Quiznetik

Microeconomics 2 | Set 1

1. Of ‘real wages’ and ‘money wages’

Correct : A. The former is a wider concept than the latter

2. The concept of Quasi-rent mean

Correct : D. The return to a factor of production which is fixed in supply in the short period

3. The return to a factor of production which is fixed in supply in the short period is called

Correct : C. Quasi-rent

4. The marginal productivity theory of distribution was firstly formulated in its complete form by

Correct : C. J. B. Clark

5. The ‘iron law of wages’ is

Correct : D. The subsistence theory of wages

6. According to Prof Knight, profit is the reward for

Correct : D. Uncertainty bearing

7. The uncertainty-bearing theory of profit was propounded by

Correct : A. F. H. Knight

8. Which of the following is not included in the assumptions of Clark’s marginal productivity of distribution

Correct : D. Labour is heterogeneous

9. Marginal productivity theory is also called

Correct : A. Real theory

10. Subsistence theory of wages was used by

Correct : D. David Ricardo

11. Profit is also known as

Correct : B. Residual income

12. Changes in the rate of interest affect the amount of money held for

Correct : C. speculative motive

13. The marginal productivity theory of distribution is associated with

Correct : C. J. B. Clark

14. Who has contributed the modem theory of interest rate determination?

Correct : D. J.R. Hicks

15. Whose name is associated with the “Uncertainty-bearing theory of profit”?

Correct : B. F.H. Knight

16. Who has sought to measure Consumer’s Surplus with the help of indifference curve technique?

Correct : C. J.R. Hick

17. Which among the following is NOT an assumption of Pareto optimality?

Correct : D. The concept of utility is cardinal and cardinal utility function of every consumer is given.

18. When a firm’s average revenue is equal to its average cost, it gets ________.

Correct : B. Normal profit

19. Given the price, if the cost of production increases because of higher price of raw materials, the supply

Correct : A. Decrease

20. Under __________________, price is determined by the interaction of total demand and total supply in the market.

Correct : A. Perfect competition

21. Standard of living of workers depends upon their

Correct : B. Real wages

22. Under Marginal productivity Theory, reward for labour is determined by

Correct : D. Marginal Product

23. The economist Ricardo argued that prices were _____ because land rents were _______

Correct : D. High, Low

24. As for the cost of production of an individual farmer, the rent paid by him

Correct : A. Enters into the price of his product

25. He presented a theory of rent

Correct : C. Ricardo

26. The following affect rent EXCEPT

Correct : C. Cleverness of landlords

27. These are kinds of rent EXCEPT

Correct : C. Mobility rent

28. This is capital:

Correct : C. Machinery

29. According to Keynes interest is a payment for

Correct : C. Liquidity preference

30. Interest is paid because

Correct : A. Capital is scarce

31. With decrease in price of bonds, rate of interest:

Correct : B. Increases

32. Every factor of production gets reward equal to its:

Correct : B. Marginal product

33. According to Keynes, interest is a payment for:

Correct : C. Use of money

34. In economics capital refers to:

Correct : D. Machinery and factories

35. Professor Knight is famous for his theory of:

Correct : B. Profit

36. Profits:

Correct : A. Are residual payment

37. Profits:

Correct : D. All of the above

38. Profits arise because an entrepreneur:

Correct : D. Both (a) and (b

39. Gross profit does NOT include:

Correct : D. Taxes

40. Some economists say that profit earner is a kind of:

Correct : A. Wage earner

41. Risks in the business arise because of:

Correct : D. All the above

42. According to Professor Knight risks are of _____ kinds:

Correct : A. two

43. This is not a function of the entrepreneur:

Correct : C. Lend money

44. According to Modern Theory of Rent, rent accrues to

Correct : B. Any factor

45. An increase in the wage rate:

Correct : B. Will decrease total earnings of employees if the demand for labour is wage elastic

46. A decrease in the supply of labour is likely to lead to:

Correct : D. A higher equilibrium wage and lower quantity of labour employed

47. In order to maximize profits, a firm should produce at the output level for which

Correct : B. Marginal cost equals marginal revenue

48. A market system where there is only one buyer, is known as.

Correct : C. Monopsony

49. The market, where the services of factor of production are bought and sold is, is

Correct : B. Factor market

50. Factor prices are determined in the market under forces of

Correct : D. None of the above

51. The firm is in equilibrium in the factor market when it employs units of labour upto the point where

Correct : A. The marginal revenue product of labour is equal to its marginal cost

