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

As a Factor of Production, "Land" is one of the  ________ means of Production.

  1. Original

  2. Produced

  3. Derived

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

Land is considered an original factor of production because it is a gift of nature, not created by human effort. Other factors like capital are produced, while labor is human-derived.

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

As a Factor of Production, Land is ________________.

  1. A free gift of nature.

  2. Fixed in quantity

  3. Variable in terms of fertility and uses

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

Land is defined as a free gift of nature, its total supply is fixed, and its utility and fertility vary depending on location and use. All these are standard characteristics of land in economic theory.

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

As a Factor of Production, the Supply of Land is perfectly inelastic from the viewpoint of ____________________.

  1. The entire economy

  2. An Individual Firm

  3. Both (a) and (b)

  4. Neither (a) nor (b)
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

From the perspective of the entire economy, the total amount of land is fixed and cannot be increased, making its supply perfectly inelastic. An individual firm, however, can acquire more land by paying more.

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

As a Factor of Production, the Supply of Land is relatively elastic from the viewpoint of ___________________.

  1. The entire economy

  2. An Individual Firm

  3. Both (a) and (b)

  4. Neither (a) nor (b)
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

For an individual firm, the supply of land is relatively elastic because the firm can attract more land by offering higher prices or rents, effectively pulling it away from other uses.

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

As a Factor of Production, Land is mobile across ____________.

  1. Places

  2. Uses

  3. Both (a) and (b)

  4. Neither (a) nor (b)
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

While land cannot be moved geographically, it is mobile across uses. This means a piece of land can be switched from one purpose, such as farming, to another, such as building a factory.

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

As a Factor of Production, the Elasticity of Supply of Land from the viewpoint of the entire economy is ______________.

  1. Infinite

  2. Zero

  3. Positive

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

Since the total amount of land in the entire economy is fixed and cannot be increased regardless of price, the supply is perfectly inelastic, which corresponds to an elasticity of zero.

Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply

Rent will be produced at that time when ________.

  1. entire land is fertile

  2. elasticity of supply of land is perfectly elastic

  3. land is mobile

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

Rent on land will be produced only when different types of lands are differently fertile. At the same time, the supply of land should be elastic and not perfectly elastic.

Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply

Land is the only factor of production whose supply is _____.

  1. more elastic

  2. perfectly elastic

  3. perfectly inelastic

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

A perfectly inelastic supply curve is a vertical line at a given quantity, which shows a constant supply regardless of price. Land becomes one such factor of production.

Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply

The supply of agricultural products is generally ________.

  1. elastic

  2. inelastic

  3. perfectly elastic

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

The supply of agricultural products is generally inelastic that means proportionate change in quantity demand is lesser than the proportionate change in price as agricultural products are necessities since it provides basic subsistence to people.

Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply

Which one of the following labour resources will likely have the most inelastic supply schedule in the short run?

  1. Filling station attendants

  2. Sales clerks

  3. Construction labourers

  4. Dentist
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Supply of labour is inelastic when it requires long periods of specialized training or education. A dentist requires many years of education, making the supply of dentists very inelastic in the short run compared to unskilled labour.

Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply
The supply of durable goods is usually _____________.

  1. more elastic

  2. less elastic

  3. perfectly elastic

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

Durable goods can be stored over time, allowing producers to adjust their supply more easily in response to price changes compared to perishable goods. Thus, their supply is generally more elastic.

Multiple choice evs how to save fuel define fossil fuels conservation of fuels reason for finishing of materials (resources) fuel and conservation

If materials (resources) are finished then people will struggle for ______.

  1. LPG

  2. CNG

  3. both a and b

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

C is the correct option.if resources are finished then people will struggle for both CNG and LPG as both are obtained from fossils.They cannot be replenished soon.

Fossil Fuels are sources of energy that are formed from the accumulated remains of living organisms that were buried millions of years ago. 

Multiple choice history economic system and economic policies american dominance, neo-imperialism and new economic policy insights on lpg changing economic policies

The New Industrial Policy announced on July 24, 1991 contained provisions relating to _________.

  1. industrial licensing

  2. foreign investment

  3. foreign technology policy

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

On July 24, 1991, Government of India announced its new industrial policy with an aim to correct the distortion and weakness of the Industrial Structure of the country that had developed in 4 decades; raise industrial efficiency to the international level; and accelerate industrial growth. The NIP does away with licensing for all major industries, irrespective of the investment level, proposes liberal foreign investment, dispenses with the Monopolies and Restrictive Trade Practices (MRTP)  clearances but curbs unfair trade practices and emphasis technological up-gradation.

Hence, D is the correct option.

Multiple choice history economic system and economic policies american dominance, neo-imperialism and new economic policy insights on lpg changing economic policies

If an industry is characterized by economies of scale then _________.

  1. barriers to entry are not very large

  2. long-run unit costs of production decreases as the quantity the firm produces increases

  3. capital requirement are small due to the efficiency of the large scale operation

  4. the costs of entry into the market are likely to be substantial
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

In microeconomics, economics of scale are the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer's average cost per unit to fall as the scale of output is increased. "Economics of scale" is a long run concept and refers to reductions in unit cost as the size of a facility and the usage levels of other inputs increase.