Simpleton Learns Economics Trivia Quiz

Answer: Cardinalist & Ordinalist

Cardinalist approach says that utility can be measured in monetary units. Some economists even coined the word 'utils' for measurement units.

The Ordinalist approach says the consumer need not know in specific units the utility, but it is enough if he can rank the various 'baskets of goods' to determine order of preference.

Ordinalist approach can be further divided into "indifference curves" and "revealed preference hypothesis."

Answer: Raw materials

There are two types of inputs - factor and non-factor. The factor inputs are land (owned by the landlord), labour (owned by the labourer), capital (owned by the moneylender) and enterprise (owned by the entrepreneur). Raw materials are a non-factor input.

Answer: Capital Control Market

The fourth being Pure (& perfect) Competition. Basically, the markets are identified on the basis of products (homogenous & differentiated), knowledge (of buyer & seller), number of buyers & sellers etc.

Answer: False

In a Pure Competition Market, there are a lot of buyers and sellers, homogenous products, etc. However, a Pure Competition Market becomes a Pure and Perfect Competition Market only when it satisfies the following conditions (in addition to 'Pure' Competition Market conditions)-
(1) When consumers have perfect knowledge;
(2) Perfect mobility of factors of production

Answer: Oligopoly

In an Oligopoly, very few sellers exist in the market - indulging in severe cut-throat competition. The 'kink' implies that the firm expects that their competitors will also cut their prices but not raise prices. Thus, to the left of the kink, the demand curve has a greater elasticity than at points to the right.

Answer: Total Fixed Cost + Total Variable Cost

TC = TFC +TVC. When plotting a graph, TFC will be a straight line (provided fixed investment is made only at the start of the firm), and TVC will move up from left to right starting from (0,0). TC can be obtained by drawing a parallel line to TFC starting from the start of the TFC line.

Answer: J.B Say

Better known as Say's Law, this is one of the reasons for the great Depression in the U.S.A. It was debunked by Keynes. Some of the implications of this theory were -
(1) Automatic adjustment of every element in an economy
(2) General overproduction not possible
(3) No general unemployment etc

Answer: Capital formation

Production - Consumption = Capital formation. What it means is that those goods which are not consumed contribute to the capital formation in an economy.

Answer: Cyclical Unemployment

It happens when aggregate effective demand (Macro economics) of the community becomes deficient in relation to the productive capacity of the country. It can be eliminated, or at least reduced, by increasing expenditure on consumption and investing more in economy.

Answer: Keynes

Keynes brought about this concept in 1929. It was further developed by R.F Kahn in 1931. Kahn's multiplier was actually an 'employment' multiplier, not an 'investment' multiplier.
'Investment Multiplier is the ratio of change in income (revenue) to change in investment'. Multiplier is generally denoted by the letter 'K'.