Principles Of Economics And Management
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Economics is a ----- science which deals with human wants and their satisfaction.
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Social
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Political
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Natural
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Physical
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This quiz explores fundamental concepts in economics and management, focusing on economic systems, market interactions, and management challenges like the principal-agent problem. It assesses understanding of economic costs, profits, and the role of pricing in free markets.
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- 2.
The ------------------ problem refers to the possibility that owners and their managers may have different objectives.
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Company- Manager problem
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Principal-Agent Problem
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Firm-Employee problem
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Problem of different objectives
Correct Answer
A. Principal-Agent ProblemExplanation
The Principal-Agent problem refers to the possibility that owners and their managers may have different objectives. This problem arises when the owner (principal) hires a manager (agent) to make decisions on their behalf, but the agent may act in their own self-interest rather than in the best interest of the owner. This misalignment of interests can lead to conflicts and inefficiencies within the organization.Rate this question:
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- 3.
Economic profit refers to ------------ minus all relevant costs , both explicit and implicit.
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Profit
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Cost
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Expenses
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Revenues
Correct Answer
A. RevenuesExplanation
Economic profit is calculated by subtracting all relevant costs, both explicit and implicit, from revenues. This means that economic profit represents the amount of profit remaining after deducting all expenses and costs associated with generating those revenues.Rate this question:
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- 4.
In free market economy, the organization and interaction of producers and consumers is accomplished through the--------------- system.
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Price
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Cost
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Profit
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Revenue
Correct Answer
A. PriceExplanation
In a free market economy, the organization and interaction of producers and consumers is accomplished through the price system. This means that prices play a crucial role in determining the allocation of goods and services. Producers set prices based on their costs and desired profits, while consumers make purchasing decisions based on the prices they are willing to pay. This price mechanism helps to balance supply and demand, and allows for efficient resource allocation in the economy.Rate this question:
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- 5.
An economic system:
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Requires a grouping of private markets linked to one another.
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Is a particular set of institutional arrangements and a coordinating mechanism used to respond to the economizing problem.
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Requires some sort of centralized authority (such as government) to coordinate economic activity.
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Is a plan or scheme that allows a firm to make money at some other firm's expense
Correct Answer
A. Is a particular set of institutional arrangements and a coordinating mechanism used to respond to the economizing problem.Explanation
An economic system refers to a specific set of institutional arrangements and a coordinating mechanism that is designed to address the economizing problem. It involves the organization and coordination of various economic activities within a society. This includes the allocation of resources, production, distribution, and consumption of goods and services. The economic system provides a framework for individuals, businesses, and the government to interact and make decisions regarding economic activities. It helps to ensure the efficient utilization of resources and the satisfaction of individuals' wants and needs.Rate this question:
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- 6.
Which of the following is not an economic cost?
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Wages
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Rents
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Economic profits
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Payments made to the entrepreneur for organizing production
Correct Answer
A. Economic profitsExplanation
Economic profits are not considered an economic cost because they represent the difference between total revenue and total opportunity costs, including explicit and implicit costs. While wages, rents, and payments made to the entrepreneur are all considered economic costs, economic profits are a measure of the surplus or excess revenue earned by a firm after deducting all costs. Therefore, economic profits are not included in the category of economic costs.Rate this question:
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- 7.
The two basic markets shown by the simple circular flow model are:
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Capital goods and consumer goods
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Free and controlled
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Product and resource
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Household and business
Correct Answer
A. Product and resourceExplanation
The correct answer is "Product and resource". The simple circular flow model represents the flow of goods and services between households and businesses. The product market represents the exchange of finished goods and services from businesses to households, while the resource market represents the exchange of resources (such as labor, land, and capital) from households to businesses. This model helps to illustrate the interdependence and flow of economic activity between households and businesses in an economy.Rate this question:
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- 8.
In economics the central problem is:
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Money
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Scarcity
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Allocation
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Production
Correct Answer
A. ScarcityExplanation
In economics, the central problem refers to scarcity. Scarcity means that resources are limited in relation to the unlimited wants and needs of individuals and society. This scarcity forces individuals and society as a whole to make choices about how to allocate these limited resources to fulfill their needs and wants. Therefore, scarcity is the fundamental issue that drives the allocation and production decisions in economics.Rate this question:
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- 9.
