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 business organisation and correspondence meaning and factors of business environment dimensions of business environment business environment and its dimensions business environment

The 6 MS of internal environment are ____________________________.

  1. Media, management, money, monitory policy, mission man

  2. Monitory policy, man, marketing, resources, money, machinery miscellaneous factors.

  3. Man, marketing resources, machinery, management, money, miscellaneous, money machinery

  4. None of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation
The type of business environment within a company is called internal environment. Internal environment contains the owners of the business, the shareholders, the managing director, the non-managers, employees, the customer, structure of the business organization and the culture of the organization.The 6 MS of internal environment are:Man, marketing resources, machinery, management, money, miscellaneous, money machinery.
Multiple choice business organisation and correspondence meaning and factors of business environment dimensions of business environment business environment and its dimensions business environment

Which are the $6$Ms of internal environment?

  1. Media, management, money, monitory policy, mission man

  2. Monitory policy, man, marketing, resources, money, machinery, miscellaneous factors.

  3. Man, marketing resources, machinery, management, money, miscellaneous

  4. None of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The six M's of internal enviornment are Man, Marketing, Machinery, Management, Money, Miscellaneous, Money.

Multiple choice business economics and quantitative methods measurement of national income methods of national income methods of measuring national income national income analysis

Aggregate of factor incomes of all the factors of production of all the producing units form the subject matter of _______.

  1. Value Added Method

  2. Income method

  3. Expenditure Method

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

The income method calculates national income by summing all factor incomes earned by the factors of production within the economy.

Multiple choice business economics and quantitative methods measurement of national income methods of national income methods of measuring national income national income analysis

Net Value Added is equal to _____________________.

  1. Payments accruing to Factors of Production

  2. Compensation to Employees

  3. Wages plus Rent plus Imputed Rent

  4. Value of Output minus Depreciation
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Net Value Added at factor cost is equivalent to the sum of factor incomes (wages, rent, interest, and profit) generated by the production process, which are the payments accruing to the factors of production.

Multiple choice civics foreign trade in india the government and economic development indian economy on the eve of independence impact of technology on livelihoods

Agriculture is subject to ____________.

  1. The Law of Diminishing Returns

  2. Law of Increasing Returns

  3. Both (a) and (b)

  4. Neither of the two
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Agriculture is subject to the Law of Diminishing Returns. 

As we know that, when we employ more and more variable factors with the fixed factors, it results in a lower marginal product, thus leading to the Law of Diminishing Returns. In agriculture, the land is a fixed factor as it cannot be increased or decreased as per the choice of an agriculturist. When factors of production which are variable in nature are employed, Law of Diminishing Returns apply.

Thus, the correct answer is A.

Multiple choice civics foreign trade in india the government and economic development indian economy on the eve of independence impact of technology on livelihoods

After economic reform industrial licensing was abolished for _________.

  1. 18 industries

  2. 28 industries

  3. all industries, except 18 industries

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

After economic reform industrial licensing was abolished for all industries, except 18 industries.Economic reforms aims to create a more freer economy and uphold the liberalization, privatization and globalization. Economic reforms helps to promote economic growth and development.

Multiple choice business economics and quantitative methods foreign trade in india the government and economic development indian economy on the eve of independence impact of technology on livelihoods

Consumer has no consumer surplus on _______ of the commodity consumed.

  1. first unit

  2. second unit

  3. all units

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

Consumer has no consumer surplus on last unit of the commodity consumed. This is because consumer surplus is based on the law of diminishing marginal utility. According to this law, the Marginal utility/satisfaction of the consumer goes on decreasing with every additional consumption of the commodity. Hence, it is because of this law that the consumers willingness to pay for additional unit goes on diminishing and there is no consumer surplus on the last unit. 

Multiple choice evs eat when you need food poisoning and food preservation methods food spoilage, adulteration and preservation food spoilage and adulteration

___________ makes the availability of food materials throughout the years.

  1. Storage at Low temperature

  2. Highly active enzymes

  3. Over production

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

Storing food products at low temperature reduces the enzyme activity. Due to this the food could be stored for longer period of time and making it available throughout the year.

Multiple choice economics solution to basic economic problems under different economic systems supply curve and price determination in the market price mechanism and solutions supply

___________ markets are those markets where factor services are bought and sold.

  1. Factor

  2. Service

  3. Production

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

Factor market refers to those market where factor services i.e. factors of production like capital, land, labour, and entrepreneurship are bought and sold against some factor payments like interest, rent, wages, and profit.

Multiple choice economics solution to basic economic problems under different economic systems supply curve and price determination in the market price mechanism and solutions supply

In a ____________ economy, the producer operates with the objective of profit-maximisation.

  1. planned

  2. socialist

  3. free-enterprise

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

In a free enterprise economy, prices of commodities in the market are affected by the forces of demand and supply that generates open competition in the market which leads to the survival of the fittest due to which profit maximization becomes the ultimate motive of all the producing sector. 

Multiple choice economics solution to basic economic problems under different economic systems supply curve and price determination in the market price mechanism and solutions supply

Producers compete with each other in capitalist economy to produce those goods and services which yield _________.

  1. no profits

  2. higher profits

  3. lower profits

  4. no loss
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Capitalist economy has private ownership where utilization of resources takes place for private gains therefore in this kind of economy only those goods are produced which are in high demand in the market which is leads to open competition in the market where all the producer compete with each other to yield higher profits. 

Multiple choice economics solution to basic economic problems under different economic systems supply curve and price determination in the market price mechanism and solutions supply

The cost of a commodity should reflect the sacrifice made by the ___________ in terms of resources used in the production process.

  1. consumer

  2. individual

  3. producer

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

The cost of a commodity should always be reflected in terms of opportunity cost where the cost of the commodities supplied in the market should be reflected in terms of sacrifice of the resources of the society which are the next best alternative in the production process. 

Multiple choice economics solution to basic economic problems under different economic systems supply curve and price determination in the market price mechanism and solutions supply

Factor income reflects the value of the resources provided by the factor of production.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

In price mechanism, factor income directs the flow of factors of production in the market as if the income rises, the supply of the factors increases and if the income decreases, the supply of the factors decreases.

Multiple choice economics solution to basic economic problems under different economic systems supply curve and price determination in the market price mechanism and solutions supply

Factors of production are paid according to their contribution to the output sold.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Factor of production contributes to the production of output and not to the marketing or selling of output. Therefore they are paid according to the number of units of output produced and not according to how many output sold. 

Multiple choice economics solution to basic economic problems under different economic systems supply curve and price determination in the market price mechanism and solutions supply

Producer will adopt capital-intensive technique of production when the price capital is relatively cheaper than the price of labour.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The central problem of "How to produce?" which is faced by the economy where the economy consider either labour intensive techniques or capital intensive techniques for the production of goods and services in the economy depending upon the available resources in the economy. Therefore, a producer will go with the technique which is cheapest among all the techniques of the production.