# Theory of Factor Pricing Online Test

When does a firm, operating under perfectly competitive Product and Factor markets, maximize its Total Profits?
MCx is rising and Px = MCx
MPa = MPb Pa Pb
MPa = MPb = 1 Pa Pb MCx
MPa = MPb = MCx Pa Pb
MPa = MPb and 1 = 1 Pa Pb MCx Px
Which of the given points is not an assumption of the Marginal Productivity Theory?
The theory forms the basis of general Equilibrium Analysis
There is full employment in the economy
All factors are homogeneous
All factors are heterogeneous
There is perfect divisibility of factors
When does it pay to purchase one more unit of Capital?
Market Rate of Interest exceeds Marginal Efficiency of Capital
Marginal Efficiency of Capital exceeds the Average Efficiency of Capital
Average Efficiency of Capital exceeds Marginal Efficiency of Capital
Average Efficiency of Capital exceeds Market Rate of Interest
Marginal Efficiency of Capital exceeds the Market Rate of Interest
Which of the following determines the Demand for money for Transaction motive?
Economic Rent
Profit
Income
Expectations
Rate of Interest
Who stated that “Interest is the price paid for the use of capital in any market”?
H.G.Wells
S.E.Harris
Marshall
Lipsey
Dalip S. Swamy
According to Clark, the Aggregate Supply Curve of Labour is:
Indeterminate
Perfectly Elastic
Perfectly Inelastic
Unitary Elastic
Less than Elastic
What does the Real Wage earned by a worker represent?
The purchasing power of the labourer’s earnings
The worker’s short term earnings
The worker’s long term earnings
The worker’s average weekly earnings
The worker’s Basic Wage less Overtime
Under which form of competition VMPx>MRPx>Px? I Oligopoly exploitation II Monoponistic exploitation III Monopolistic exploitation
I only
II only
III only
I and II
II and III
Every competitive firm will be in equilibrium when:
The VMP curve coincides with VAP curve
The MFC curve coincides with the AFC curve
The Average Wage is equal to Marginal Wage
The MRP of a factor is equal to the AFC
The price of a factor is equal to the value of Marginal Product
In the short run, a firm receives abnormal profits when:
VMP=AFC
VMP>AFC
VMP VMP>MFC
VMP
Description:

In Microeconomics, the study of Factor Markets and Theory of Distribution, covers the concepts of Rent, Wages, Interest and Profit. This test is a must for any student of AP Microeconomics, who wants to understand the influence of Demand and Supply on the prices of various factor services.

Discussion

FACTOR PRICING IN ECONOMIC THEORY (WAGE,RENT)

4009 days 18 hours 31 minutes ago

FACTOR PRICING IN ECONOMIC THEORY (WAGE,RENT)

4009 days 18 hours 31 minutes ago

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