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1. Which amongst the following is NOT one of the four main factors of production?
A. Land
B. Labour
C. Expenditure
D. Entrepreneurship
ANSWER: C.Expenditure
SOLUTION :Economists divide the factors of production into four categories: land, labor, capital, and entrepreneurship. So, Expenditure is not the factor of the production.
2. What does the Lorenz curve indicate?
A. Relationship between the price of a certain commodity and its demand.
B. Income distribution
C. Rate of employment
D. Taxable income elasticity
ANSWER:B.Income distribution
SOLUTION:
The Lorenz curve is a graphical representation of the distribution of income or of wealth. The graph represents the population percentile on X-axis and Y-axis
3. An economic condition when there is one buyer and many sellers is called ______
A. Oligopoly
B. Monopoly
C. Perfect Competition
D. Monopsony
ANSWER : D.Monopsony
SOLUTION:
A monopsony is the condition of the market when there is a single buyer and multiple sellers. The difference between a monopoly and monopsony is primarily in the difference between the controlling entities. A single buyer dominates a monopsonized market while an individual seller controls a monopolized market.
4. Which economist gave the theory of Opportunity cost?
A. Milton Friedman
B. Adam Smith
C. John Keynes
D. Gottfried Haberler
ANSWER: D.Gottfried Haberler
SOLUTION:
Gottfried Haberier gave the theory of the opportunity cost. Opportunity cost in microeconomics is the loss of the benefit that could have been taken by making the alternative option that was available at the time of selection.
5. When the output is equal to zero, the variable cost is _______.
A. Constant
B. Zero
C. Minimum
D. Maximum
ANSWER: D.Maximum
SOLUTION:
Total Variable cost = total quantity of output × variable cost per unit If output is equal to zero then the variable cost is equal to zero. Total cost = variable cost +fixed cost
6. What is the value of all tangible resources such as raw materials and labour that are used in the production process called?
A. Real Cost
B. Variable Cost
C. Opportunity Cost
D. Fixed Cost
ANSWER: A.Real Cost
SOLUTION:
Real Cost : It is the overall actual expense involved in creating a good or service for sale to consumers.The real cost of production for a business typically includes the value of all tangible resources such as raw materials and labor that are used in the production process.
7. A marketplace in which a final goods or service is bought and sold is called ____.
A. Equity Market
B. Factor Market
C. Commodity Market
D. Product Market
ANSWER: D.Product Market
SOLUTION :
The product market is the market where final goods or services are sold to the customer for example the pharmaceutical sector, smart- phones. In this type of market trading of raw does not happen both company and customer deals with the finished product.
8. A market structure which is dominated by only a small number of firms is called____________.
A. Perfect Competition
B. Monopoly
C. Oligopoly
D. Monopolistic Competition
ANSWER: C.Oligopoly
SOLUTION:
Monopolistic competition, also called competitive market, where there is a large number of producers, each producer has a small share in the market with slightly different products.
9. Which of the following is not included in the factors of production ?
A. Capital
B. Labour
C. Tax
D. land
ANSWER: C.Tax
SOLUTION:
Factors of production are the inputs needed for the creation of a good or service. The factors of production include land, labor, entrepreneurship, and capital. Tax is not the factor of production.
10. The expenses leading to the increment in production capacity are which type of expenses ?
A. Revenue Expenditure
B. Production Expenditure
C. Investment Expenditure
D. Capital Expenditure
ANSWER: C.Investment Expenditure
SOLUTION:
The expenses leading to the increment in production capacity are Investment expenditure. It is the expenditure that an organisation makes for the creation of the new assets like machinery, building etc.