Q. The term ‘normal profit’ as used in the analysis of equilibrium of the firm under perfect competition, refers to: Earnings of management Reward for enterprise Reward for innovation Residual income of a business Answer: Earnings of management
Q. According to Joseph Schumpeter, profit is the reward for: Innovation Uncertainty-bearing Risk-taking Management Answer: Innovation
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Q. Who argued that pure profit can arise only in a dynamic economy? F.H. Knight J.B. Clark Bohm Bawerk Alfred Marshall Answer: J.B. Clark
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Q. The classical theory explained interest as a reward for: A. Parting with liquidity B. Abstinence C. Saving D. Inconvenience Answer: Saving
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Q. The demand for liquidity preference is governed by: A. Transaction motives B. Precautionary motives C. Speculative motives D. All of these Answer: All of these
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Q. On which of the following does the demand for money for speculative motive mainly depend? Income Profits Rate of interest General price level Answer: Rate of interest
Q. Which of the following purposes normally does not give rise to the demand for loan able funds? Consumption Saving Investment Hoarding Answer: Saving
Q. A factor of production, whose supply is fixed in the short run, may get additional earnings. These earnings are generally referred to as: Surplus value Quasi-rent Transfer earnings Supernormal profit Answer: Quasi-rent
Q. Which of the following factors forms the basis of the Loan able Funds Theory of Interest? A. Monetary factors B. Psychological factors C. Technical factors D. Monetary and non monetary factors Answer: Monetary and non monetary factors
Q. In the context of the firm as a whole, quasi-rent is defined as the excess of the total receipts over the total: Fixed cost Average cost Fixed and variable cost Variable cost Answer: Variable cost
