Economics - Study Mode

[#1116] Demand for factors of production is
Correct Answer

(A) Derived demand

Explanation

Solution: Demand for factors of production is derived demand. The demand for any factor of production, such as labor, physical capital or land is a derived demand because it arises not from the intrinsic utility provided by the factor but because of the value placed on the production it produces by consumers.

[#1117] The producer's demand for a factor of production is governed by the ____ of the factor.
Correct Answer

(B) Marginal productivity

Explanation

Solution: The producer's demand for a factor of production is governed by the marginal productivity of the factor.

[#1118] Under conditions of perfect competition in the product market
Correct Answer

(A) MRP = VMP

Explanation

Solution: Under conditions of perfect competition in the product market MRP = VMP. Under the assumption of perfect competition a firm employs a factor up to that number at which the price of the factor is just equal to the value of the marginal product (=MRP of the factor).

[#1119] Which statistical measure helps in measuring the purchasing power of money?
Correct Answer

(B) Index numbers

Explanation

Solution: Index numbers statistical measure helps in measuring the purchasing power of money. Index numbers possess much practical importance in measuring changes in the cost of living, production trends, trade, income variations, etc.

[#1120] Fisher's ideal index number is
Correct Answer

(C) Geometric mean of Laspeyre's and Paasche's index

Explanation

Solution: Fisher's Ideal volume index is the geometric mean of the Laspeyres and Paasche volume indices. A measure of change in volume from period to period. It is calculated as the geometric mean of a chain Paasche volume index and a chain Laspeyres volume index.