Economics MCQ Questions and Solutions with Explanations | Commerce

If the price of 'X' rises by 10 percent and the quantity demanded falls by 10 percent, 'X' has Unitarily elastic demand.

Demand for intermediate consumption arises in all producing sectors of the economy. Intermediate consumption is a national accounts concept which measures the value of the goods and services consumed as inputs by a process of production.

The second glass of lemonade gives lesser satisfaction to a thirsty boy, this is a clear case of Law of diminishing marginal utility. The law of diminishing marginal utility describes a familiar and fundamental tendency of human behavior.

The kinked demand curve model of oligopoly assumes that response to a price increase is less than the response to a price decrease. In an oligopolistic market, the kinked demand curve hypothesis states that the firm faces a demand curve with a kink at the prevailing price level. The curve is more elastic above the kink and less elastic below it. This means that the response to a price increase is less than the response to a price decrease.

Agricultural goods market depicts characteristics close to Perfect competition. A perfectly competitive market has the following characteristics: There are many buyers and sellers in the market. Each company makes a similar product. Buyers and sellers have access to perfect information about price.

The answer is Total cost for producing 5 units = 300 x 5 = 1500.
Total cost for producing 6 units = 320 x 6 = 1920 Therefore, Marginal cost for producing the 6th unit = 1920-1500 = 420.
This is a mathematical part that is used for the calculation of economics. At the same time, this also talks about production, and average rate of per unit. Wlso, the marginal cost involved for the total production is also taken into account.

The various combination of goods that can be produced in any economy when it uses its available resources and technology efficiency are depicted by Production possibility curve. A production possibility frontier (PPF) shows the maximum possible output combinations of two goods or services an economy can achieve when all resources are fully and efficiently employed.

Rational decision making requires that One's choices be consistent with one's goals. Rational choice theory, also called rational action theory or choice theory, school of thought based on the assumption that individuals choose a course of action that is most in line with their personal preferences.

If the demand for a good is inelastic, an increase in the price of the good will cause the total expenditure of the consumers of the good to Increase.

All of the following are determinants of demand except Quantity supplied. The Five Determinants of Demand Prices of related goods or services. These are either complementary, those purchased along with a particular good or service, or substitutes, those purchased instead of a certain good or service. Tastes or preferences of consumers. Expectations.