Economics MCQ Questions and Solutions with Explanations | Commerce

A mixed economy is characterized by the co-existence of Public and private sectors. Mixed economies, with state-supervised markets, are most related to fascism (in the economic sense) and have several common features.

Iso-product curves does not intersect each other.

The law of demand is based on the following assumption or conditions:
No change in consumer's income: Consumer's income must remain unchanged because if income increases consumer may buy more even at a higher price invalidating the law of demand.
No change in the size and composition of population: The size of population, gender ratio and age composition are assumed to remain constant. As such changes are sure to affect demand.
No change in consumer's taste, preference, habits and fashions: If the taste changes then the consumer's preference also will change which will affect demand. When commodities go out of fashion then demand will be low even at a low price.
No expectation of future price change: The consumers do not expect any significant rise or fall in the future prices.
No change in prices of related goods: The law assumes that prices of substitutes and complementary goods remain constant.
No change in tax policy of the Government: The level of direct and indirect tax imposed by the government on the income and goods should remain constant.

Microeconomics deals with the Allocation of resources of the economy as between production of different goods and services, Determination of prices of goods and services and Behavior of industrial decision makers.

Some economists refer to iso-product curves as Production indifference curve. A given quantity of output may be produced with different combinations of factors. Iso-quant curves are also known as Equal-product or Iso-product or Production Indifference curves.

According to Joseph Schumpeter, profit is the reward for Innovation. He believed that an entrepreneur can earn economic profits by introducing successful innovations.

If quantity demanded is completely unresponsive to changes in price, demand is Perfectly inelastic. Perfectly inelastic demand means that quantity demanded remains the same when price increases or decreases. Consumers are completely unresponsive to changes in price.

Microeconomics is primarily concerned with the factors that affect individual economic choices, the effect of changes in these factors on the individual decision makers, how their choices are coordinated by markets, and how prices and demand are determined in individual markets.

Short-run average cost (SAC) curves is also known as plant curves. These SACs are also called plant curves. In the short run, a firm can operate on any SAC, given the size of the plant.

Other things equal, if a good has more substitutes, its price elasticity of demand is larger.