The total demand for goods and services in an economy is known as:
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Aggregate demand
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Gross national product
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Economy-wide demand
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National demand
Correct Answer
A. Aggregate demandExplanation
Aggregate demand refers to the total demand for goods and services in an economy. It represents the combined spending by households, businesses, government, and foreign entities on all final goods and services produced within a country during a specific period. It is a key indicator of the overall economic activity and is influenced by factors such as consumer spending, investment, government spending, and net exports. Gross national product, economy-wide demand, and national demand do not encompass the same concept as aggregate demand, making them incorrect options.Rate this question:
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- 10.
Unemployment means that:
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People are not willing to work at the going wage rate
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At the going wage rate, there are people who want to work but cannot find work
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There are some people who will not work at the going wage rate
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There is excess demand in the labour market
Correct Answer
A. At the going wage rate, there are people who want to work but cannot find workExplanation
Unemployment means that at the going wage rate, there are people who want to work but cannot find work. This explanation implies that there are individuals who are actively seeking employment but are unable to secure a job opportunity. It suggests that there is a discrepancy between the number of people who want to work and the available job opportunities in the labor market.Rate this question:
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- 11.
The circular flow of goods and incomes shows the relationship between:
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Firms and households
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Goods and services
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Income and money
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Wages and salaries
Correct Answer
A. Firms and householdsExplanation
The circular flow of goods and incomes illustrates the connection between firms and households. Firms produce goods and services, which are then purchased by households. In return, households provide income to firms through their consumption. This flow of goods and incomes creates a continuous cycle in the economy, as firms use the income received to produce more goods and services, and households use their income to purchase them. This interdependence between firms and households is crucial for the functioning of the economy.Rate this question:
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- 12.
Goods and Services bought and sold in:
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Product Market
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Factor Market
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Capital Market
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Money Market
Correct Answer
A. Product MarketExplanation
The product market refers to the market where goods and services are bought and sold by individuals and businesses. It is the marketplace where the final products are exchanged between buyers and sellers. This can include physical goods like clothing or electronics, as well as services like healthcare or transportation. In the product market, consumers purchase goods and services for their personal use or for their businesses. This market is distinct from other markets like the factor market, which deals with the buying and selling of factors of production like labor or capital.Rate this question:
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- 13.
In factor market suppliers are:
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Firms
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Households
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Government
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None of these
Correct Answer
A. HouseholdsExplanation
In factor markets, suppliers refer to the entities that provide factors of production, such as labor, land, and capital. Among the options given, households are the correct answer as they are the primary source of these factors. Households supply labor by offering their skills and services in exchange for wages, they own land and other natural resources, and they also possess capital in the form of savings and investments. Firms, on the other hand, are the demanders of these factors, as they require them to produce goods and services. The government's role in factor markets is typically regulatory and not as a direct supplier.Rate this question:
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- 14.
Indian economy is:
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Capitalist Economy
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Socialist Economy
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Mixed Economy
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None of these
Correct Answer
A. Mixed EconomyExplanation
The Indian economy is classified as a mixed economy because it combines elements of both capitalism and socialism. While the government plays a significant role in regulating and controlling certain sectors of the economy, such as banking, defense, and infrastructure, there is also a significant presence of private enterprises and market forces. This allows for a combination of private initiative and government intervention, aiming to achieve economic growth and social welfare.Rate this question:
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- 15.
Father of Economics:
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Lionel Robbins
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Adam Smith
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Alfred Marshal
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None of these
Correct Answer
A. Adam SmithExplanation
Adam Smith, often referred to as the "father of economics," was an 18th-century Scottish philosopher and economist whose groundbreaking ideas laid the foundation for modern economics. His seminal work, "The Wealth of Nations," published in 1776, remains a cornerstone of economic thought. Smith's most influential concept was the theory of the invisible hand, which argued that individuals, pursuing their own self-interest in a competitive market, unintentionally promote the overall well-being of society.Rate this question:
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- 16.
Business Economics is also known as………….
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Managerial Economics
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Economics for Executives
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Economic analysis for business decisions
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All of these
Correct Answer
A. All of theseExplanation
Business Economics is also known as Managerial Economics, Economics for Executives, and Economic analysis for business decisions. This is because Business Economics encompasses the application of economic principles and concepts to make managerial decisions in a business setting. It involves analyzing economic data, forecasting market trends, and evaluating the financial impact of various business decisions. Therefore, all of these terms refer to the same field of study.Rate this question:
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- 17.
The opportunity cost of a machine which can produce only one product is:
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Low
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Infinite
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High
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Medium
Correct Answer
A. LowExplanation
The opportunity cost of a machine that can only produce one product is low because there are limited alternatives or options to consider. Since the machine is specialized to produce a specific product, the opportunity cost of using it is relatively low compared to machines that can produce multiple products. In other words, there are fewer alternative uses for the machine, resulting in a lower opportunity cost.Rate this question:
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- 18.
