equilibrium