Chapter 7 ECONOMICS : Theory of Distribution — Online MCQ Test
ECONOMICS · CLASS 11 INTER I YEAR · Andhra State Board
Practice Chapter 7 ECONOMICS : Theory of Distribution with a free chapter-wise online MCQ test.
This chapter covers: This chapter covers marginal productivity theory of distribution theories of rent wages interest and profit determination..
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Chapter 7 ECONOMICS : Theory of Distribution — Important Questions & Answers
The payment made for the use of land is known as:
- A. Wages
- B. Interest
- C. Rent
- D. Profit
Answer: C. Rent
In economics, rent is defined as the income earned by the owner of land or any other natural resource in fixed supply.
In economics, rent is defined as the income earned by the owner of land or any other natural resource in fixed supply.
Which of the following is considered a 'reward' for the entrepreneur?
- A. Wages
- B. Profit
- C. Interest
- D. Rent
Answer: B. Profit
Profit is the residual income earned by the entrepreneur for bearing risk and organizing factors of production.
Profit is the residual income earned by the entrepreneur for bearing risk and organizing factors of production.
Which theory of rent was proposed by David Ricardo?
- A. Modern Theory of Rent
- B. Ricardian Theory of Rent
- C. Quasi-rent Theory
- D. Marginal Productivity Theory
Answer: B. Ricardian Theory of Rent
David Ricardo is famous for his theory that rent arises due to the differences in the fertility of land.
David Ricardo is famous for his theory that rent arises due to the differences in the fertility of land.
If the marginal productivity of labor increases while its wage rate remains constant, what should a rational firm do?
- A. Decrease labor usage
- B. Increase labor usage
- C. Maintain labor usage
- D. Stop production
Answer: B. Increase labor usage
If marginal product exceeds the wage, hiring more labor increases total profit until marginal product equals the wage.
If marginal product exceeds the wage, hiring more labor increases total profit until marginal product equals the wage.
Which theory suggests that interest is the payment for the delay of consumption?
- A. Loanable Funds Theory
- B. Liquidity Preference Theory
- C. Time Preference Theory
- D. Marginal Productivity Theory
Answer: C. Time Preference Theory
Time preference theory, famously associated with Irving Fisher, views interest as the price of waiting or delaying consumption.
Time preference theory, famously associated with Irving Fisher, views interest as the price of waiting or delaying consumption.