Economics · General Awareness

Economic Principles

1,097 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

The competence and ability of a __________ directly affects the productivity of land.

  1. fisherman

  2. milkman

  3. farmer

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

The skills and the competence of the farmers is proved to directly increase the productivity of the land under cultivation. This is because a skilled and competent labour force is necessary to optimally use the inputs from land to maximise output.

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

Surplus earned by a factor land in a short period of time referred to as ________.

  1. economic rent

  2. net rent

  3. quasi-rent

  4. super-normal rent
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Quasi-rent refers to the excess amount earned from the utilization of land for the production mechanism during short period of time.

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

The cost of land as a factor of production is _________.

  1. rent

  2. interest

  3. dividend

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

The cost of land as factor of production is known as rent.For instance, when a person utilize a piece of land for any production purpose,certain cost in the form of rent is to be paid.

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

______ has a flat supply curve.

  1. Capital

  2. Land

  3. Labour

  4. Technology
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Land has a flat supply curve since the quantity supplied of land is fixed since land is a natural resource. Therefore, the supply curve of land is inelastic in nature, that is, supply of land remains fixed irrespective of the change in demand level.

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 is true regarding "land" as a factor of production?

  1. Land is a perfectly immobile factor.

  2. Land is a passive factor.

  3. Economic reward for land is rent.

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
1) Land is a free gift of nature ,it cannot be moved from one place to another, thus,it does not possess any mobility
2) Land is a passive factor of production as it depends on other factors of production for the production process to begin.
3)Rent is the cost of land as a factor of production.
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 is not true regarding "land" as a factor of production?

  1. Land is primary factor of production.

  2. Land is a man-made factor.

  3. The supply of land is fixed.

  4. Land is a free gift of nature to mankind.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Land is a free gift of nature to human beings,thus it is not a man-made factor.

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 is not true regarding 'land' as a factor of production?

  1. Land is primary factor of production.

  2. Land is a man-made factor.

  3. The supply of land is fixed.

  4. Land is a free gift of nature to mankind.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Land is a natural resource .It is considered as a free gift of nature to mankind,thus its quantity supplied is fixed.Hence,labour is a man-made factor.

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 is true regarding 'land' as a factor of production?

  1. Land is perfectly immobile factor.

  2. Land is a passive factor.

  3. Economic reward is rent.

  4. All of above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
1)Land is perfectly immobile factor as it is a natural resource and its quantity supplied is fixed and thus it does not possess any kind of mobility.
2)Land is a passive factor of production as it depends on other factors of production like,labour.
3)Rent is known as the cost of rent.For instance, a person needs to pay some cost in the form of rent to utilize the land for the production purpose.
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 is a fixed capital?

  1. Clay

  2. Yarn

  3. Tools

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

Fixed capital includes the assets that are needed to start up and conduct business. These assets are considered fixed as they are not consumed or destroyed during the actual production of a good or service but have a reusable value.