Economics - Study Mode

[#801] Demand for final consumption arises in
Correct Answer

(C) Both household and government sector

Explanation

Solution: Demand for final consumption arises in both household and government sector. In the basic two- sector circular flow of income model, the economy consists of two sectors: (1) households and (2) firms.

[#802] When as a result of decrease in price of good, the total expenditure made on it decreases we say that price elasticity of demand is
Correct Answer

(A) Less than unity

Explanation

Solution: When as a result of decrease in price of good, the total expenditure made on it decreases we say that price elasticity of demand is less than unity.

[#803] The structure of the cold drink industry in India is best described as
Correct Answer

(D) Monopolistically competitive

Explanation

Solution: The structure of the cold drink industry in India is best described as monopolistically competitive. Monopolistic competition is a market structure in which there are many firms selling differentiated products.

[#804] Under which market structure, average revenue of a firm is equal to its marginal revenue
Correct Answer

(C) Perfect competition

Explanation

Solution: Under Perfect competition market structure, average revenue of a firm is equal to its marginal revenue. For a perfectly competitive firm, average revenue is not only equal to price, but more importantly, it is equal to marginal revenue, all of which are constant.

[#805] In economics, what a consumer is ready to pay minus what he actually pays, is termed as
Correct Answer

(B) Consumer's surplus

Explanation

Solution: In economics, what a consumer is ready to pay minus what he actually pays, is termed as Consumer's surplus. Consumer surplus is defined as the difference between the consumers' willingness to pay for a commodity and the actual price paid by them, or the equilibrium price.