.........……cost are also known as Imputed Costs
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Opportunity
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Marginal
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Total
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Historical
Correct Answer
A. OpportunityExplanation
Opportunity costs refer to the value of the next best alternative foregone when making a decision. These costs are not recorded in accounting statements as they do not involve any actual payment, but they are still relevant in decision-making. Imputed costs, on the other hand, are hypothetical costs that are assigned to assets or resources that are not traded in the market. Since opportunity costs are not recorded in accounting statements and are hypothetical in nature, they can be considered as imputed costs. Therefore, the correct answer is "Opportunity".Rate this question:
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- 19.
There are …......…branches of economics.
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2
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3
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4
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6
Correct Answer
A. 2Explanation
The correct answer is 2 because the question states that there are a certain number of branches of economics, and out of the options given, 2 is the only number that matches the statement.Rate this question:
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- 20.
The term `Economics‟ in English language has its origin in................ word.
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Greek
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Italic
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Latin
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Indian
Correct Answer
A. GreekExplanation
The term "Economics" in English language has its origin in the Greek word. The field of economics as we know it today has its roots in ancient Greece, where philosophers like Aristotle and Plato discussed topics related to wealth, trade, and resources. The Greek word "oikonomia" refers to the management of a household or estate, and it eventually evolved to encompass broader economic concepts. This term was later adopted by English-speaking scholars to describe the study of production, consumption, and distribution of goods and services in society.Rate this question:
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- 21.
The principle reasons behind economic problems
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Unlimited wants
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Limited or Scarce of Means
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Alternatives Uses of Means
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All of these
Correct Answer
A. All of theseExplanation
The correct answer is "All of these" because economic problems arise due to a combination of factors. Unlimited wants refer to the fact that individuals and societies have insatiable desires for goods and services. Limited or scarce means indicate that resources such as land, labor, and capital are finite and insufficient to satisfy all wants. Alternatives uses of means highlight the need to make choices and allocate resources efficiently. Therefore, all three factors contribute to economic problems.Rate this question:
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- 22.
According to profit maximization theory of the firm, management.
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Decides output level which maximizes revenue
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Output level which minimizes cost
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Output level which maximizes difference between the two
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None of these
Correct Answer
A. Output level which maximizes difference between the twoExplanation
According to the profit maximization theory of the firm, management aims to maximize the difference between revenue and cost. By determining the output level that generates the highest profit, the firm can optimize its operations and achieve the highest possible financial gain. This approach considers both revenue and cost factors, allowing management to make informed decisions that will ultimately lead to maximizing profits.Rate this question:
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- 23.
It is the difference between total revenue and total economic cost
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Accounting Profit
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Economic Profit
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Gross Profit
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Net Profit
Correct Answer
A. Net ProfitExplanation
Net profit is the amount of money a company has left after deducting all expenses, including both explicit costs (such as wages, rent, and supplies) and implicit costs (such as opportunity costs and depreciation). It is the final result of subtracting total economic cost from total revenue. Net profit is a measure of the company's profitability and indicates how much money is actually being earned.Rate this question:
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- 24.
Accounting cost include:
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Owner`s land for company establishment
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Depreciation
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Management skill of a owner
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None of these
Correct Answer
A. DepreciationExplanation
Accounting costs refer to the expenses incurred by a company in order to operate its business. Depreciation is a type of accounting cost that represents the reduction in value of an asset over time due to wear and tear, obsolescence, or other factors. It is a non-cash expense that is recorded on the income statement to allocate the cost of an asset over its useful life. Therefore, depreciation is included in accounting costs as it reflects the decrease in the value of an asset and is an essential component in calculating the profitability and financial health of a company.Rate this question:
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- 25.
Factors of production are :
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Inputs into the production process
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Weather, social, and political conditions that affect production
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The physical relationships between economic inputs and outputs.
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The mathematical calculations firms make to determine production.
Correct Answer
A. Inputs into the production processExplanation
Factors of production refer to the various resources and inputs that are used in the production process to create goods and services. These inputs can include land, labor, capital, and entrepreneurship. They are essential for the production of goods and services and play a crucial role in determining the efficiency and productivity of the production process. By utilizing these inputs effectively, businesses can optimize their production and maximize their output.Rate this question:
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Current Version
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Sep 08, 2023Quiz Edited by
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Apr 22, 2020Quiz Created by
Prof. Rakesh
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