Microeconomics multiple choice questions and answers is (d)
Consumer surplus is the difference between the price consumers would be prepared to pay and the actual market price.
Which of the following cost curve is never ‘U’ shaped?
(a) Marginal cost curve
(b) Average variable cost curve
(c) Average fixed cost curve
(d) Average cost curve
Microeconomics multiple choice questions and answers is (c)
Average fixed cost curve is never ‘U’ shaped. Since total fixed costs are unchanged as output rises, the average fixed cost curve falls continuously as output is increased.
Demand for complementary goods is known as
(a) Joint demand
(b) Derived demand
(c) Direct demand
(d) Cross demand
Microeconomics multiple choice questions and answers is (a)
Demand for complementary goods is called Joint Demand. Joint Demand is the demand in which goods are related in such a way that an increase in the demand for one causes an increase in the demand for the other.
Which activity is not included in production?
(a) Production of wheat by a farmer
(b) Production of medicines by a company
(c) Services given by a nurse in the hospital
(d) Services are done by a house-wife in her own house
Microeconomics multiple choice questions and answers is (d)
Services done by a house-wife in her own house are not included in production.
In a perfectly competitive market, a firm’s
(a) Average Revenue is always equal to Marginal Revenue
(b) Marginal Revenue is more than Average Revenue
(c) Average Revenue is more than Marginal Revenue
(d) Marginal Revenue and Average Revenue are never equal
Microeconomics multiple choice questions and answers is (a)
Average revenue is the amount money received by a firm per unit of output sold. Marginal revenue is the change in total revenue resulting from a small change in the quantity sold. In a perfectly competitive market, a firm’s Average Revenue is always equal to Marginal Revenue.
Demand in Economics means:
(a) Aggregate demand
(b) Market demand
(c) Individual demand
(d) Demand backed by purchasing power
Microeconomics multiple choice questions and answers is (d)
‘ Demand ’ in Economics refers to the quantity of a good or service consumers ate able and willing to buy at a given price in a given market during a specified time period , other things beings equal.
The number of sellers in the monopoly market structure is
(a) few
(b) large
(c) one
(d) two
Microeconomics multiple choice questions and answers is (c)
Monopoly refers to a market in which there is only one supplier and no other firms are able to enter.
Who propounded the Dynamic Theory of profit?
(a) Clark
(b) Schumpeter
(c) Knight
(d) Hawly
Microeconomics multiple choice questions and answers is (a)
Dynamic Theory of Profit is associated with the name of an American Economist J. B. Clark. In the world of reality, according to J. B. Clark profit arises only in a dynamic economy.
Elasticity (e) expressed by the formula l > e > 0 is
(a) Perfectly elastic
(b) Relatively elastic
(c) Perfectly inelastic
(d) Relatively inelastic
Microeconomics multiple choice questions and answers is (d)
Elasticity (e) expressed by the formula 1 > e > 0 is relatively inelastic. Elasticity is responsiveness of one variable to a change in another, when other conditions are held constant.
In the case of an inferior good, the income elasticity of demand is:
(a) Zero
(b) Negative
(c) Infinite
(d) Positive
Microeconomics multiple choice questions and answers is (b)
A negative income elasticity of demand is associated with inferior goods; an increase in income will lead to a fall in the demand and may lead to changes to more luxurious substitutes. A positive income elasticity of demand is associated with normal goods; an increase in income will lead to a rise in demand.
Diamonds are priced higher than water because:
(a) they are sold by selected firms with monopolistic powers.
(b) their marginal utility to buyers is higher than that of water.
(c) their total utility to buyers is higher than that of water.
(d) consumers do not buy them at lower prices.
Microeconomics multiple choice questions and answers is (b)
The water diamond paradox or puzzle was a mystery of Adam Smith who observed that the price of diamonds was much higher than that of water even though water seemed to offer for more utility than diamonds. The resolution of this puzzle or paradox is based on the distinction between marginal utility and total utility. The marginal utility of diamonds is very high and so consumers are willing to pay higher prices for diamond, than for water.
