Economics - Study Mode

[#71] Which cost increases continuously with the increase in production?
Correct Answer

(D) Variable cost

Explanation

Solution: Variable cost increases continuously with the increase in production. Variable cost varies at different level of output, this implies that when the output of a particular firm is at zero, the variable cost will be zero and when there is increase in production of output, there will also be a corresponding increase in the variable cost.

[#72] A factor of production, whose supply is fixed in the short run, may get additional earnings. These earnings are generally referred to as
Correct Answer

(B) Quasi-rent

Explanation

Solution: A factor of production, whose supply is fixed in the short run, may get additional earnings. These earnings are generally referred to as Quasi-rent. The earnings from machines and instruments are termed as quasi-rent. The quasi-rent refers to the income produced when the demand for products increases suddenly.

[#73] A factor of production, whose supply is fixed in the short tun, may get additional earnings. These earnings are generally referred to as
Correct Answer

(B) Quasi-rent

[#74] The necessary condition for equilibrium position of a firm is
Correct Answer

(C) MC=MR

Explanation

Solution: The necessary condition for equilibrium position of a firm is MC=MR. A firm is in equilibrium when it has no tendency to change its level of output. It needs neither expansion nor contraction. It wants to earn maximum profits in by equating its marginal cost with its marginal revenue, i.e. MC = MR.

[#75] In May 2013, firm was supplying 500kg of sugar at market price of Rs.30/- per kg. During June 2013, firm's supply of sugar had decreased to 450kg at price of Rs.20/- per kg. These changes show that supply of sugar is
Correct Answer

(C) Less elastic

Explanation

Solution: In May 2013, firm was supplying 500kg of sugar at market price of Rs.30/- per kg. During June 2013, firm's supply of sugar had decreased to 450kg at price of Rs.20/- per kg. These changes show that supply of sugar is less elastic.