Tag: liquidity preference and profit

Questions Related to liquidity preference and profit

The market for hand tools (Such as hammers and screwdrivers) is dominated by Draper, Stanley, and Craftsman. This market is best described as

business economics and quantitative methods equilibrium of a firm shifts in demand and supply producer's equilibrium income-output determination liquidity preference and profit

  1. Monopolistically competitive

  2. a monopoly

  3. an oligopoly

  4. perfectly competitive

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Correct Option: C

Consumer stops purchasing the additional units of the commodity when ______________________.

business economics and quantitative methods equilibrium of a firm shifts in demand and supply producer's equilibrium income-output determination liquidity preference and profit

  1. marginal utility starts declining

  2. marginal utility become zero

  3. marginal utility is equal to marginal utility of money

  4. total utility is increasing

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Correct Option: B

Marginal utility of a commodity dependson its quantity and is_______.

business economics and quantitative methods equilibrium of a firm shifts in demand and supply producer's equilibrium income-output determination liquidity preference and profit

  1. inversely proportional to its quantity

  2. not proportional to its quantity

  3. independent of its quantity

  4. none of the above

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Correct Option: A

A tiny unit is one having investment upto _____________.

business economics and quantitative methods equilibrium of a firm shifts in demand and supply producer's equilibrium income-output determination liquidity preference and profit

  1. 5 lakh

  2. 20 lakh

  3. 50 lakh

  4. 1 crore

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Correct Option: A

The point of intersection between aggregate demand curve and aggregate supply curve is called _________________.

business economics and quantitative methods equilibrium of a firm shifts in demand and supply producer's equilibrium income-output determination liquidity preference and profit

  1. aggregate demand

  2. market demand

  3. effective demand

  4. demand

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Correct Option: C
Explanation:

Aggregate supply refers to the desired level of output in the economy during an accounting year. It is through this output only that the producer sector generates income. 

Aggregate Demand refers to the desired level of expenditure in the economy during an accounting year. It is what people wish to spend on the purchase of goods and services during an accounting year.

Therefore, the point of  intersection between aggregate demand curve and aggregate supply curve is called effective demand as at this point all the output produced in the economy is used by the consumers of the economy owing to full employment. 

Marginal Productivity Theory is based on the assumption of ___________________.

business economics and quantitative methods equilibrium of a firm shifts in demand and supply producer's equilibrium income-output determination liquidity preference and profit

  1. perfect competition

  2. monopoly

  3. oligopoly

  4. monopsony

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Correct Option: A

Marginal productivity theory is the _______________ theory of distribution.

business economics and quantitative methods equilibrium of a firm shifts in demand and supply producer's equilibrium income-output determination liquidity preference and profit

  1. primary

  2. general

  3. central

  4. secondary

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Correct Option: B

When average cost production (AC) falls, marginal cost of production must be _________.

business economics and quantitative methods equilibrium of a firm shifts in demand and supply producer's equilibrium income-output determination liquidity preference and profit

  1. rising

  2. falling

  3. greater than the average cost

  4. less than the average cost

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Correct Option: D

Effective demand depends on ______.

business economics and quantitative methods equilibrium of a firm shifts in demand and supply producer's equilibrium income-output determination liquidity preference and profit

  1. capital-output ratio

  2. output-capital ratio

  3. total expenditure

  4. supply price

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Correct Option: D
Explanation:

Effective demand depends on supply price. Effective demand refers to that point where aggrgate demand is equal to aggregate supply. Therefore, supply price and demand price are independent.

When demand curve shifts to the right, the ________. 

business economics and quantitative methods equilibrium of a firm shifts in demand and supply producer's equilibrium income-output determination liquidity preference and profit

  1. equilibrium quantity and price increase

  2. equilibrium quantity and price decrease

  3. equilibrium quantity increases and price decreases

  4. equilibrium quantity decreases and price increases

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Correct Option: A