Economics ยท 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 producer's equilibrium equilibrium of a firm shifts in demand and supply liquidity preference and profit

Innovation theory of profit was propounded by ________________.

  1. Jacob Viner

  2. Joesph. A.Schumpeter

  3. F.B Hawley

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

Joseph A. Schumpeter is the economist who introduced the Innovation Theory of Profit. He argued that entrepreneurs earn profit by introducing new products, methods of production, or markets, which disrupts the existing economic equilibrium.

Multiple choice organisation of commerce and management specialised financial institutions institutional sources long term sources of finance sources of business finance - 2

__________ is responsible for revival of public sector enterprises.

  1. NTPC

  2. BIFR

  3. BRPSE

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

The government of India, in order to solve the problems of industrial sickness had set up a Board of Industrial and Financial Reconstruction under the purview of sick industrial companies act, 1985. Hence, BIFR is responsible for the revival of Public Sector Enterprises.

Multiple choice

What are the three main factors of production?

  1. Land, labor, and capital

  2. Land, labor, and technology

  3. Land, labor, and entrepreneurship

  4. Land, labor, and management
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The three main factors of production are land, labor, and capital. Land is the natural resources that are used to produce goods and services. Labor is the human effort that is used to produce goods and services. Capital is the physical assets that are used to produce goods and services.

Multiple choice

What is the primary factor determining the supply of fish in the agricultural fisheries market?

  1. Availability of fish stocks

  2. Fishing technology

  3. Government regulations

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

The supply of fish in the agricultural fisheries market is influenced by the availability of fish stocks, fishing technology, and government regulations.

Multiple choice

The process of transferring ownership of government-owned enterprises to the private sector is known as:

  1. Privatization

  2. Nationalization

  3. Deregulation

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

Privatization involves the transfer of ownership and control of government-owned enterprises to the private sector.

Multiple choice

The process of reducing government regulations and restrictions on businesses and industries is known as:

  1. Deregulation

  2. Reregulation

  3. Nationalization

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

Deregulation involves the reduction or elimination of government regulations and restrictions on businesses and industries.

Multiple choice

What is the primary determinant of the demand for labor?

  1. Wage rate

  2. Price of the final product

  3. Cost of capital

  4. Level of technology
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The demand for labor is primarily determined by the price of the final product that the labor is used to produce. A higher price for the final product will lead to a higher demand for labor.

Multiple choice

What is the impact of technological progress on the demand for labor?

  1. Increases demand for labor

  2. Decreases demand for labor

  3. Has no impact on demand for labor

  4. Depends on the specific technology
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The impact of technological progress on the demand for labor depends on the specific technology being introduced. Some technologies may increase the demand for labor, while others may decrease it.

Multiple choice

What is the relationship between the demand for labor and the level of output?

  1. Positive

  2. Negative

  3. U-shaped

  4. Inverted U-shaped
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The relationship between the demand for labor and the level of output is typically positive. This means that as the level of output increases, the demand for labor also increases.

Multiple choice

What is the impact of an increase in the cost of capital on the demand for labor?

  1. Increases demand for labor

  2. Decreases demand for labor

  3. Has no impact on demand for labor

  4. Depends on the specific cost of capital
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

An increase in the cost of capital typically decreases the demand for labor, as businesses are less likely to invest in new projects and hire new workers.

Multiple choice

What is the impact of an increase in the productivity of labor on the demand for labor?

  1. Increases demand for labor

  2. Decreases demand for labor

  3. Has no impact on demand for labor

  4. Depends on the specific productivity increase
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

An increase in the productivity of labor typically increases the demand for labor, as businesses are able to produce more output with the same amount of labor.

Multiple choice

Which of the following is NOT a type of physical capital?

  1. Machinery

  2. Equipment

  3. Buildings

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

Infrastructure is not a type of physical capital, but rather a result of physical capital investment.

Multiple choice

What is the Cobb-Douglas production function?

  1. A production function that exhibits constant returns to scale.

  2. A production function that exhibits decreasing returns to scale.

  3. A production function that exhibits increasing returns to scale.

  4. A production function that exhibits non-constant returns to scale.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The Cobb-Douglas production function is a production function that exhibits constant returns to scale. This means that if all inputs are increased by a certain percentage, output will increase by the same percentage.

Multiple choice

Which of the following is NOT a type of economic efficiency?

  1. Allocative efficiency

  2. Productive efficiency

  3. Dynamic efficiency

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

Dynamic efficiency is not a type of economic efficiency. It refers to the ability of an economy to adapt to changing circumstances and technological progress.

Multiple choice

Productive efficiency occurs when:

  1. Resources are used in the most efficient way possible.

  2. The economy is producing the maximum output with the given resources.

  3. There is no waste or inefficiency in the production process.

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

Productive efficiency occurs when resources are used in the most efficient way possible, the economy is producing the maximum output with the given resources, and there is no waste or inefficiency in the production process.