Correct Answer: B. Limited supply of productive resources

Explanation

The fundamental economic problem facing all societies is the problem of scarcity or limited resources to satisfy human wants. As we all know, human wants and unlimited, and the resources meant to satisfy these needs are less than required.

Correct Answer: A. within the production possibility curve

Correct Answer: B. zero

Explanation

When total utility is constant, it means marginal utility is zero. Total utility is constant when it is at its maximum, then marginal utility will be Zero. It is based on the law of diminishing marginal utility which says 'as more and more units of a good are consumed, MU i.e level of satisfaction derived from each successive unit goes on falling because desire for that commodity tend to fall. Once the total utility is constant, marginal utility will be zero.

Correct Answer: A. ensures efficiency

Correct Answer: C. forces of demand and supply

Correct Answer: B. inelastic

Explanation

The numerical values for the PED coefficient could range from zero to infinity. In general, the demand for a good is said to be inelastic (or relatively inelastic) when the PED is less than one (in absolute value): that is, changes in price have a less than proportional effect on the quantity of the good demanded.

Correct Answer: D. Treasury bills

Explanation

Treasury securities include short term bills, intermediate term notes and long term bonds. These bonds are an asset for banks in the same way that loans are an asset. The bank will receive a stream of payments in the future.

Correct Answer: D. procurement and distribution of fertilizers

Correct Answer: A. subsidiary industry

Explanation

A subsidiary, subsidiary company or daughter company is a company that is owned or controlled by another company, which is called the parent company, parent, or holding company. The subsidiary can be a company, corporation, or limited liability company.

Explanation

(a) Fixed Costs are costs that do not vary with the scale of production. Examples of fixed costs are rent, rates and depreciation charges. Variable Costs on the other hand, are costs that vary or change with the scale or volume of production. For example, to increase production, a firm must purchase more raw materials, employ more workers and pay for more electricity supply. So, while fixed cost is constant, variable cost is not constant.

(b) Suppose a firm's total cost is $200,000 made up of variable cost (such as labour and raw materials) and made up of fixed cost (such as interest payment and rent). If the firm's total revenue is $240,000, it is making a loss of $60,000, but the total revenue of $240,000 pays all the firm's variable cost of $200,000 and also pays $40,000 of the fixed costs. Therefore, as long as the firm can pay all its variable cost and part of the fixed cost, it would be advisable for the firm to continue in operation although it operates at a loss.

The firm will remain in business, so long as it can cover its variable costs and have something left over to help meet its fixed costs. Loss minimizing output is OQ\(_1\) and price is OP\(_1\). Average revenue, therefore, exceeds average variable cost Q\(_1\)V. In this case, the firm producing nothing, would be spending P\(_3\)P\(_2\)RV as total cost. Producing at output Q at price P\(_1\) covers the average variable cost and part of the average fixed cost by the portion P\(_3\)P\(_1\)QV. It is obviously better to remain in production in the short run and lose P\(_1\)P\(_2\)RQ than to close down production and lose P\(_3\)P\(_2\)QV