Answer: Option C. -> monopolistic competition
Answer: (c)
There are six characteristics of monopolistic competition (MC):
Product differentiation;
many firms;
Free entry and exit in the long run;
Independent decision making;
market power; and
Buyers and Sellers do not have perfect information.

Answer: Option A. -> Relatively inelastic
Answer: (a)Elasticity (e) expressed by the formula 1 > e > 0 is relatively inelastic. Elasticity is responsiveness of one variable to a change in another, when other conditions are held constant.

Answer: Option C. -> is an inverse relationship
Answer: (c)
According to the Law of demand, consumers buy more of a good when its price is lower and less when its price is higher.
It states that the quantity demanded and the prices of a commodity are inversely related, other things remaining constant.

Answer: Option A. -> all fields of production
Answer: (a)
The law of diminishing returns (also the law of diminishing marginal returns or law of increasing relative cost) states that in all productive processes, adding more of one factor of production, while holding all others constant (“ceteris paribus”), will at some point yield lower per-unit returns.
The law of diminishing returns does not imply that adding more of a factor will decrease the total production, a condition known as negative returns, though in fact, this is common.

Answer: Option C. -> long run unit costs of production decreases as the quantity the firm produces increases
Answer: (c)
In microeconomics, economies of scale are the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer’s average cost per unit to fall as the scale of output is increased.
“Economies of scale” is a long-run concept and refers to reductions in unit cost as the size of a facility and the usage levels of other inputs increase.

Answer: Option A. -> what it can earn in some other use.
Answer: (a)
The opportunity cost of a choice is the value of the best alternative forgone, in a situation in which a choice needs to be made between several mutually exclusive alternatives given limited resources.
It is equivalent to what a factor could earn for the firm in alternative uses.

Answer: Option C. -> J.S. Mill
Answer: (c)
J.S. Mill developed the wages-fund theory. This theory of wage was an attempt to show that in certain circumstances wages could rise above subsistence level.
According to this theory, a fund of capital has to be accumulated in advance before wages could be paid. This fund of capital is called wages-fund out of which wages are paid to labourers.

Answer: Option B. -> technological relationship between physical inputs and output
Answer: (b)
Production involves the transformation of inputs into outputs. The output is a function of the input. The functional relationship between physical inputs and the physical output of a firm is called the production function. The word ‘function’ in mathematics means the precise relationship that exists between one dependent variable and a number (or one) of independent variables.
The production function states the maximum quantity of output that can be produced from any given quantity of various inputs during a given period of time.

Answer: Option B. -> 0 to 1
Answer: (b)
The Marginal Propensity to Consume (MPC) is measured as the ratio of the change in consumption to the change in income, thus giving us a figure between 0 and 1.
The MPC can be more than one if the subject borrowed money to finance expenditures higher than their income. One minus the MPC equals the marginal propensity to save.

Answer: Option C. -> organizes the process of production
Answer: (c)
In economics, factors of production are the inputs to the production process. Factors of production’ may also refer specifically to the ‘primary factors’, which are stocks including land, labour (the ability to work), and capital goods applied to production. Many economists today consider “human capital” (skills and education) as the fourth factor of production, with entrepreneurship as a form of human capital.
In markets, entrepreneurs combine the other factors of production, land, labour, and capital, in order to make a profit. Often these entrepreneurs are seen as innovators, developing new ways to produce and new products. In a planned economy, central planners decide how land, labour, and capital should be used to provide maximum benefit for all citizens.