Tag: economics

Quizzes (361) Questions (3598)

Questions Related to economics

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

Misallocation of resources could take place in a free-enterprise economy due to which of the following?

  1. Incorrect anticipation of demand.

  2. Costs reflecting sacrifice of the producer only.

  3. Needs not being adequately reflected in demand.

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
Misallocation of resources could take place in a free-enterprise economy due to which of the following :-a) Incorrect anticipation of demand.
b) Costs reflecting sacrifice of the producer only.
c) Needs not being adequately reflected in demand.
Allocation of resources in the market is often not done properly due to the above mentioned factors and as a result, it does not leads to the maximization of profits and satisfaction.

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

Consumer is regarded as a ____________ in a market economy.

  1. slave

  2. sovereign

  3. either A or B

  4. neither A nor B
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Consumer is regarded as a sovereign in a market economy since it is believed that the supreme power to control market lies in the hands of the consumers. Consumer is the king pin of the market.In a market economy, prices of the commodities in the market are affected by the forces of demand and supply which depends upon the purchasing power of the consumer that generates open competition in the market. Therefore, consumers are known as sovereign in the market.

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

___________ are determined in the labour market by the demand for and the supply of labour force.

  1. Wages

  2. Rent

  3. Interest

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

In a labour market, wages of the labour are decided on the demand and supply of the labour as if the demand of the labour increases their price also increases and vice-versa whereas if supply of the labour increases their price decreases and vice-versa. 

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 will __________ the available resources when a change in price, and thus, a change in the profit, occurs.

  1. reallocate

  2. rearrange

  3. return

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

In Price mechanism price directs the flow of goods and services in the market as it directs the supply by the production sector i.e supply will increase if price increases and vice-versa and the demand sector i.e demand will increase if price decreases and vice-versa. Therefore if there is any changes in the price, the available resource also changes which is reflected inthe profit margin. 

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

Tastes and preferences of the consumers are reflected through the market in the form of prices they are ____________.

  1. forced to pay

  2. required to pay

  3. willing to pay

  4. either A or C
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The consumers demand only those goods from which they are able to derive proper utility against which they pay prices. Therefore, if consumers taste and preference for the commodity is high they will derive more utility out of it and they will pay more price for it. 

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

Price mechanism is useful in determining the ___________.

  1. social changes

  2. GDP growth rate

  3. techniques of production

  4. both A & C
Reveal answer Fill a bubble to check yourself
C 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 which is easily solved in a price mechanism economy as resources are utilized here depending upon the demand and supply of commodities in the market. 
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

Distribution of total goods and services depends on the distribution of _________.

  1. goods demanded

  2. income

  3. wealth and savings

  4. money inherited
Reveal answer Fill a bubble to check yourself
B 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 distribution of goods and services according to the purchasing power of an individual which depends on the distribution of income.