Question 1

The following affect rent EXCEPT&#10;A)Better location&#10;B)Fertility of land&#10;C)Cleverness of landlords&#10;D)Scarcity of land

Accepted Answer

Cleverness of landlords does not directly affect rent. Rent is primarily determined by factors such as location, land fertility, and scarcity, which influence the desirability and productivity of the property, not the personal attributes or skills of the landlords.

Question 2

These are kinds of rent EXCEPT&#10;A)Differential rent&#10;B)Scarcity rent&#10;C)Mobility rent&#10;D)Location rent

Accepted Answer

Mobility rent is not a recognized type of rent in economic terms. Differential rent refers to the extra income generated from the most productive land, scarcity rent is the cost for using a scarce resource, and location rent pertains to the value derived from a property's location.

Question 3

According to Keynes interest is a payment for&#10;A)Consumer's preference&#10;B)Producer's preference&#10;C)Liquidity preference&#10;D)State Bank's preference

Accepted Answer

According to Keynes, interest is a payment for liquidity preference, which is the desire to hold cash rather than investing it.

Question 4

Interest is paid because&#10;A)Capital is scarce&#10;B)Capital is productive&#10;C)Capital is attractive&#10;D)Capital is surplus

Accepted Answer

Interest is paid because capital is scarce, meaning there is a limited supply of capital available, and lenders charge interest as a cost for borrowing this limited resource.

Question 5

With decrease in price of bonds, rate of interest:&#10;A)Decreases&#10;B)Increases&#10;C)Does not change&#10;D)None of the above

Accepted Answer

When the price of bonds decreases, the rate of interest (or yield) increases because the amount of interest paid on the bond becomes a larger percentage of its lower price.

Question 6

Every factor of production gets reward equal to its:&#10;A)Cost&#10;B)Marginal product&#10;C)Price&#10;D)Increasing return

Accepted Answer

Every factor of production gets rewarded according to its marginal product, which is the additional output generated by employing one more unit of the factor.

Question 7

According to Keynes, interest is a payment for:&#10;A)Use of durable goods&#10;B)Use of capital&#10;C)Use of money&#10;D)Use of land

Accepted Answer

According to Keynes, interest is primarily considered a payment for the use of money, not for the use of durable goods, capital, or land. This concept is central to his liquidity preference theory, where interest is the reward for parting with liquidity for a specified period.

Question 8

In economics capital refers to:&#10;A)Money&#10;B)High quality goods&#10;C)Trade mark&#10;D)Machinery and factories

Accepted Answer

In economics, capital refers to assets used for the production of goods and services, which includes machinery, factories, and equipment.

Question 9

Professor Knight is famous for his theory of:&#10;A)Rent&#10;B)Profit&#10;C)Population&#10;D)Wages

Accepted Answer

Professor Frank H. Knight is most famous for his work on the theory of profit, particularly in his book "Risk, Uncertainty, and Profit" where he distinguishes between insurable risks and true uncertainties, laying the groundwork for much of modern economic theory on profit and entrepreneurial activity.

Question 10

Profits:&#10;A)Are residual payment&#10;B)Are pre-determined&#10;C)Are fixed contract&#10;D)Are always higher than wages

Accepted Answer

Profits are considered residual payments because they are what remains after all expenses, including wages, rent, and interest, have been paid. They are not pre-determined, fixed, or always higher than wages, as they can vary based on the company's performance and other factors.

Question 11

Profits:&#10;A)Are lower in the long run than in the short run&#10;B)Can be negative&#10;C)Are less in perfect competition than in monopoly&#10;D)All of the above

Accepted Answer

The answer of Profits:&#10;A)Are lower in the long run than...

Question 12

Profits arise because an entrepreneur:&#10;A)Prepares plan&#10;B)Innovates&#10;C)Lends money&#10;D)Both (a) and (b

Accepted Answer

The answer of Profits arise because an entrepreneur:&#10;A)Prepares plan&#10;B)Innovates&#10;C)Lends money&#10;D)Both...

Question 13

Gross profit does NOT include:&#10;A)Rent of land owned by the firm&#10;B)Pure profit&#10;C)Interest on capital owned by firm&#10;D)Taxes

Accepted Answer

The answer of Gross profit does NOT include:&#10;A)Rent of land...

Question 14

Some economists say that profit earner is a kind of:&#10;A)Wage earner&#10;B)Rent receiver&#10;C)Interest receiver&#10;D)Govt. officer

Accepted Answer

The answer of Some economists say that profit earner is...

Question 15

Risks in the business arise because of:&#10;A)Introduction of the new products&#10;B)Uncertain policy of rival firms&#10;C)Changes in tastes&#10;D)All the above

Accepted Answer

The answer of Risks in the business arise because of:&#10;A)Introduction...

Question 16

According to Professor Knight risks are of _____ kinds:&#10;A)two&#10;B)three&#10;C)four&#10;D)many

Accepted Answer

The answer of According to Professor Knight risks are of...

Question 17

This is not a function of the entrepreneur:&#10;A)Supervise&#10;B)Innovate&#10;C)Lend money&#10;D)Prepare plan

Accepted Answer

The answer of This is not a function of the...

Question 18

According to Modern Theory of Rent, rent accrues to&#10;A)Land only&#10;B)Any factor&#10;C)Capital only&#10;D)Labour only

Accepted Answer

The answer of According to Modern Theory of Rent, rent...

Question 19

An increase in the wage rate:&#10;A)Will usually lead to more people employed&#10;B)Will decrease total earnings of employees if the demand for labour is wage elastic&#10;C)Is illegal in a free market&#10;D)Will cause a shift in the demand for labour

Accepted Answer

The answer of An increase in the wage rate:&#10;A)Will usually...

Question 20

A market system where there is only one buyer, is known as.&#10;A)Monopoly&#10;B)Monopolistic competition&#10;C)Monopsony&#10;D)Monopsonistic competition

Accepted Answer

The answer of A market system where there is only...

Question 21

Factor prices are determined in the market under forces of&#10;A)Elasticity of demand&#10;B)Elasticity of supply&#10;C)Elasticity and supply&#10;D)None of the above

Accepted Answer

The answer of Factor prices are determined in the market...

Deck 2: Understanding Rent, Capital, and Profits in Economics