“Economics is what it ought to be” – This statement refers to
(a) Normative economics
(b) Positive economics
(c) Monetary economics
(d) Fiscal economics
Answer for Objective Question on Microeconomics is (a)
Normative economics (as opposed to positive economics) is that part of economics that expresses value judgments (normative judgments) about economic fairness or what the economy ought to be like or what goals of public policy ought to be. It is the study or presentation of “what ought to be” rather than what actually is. Normative economics deals heavily in value judgments and theoretical scenarios. An example of a normative economic statement would be, “We should cut taxes in half to increase disposable income levels”. By contrast, a positive (or objective) economic observation would be, “Big tax cuts would help many people, but government budget constraints make that option infeasible.”
When the price of a commodity falls, we can expect
(a) the supply of it to increase
(b) the demand for it to fall
(c) the demand for it to stay constant
(d) the demand for it to increase
Answer for Objective Question on Microeconomics is (d)
In economics, the law of demand is an economic law, which states that consumers buy more of a good when its price is lower and less when its price is higher. The Law of demand states that the quantity demanded and the price of a commodity are inversely related, other things remaining constant. That is, if the income of the consumer, prices of the related goods, and preferences of the consumer remain unchanged, then the change in quantity of good demanded by the consumer will be negatively correlated to the change in the price of the good.
‘Law of demand’ implies that when there is excess demand for a commodity, then
(a) price of the commodity falls
(b) price of the commodity remains the same
(c) price of the commodity rises
(d) quantity demanded of the commodity falls
Answer for Objective Question on Microeconomics is (c)
The Law of demand states that the quantity demanded and the price of a commodity are inversely related, other things remaining constant. That is, if the income of the consumer, prices of the related goods, and preferences of the consumer remain unchanged, then the change in quantity of good demanded by the consumer will be negatively correlated to the change in the price of the good. When there is excess demand of the commodity the price starts rising and it continues to rise till equilibrium price is reached.
The value of a commodity expressed in terms of money is known as
(a) Price
(b) Utility
(c) Value
(d) Wealth
Answer for Objective Question on Microeconomics is (a)
The exchange value of every commodity can be expressed in terms of money. This possibility has enabled money to become a medium for expressing values when the growing elaboration of the scale of values which resulted from the development of exchange necessitated a revision of the technique of valuation. When value is expressed in terms of money, it is called price. Thus, price can be defined as exchange value of a commodity expressed in terms of money.
Toothpaste is a product sold under:
(a) Monopolistic Competition
(b) Perfect Competition
(c) Monopoly
(d) Duopoly
Answer for Objective Question on Microeconomics is (a)
Monopolistic competition is a type of imperfect competition such that many producers sell products that are differentiated from one another as goods but not perfect substitutes (such as from branding, quality, or location). In monopolistic competition, a firm takes the prices charged by its rivals as given and ignores the impact of its own prices on the prices of other firms. There are six characteristics of monopolistic competition (MC): (a) Product differentiation; (b) many firms; (c) Free entry and exit in the long run; (d) Independent decision making; (e) market power; and (f) Buyers and Sellers do not have perfect information. Toothpastes, toilet papers, computer software and operating systems are examples of differentiated products.
The demand curve shows that the price and quantity demanded are
(a) directly related only
(b) directly proportional and also directly related
(c) inversely proportional and also inversely related
(d) inversely related only
Answer for Objective Question on Microeconomics is (c)
Law of demand states that consumers buy more of a good when its price is lower and less when its price is higher. It states that the quantity demanded and the prices of a commodity are inversely related, other things remaining constant. That is, if the income of the consumer, prices of the related goods, and preferences of the consumer remain unchanged, then the change in quantity of good demanded by the consumer will be negatively correlated to the change in the price of the good.
Fixed cost is known as
(a) Special cost
(b) Direct cost
(c) Prime cost
(d) Overhead cost
Answer for Objective Question on Microeconomics is (d)
Fixed costs are business expenses that are not dependent on the level of goods or services produced by the business. They tend to be time-related, such as salaries or rents being paid per month, and are often referred to as overhead costs. This is in contrast to variable costs, which are volume-related (and are paid per quantity produced).
In the long-run equilibrium, a competitive firm earns
(a) Super-normal profit
(b) Profits equal to other firms
(c) Normal profit
(d) No profit
Answer for Objective Question on Microeconomics is (c)
Making the assumption that the market demand curve remains unchanged, higher market supply will reduce the equilibrium market price until the price = long run average cost. At this point each firm is making normal profits only. There is no further incentive for movement of firms in and out of the industry and a long-run equilibrium has been established.
If total utility is maximum at a point, then marginal utility is
(a) positive
(b) zero
(c) negative
(d) positive but decreasing
Answer for Objective Question on Microeconomics is (b)
Marginal utility of a good or service is the gain (or loss) from an increase (or decrease) in the consumption of that good or service. As the rate of commodity acquisition increases, marginal utility decreases. If commodity consumption continues to rise, marginal utility at some point falls to zero, reaching maximum total utility. Further increase in consumption of units of commodities causes marginal utility to become negative; this signifies dissatisfaction.
The relationship between the price of a commodity and the demand for it
(a) is a positive relationship
(b) is an inverse relationship
(c) They are independent of each other
(d) They do not have any relationship
Answer for Objective Question on Microeconomics is (b)
According to the Law of demand, consumers buy more of a good when its price is lower and less when its price is higher. It states that the quantity demanded and the prices of a commodity are inversely related, other things remaining constant.