52. A market system, where there is only one seller is known as

Correct : A. Monopoly

53. Equilibrium in the factor market achieved at the factor price and factor quantity is given by

Correct : A. The intersection of the factor demand curve and the factor supply curve

54. Monopsony means

Correct : B. A single buyer

55. Monopoly means

Correct : A. A single seller

56. Factor prices are determined in the factor market under the forces of

Correct : D. Demand and supply

57. The labour market equilibrium determines the wage rate and

Correct : B. Employment

58. Equilibrium conditions for factor market is

Correct : A. Demand for factors is equal to supply of factors

59. Demand for factor of production is

Correct : C. Derived demand

60. Factor market will be in equilibrium when

Correct : B. Demand for factors is equal to supply of factors

61. Which of the following is not a factor of production?

Correct : C. Money

62. A monopolist maximizes profit by producing the quantity at which

Correct : A. marginal revenue equals marginal cost.

63. The supply of a good refers to:

Correct : D. Quantity of the good offered for sale at a particular price per unit of time

64. The cost of one thing in terms of the alternative given up is called:

Correct : B. Opportunity cost

65. The producer’s demand for a factor of production is governed by the ___ of that factor.

Correct : B. Marginal Productivity

66. Under conditions of perfect competition in the product market:

Correct : A. MRP = VMP

67. In a perfectly competitive market a firm in the long run will be in equilibrium when:

Correct : D. Price = AR = MR= AC= MC

68. Which of the following is a characteristic of capital as a factor of production?

Correct : C. It is a passive factor of production

69. On which law of consumption the concept of consumer’s surplus is based?

Correct : C. First law of Gossen

70. The relation that the law of demand for factor defines is.

Correct : B. Price and quantity of a factor

71. Union leaders are in a better position to bargain for higher wages if demand for labour is

Correct : B. Inelastic

72. Sometimes the supply curve of labour ends:

Correct : C. Backward

73. A firm maximizes profit if:

Correct : A. MRP = Wage rate

74. The opportunity cost of a machine which can produce only one product is:

Correct : A. Low

75. When price is below equilibrium level, there will be:

Correct : D. Shortage of commodity in the market

76. If equilibrium price rises but equilibrium quantity remains unchanged, the cause is:

Correct : C. Supply decreases and demand increases

77. A decrease in demand causes the equilibrium price to:

Correct : B. Fall

78. Price of a product is determined in a free market:

Correct : C. By both demand and supply

79. In market equilibrium, supply is vertical line. The downward sloping demand curve shifts to the rights. Then,

Correct : A. Price will rise

80. A rise in supply and demand in equal proportion will result in:

Correct : C. No change in equilibrium price and increase in equilibrium quantity

81. Every factor of production gets reward equal to:

Correct : B. Value of marginal product

82. Under perfect competition, demand for a factor is its:

Correct : A. MRP curve

83. We should employ units of a factor to a point where:

Correct : B. MP is equal to price of the factor

84. If marginal product of labour rises because of new technology:

Correct : A. Wages will rise

85. Increasing the minimum wage for workers will:

Correct : C. Cause a substitution of capital for labour

86. The price of capital is

Correct : B. Interest

87. If MRP > Price of the factor: firm should hire

Correct : B. more factors

88. If MRP = Price of the factor: firm should _______ at the unit of factor

Correct : C. stop hiring more

89. If MRP < P of the factor, firm should hire

Correct : A. less factors

90. The labor market equilibrium determines the wage rate and

Correct : B. employment

91. Union leaders are in a worse position to bargain for higher wages if demand for labour is

Correct : A. perfectly Elastic

92. The concept of social optimum was introduced in Welfare Economics by

Correct : A. Vilfredo Pareto

93. An ethical or value judgement must be made in order to derive the

Correct : D. Social welfare function

94. According to Kaldor-Hicks compensation criteria, the proposed change will increase the social welfare if

Correct : B. The gains are greater than the losses

95. The concept of Social Welfare function was firstly introduced by

Correct : C. Bergson

96. The first condition of which economist states that welfare is said to increase when national income increases

Correct : C. A. C. Pigou

97. Compensation criterion principle is associated with the name of

Correct : A. Kaldor-Hicks

98. Who proclaimed the ‘doctrine of invisible hand’?

Correct : A. Adam Smith

99. Social Welfare function is a function of

Correct : A. All the individuals constituting the society

100. “Social welfare increases when transfer of real income from the rich to poor increases” is a statement given by

Correct : B. A. C. Pigou