Economics · General Awareness

Economic Principles

1,087 Questions

Economic principles form the foundation of how societies allocate resources and produce goods. This topic covers factors of production, types of capital, and demand classifications. It is a vital component of the economics syllabus in many civil services and banking exams.

Factors of productionCapital typesDemand classificationsEconomic activities

Economic Principles Questions

Multiple choice economics how does production take place? natural resources- air, water and land land land,labour, capital and entrepreneur production mechanism

What is the fundamental factor that affects the productivity of land?

  1. Capital

  2. Subordinate land

  3. Secondary resources

  4. None of these
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Capital is the fundamental factor that affects the productivity of land as for production capital is needed.For example, for cultivating the land proper HYV seeds,agricultural facilities,etc is needed- to facilitate all these capital is of extreme significance.

Multiple choice economics how does production take place? natural resources- air, water and land land land,labour, capital and entrepreneur production mechanism

The average productivity of land is defined as the output obtained from land divided by ____________.

  1. area of that piece of land

  2. available irrigation

  3. available resources

  4. none of these
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Calculation of average productivity of land helps us to understand the per unit land productivity, which helps us to know the ability of a production system to produce more effectively and efficiently.

Multiple choice economics how does production take place? natural resources- air, water and land land land,labour, capital and entrepreneur production mechanism

Which of the following highlight/s the importance of land?

  1. Land determines agricultural production

  2. The industrial progress depends on availability of mineral resources

  3. Land determines total production of a country

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Land is one of the four basic factors of production. 

Multiple choice economics how does production take place? natural resources- air, water and land land land,labour, capital and entrepreneur production mechanism

The productivity of land depends on the availability of ____________ as land alone cannot produce anything without it.

  1. efficient labour

  2. deficient labour

  3. important laws

  4. none of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Land alone is of no use without human resource or efficient and effective labour resource. An efficient production mechanism is established with the proper coordination between land and labour, where in the labour makes use of the land to produce output.

Multiple choice economics how does production take place? natural resources- air, water and land land land,labour, capital and entrepreneur production mechanism

Economic rent refers to which of the following?

  1. Payment made for the use of labour

  2. Payment made for the use of capital

  3. Payment made for the use of organisation

  4. Payment made for the use of land
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The reward for land is rent. Thus if the land is not owned by the entrepreneur the owner of the land must be compensated for its usage and thus the entrepreneur pays rent. 

Multiple choice economics how does production take place? natural resources- air, water and land land land,labour, capital and entrepreneur production mechanism

If more and more capital and labour are employed on a piece of land after a certain point, the output increases by _________.

  1. more than proportionately

  2. proportionately

  3. less than proportionately

  4. constantly
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

This happens due to negative marginal returns for eg , in case of excessive employment in a particular land. At this point withdrawal of workers will help to increase the total output.

Multiple choice economics how does production take place? natural resources- air, water and land land land,labour, capital and entrepreneur production mechanism

_____is/are characteristic of land.

  1. Fixed supply

  2. Requires labours and capital to be useful

  3. Highly immobile

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Land is a free gift of nature to the human beings hence the supply of land is fixed,it requires labours and capital to be useful in order to make some production to the economy, it does not possess an mobilty,ie, it cannot be moved from one place to another.

Multiple choice economics how does production take place? natural resources- air, water and land land land,labour, capital and entrepreneur production mechanism

Which of the following will have a flat supply curve?

  1. Labour

  2. Capital

  3. Land

  4. Raw material
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Land has a flat supply curve because the quantity supplied of the land is fixed as land is natural resource. Land has a perfectly inelastic supply, that is, the supply of the land remains fixed irrespective of the increase or decrease in the demand of the land.

Multiple choice economics how does production take place? natural resources- air, water and land land land,labour, capital and entrepreneur production mechanism

Supply of land is ________.

  1. perfectly inelastic

  2. perfectly elastic

  3. highly elastic

  4. relatively elastic
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Supply of land is perfectly inelastic as change in demand of land does not lead to any change in supply of land as land is a free gift of nature and it's quantity is fixed.Supply curve of land is a straight vertical line .

Multiple choice economics how does production take place? natural resources- air, water and land land land,labour, capital and entrepreneur production mechanism

State the factor that is fixed in the short run.

  1. Land

  2. Raw material

  3. Electricity

  4. Labour
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

In the short run, land is considered a fixed factor because its total supply cannot be increased easily. Labor, raw materials, and electricity are variable factors that can be adjusted quickly.