Answer: Option B. -> by adding a margin to the average cost
Answer: (b)
Full cost pricing is a practice where the price of a product is calculated by a firm on the basis of its direct costs per unit of output plus a markup to cover overhead costs and profits.
Having worked out what average total cost would be if the level of output expected for the next period of time were actually achieved, firms add to this a 'satisfactory' profit margin.
This is known as 'full cost' pricing. The price is equal to 'full' cost, including an acceptable profit.

Answer: Option B. -> Final goods
Answer: (b)
All goods which are meant either
for consumption by consumers or
for investment by firms are called final goods.
They are finished goods, meant for final use. These are neither resold nor do they enter into further stages of production. For example, Cars, television sets, cloth, food, machinery, equipment etc. are final goods.

Answer: Option D. -> Marginal Revenue = Marginal Cost
Answer: (d)
When the marginal revenue productivity of a factor is equal to the marginal- cost (MR=MC) of the factor, the firm will be in equilibrium and its profits maximized.
Equilibrium in perfect competition is the point where market demands will be equal to market supply.
The condition that price equals both average revenue and marginal revenue (P = AR = MR) is the standard condition for a perfectly competitive firm.

Answer: Option D. -> Marginal cost
Answer: (d)The addition to total cost by producing an additional unit of output by a firm is called Marginal cost. Average cost is the total cost of producing a given output divided by that output.

Answer: Option A. -> supply is equal to demand
Answer: (a)
The equilibrium price is the price where the goods and services supplied by the producer equals the goods and services demanded by the customer(s).
How the equilibrium price is achieved is through the 'Invisible Hand', or market forces of the economy.

Answer: Option B. -> Clark
Answer: (b)Dynamic Theory of Profit is associated with the name of an American Economist J. B. Clark. In the world of reality, according to J. B. Clark profit arises only in a dynamic economy.

Answer: Option B. -> Consumer’s Surplus
Answer: (b)
Consumer surplus is the difference between the maximum price a consumer is willing to pay and the actual price they do pay.
If a consumer would be willing to pay more than the current asking price, then they are getting more benefit from the purchased product than they spent to buy it.

Answer: Option C. -> Adam Smith
Answer: (c)Adam Smith is known as ‘Father of Modern Economics.’ He is best known for two classic works: The Theory of Moral Sentiments (1759), and An Inquiry into the Nature and Causes of the Wealth of Nations (1776).

Answer: Option D. -> perfectly elastic
Answer: (d)
The demand curve facing a perfectly competitive firm is flat or horizontal. This is because all firms in perfect competition are by definition selling an identical (homogeneous) product.
A horizontal demand curve is a flat curve with a slope of zero. It is a perfectly elastic demand curve. Because the slope of the curve is zero, it is impossible for the price to change in the market.

Answer: Option C. -> a luxury
Answer: (c)
In economics, income elasticity of demand measures the responsiveness of the demand for a good to a change in the income of the people demanding the good, ceteris paribus.
It is calculated as the ratio of the percentage change in demand to the percentage change in income.
For example, if, in response to a 10% increase in income, the demand for a good increased by 20%, the income elasticity of demand would be ${20%}/{10%} = 2$.
Positive income elasticity of demand is associated with normal goods; an increase in income will lead to a rise in demand.
If the income elasticity of demand of a commodity is less than 1, it is a necessity good. If the elasticity of demand is greater than 1, it is a luxury good or a superior good.