Economics Questions and Answers – Part1
This is the Part 1 general knowledge questions and answers section on “Economics” with explanation for various interview, competitive examination and entrance test. Solved examples with detailed answer description, explanation are given and it would be easy to understand.
1. What is Economics?
Economics is the study of how goods and services produced and how they are distributed.
2. Into how many branches the area of economic theory is divided into?
3. What are they?
Micro economics and macro economics.
4. The word ‘micro’ derived from which language?
Greek; it means small
5. What does micro-economics deal with?
It deals with the analysis of small units of the economy, such as individual consumers, firms, individual prices, individual industries etc..
6. What is called price theory?
The price mechanism as expressed through the market behavior of individual households and firms is the central point of micro economic theory. Hence it is called price theory
7. What is a discounting principle?
The discounting principle is a concept developed from the opportunity cost concept. It is a common notion that the present value of money available after a few years is less than the present value of money available today
8. Managerial economics has close connection with which subjects?
Statistics, mathematics and operations research
9. Statistical techniques are now widely used for what? It is used for what?
It is used in dealing with managerial problems.
10. Which technique is mainly used in solving the business problems?
The operations research is a specialized approach to investigate into the particular problem of the firm. It can be defined as the application of mathematical techniques in solving the business problem.
11. What do you mean by price elasticity of demand?
The rate at which demand changes when price changes is known as elasticity of demand
12. What do you mean by income elasticity of demand?
Income elasticity of demand measures the rate of change in demand in response to a given rate of change in income.
13. What is advertisement elasticity of demand?
Advertisement elasticity also known as “Promotional elasticity” measures the responsiveness of demand to changes in advertising or other promotional expenses. Advertisement elasticity is always positive.
14. What is demand forcasting?
A forcast is a prediction or estimation of a future situation. Demand forecasting enables a firm to avoid overproduction or underproduction. It is also helps the firm to determine the price policy, promotional policy etc..
15. What is control economy?
This is a system in which government exercise extensive control
16. What is commodities of habit?
Commodities whose consumption has become a habit of convension have in elastic demand. For example goods like cigarattes, pan etc. are consumed as a habit. In the case of such goods demand does not contract very much even if the price rises
17. What is endownment?
The money given for a specific purpose; in insurance, fixed sum to be paid at the end of certain period is called endownment.
18. Which are the Third world countries?
The developing countries in Asia, Africa and South America
19. Is India a Third World country?
20. How many members are there in the exclusive group of Third Workd Countries?