Introduction to Microeconomics Test - 5

In Economics, goods  are materials that satisfy human wants  and provide utility. A good may be a consumable item that is useful to people but scarce in relation to its demand, so that human effort is required to obtain it.

A  resource  is a source or supply from which benefit is produced. An item becomes a resource with time and developing technology.Typically resources are materials, energy, services, staff, knowledge, or other assets that are transformed to produce benefit and in the process may be consumed or made unavailable.

Central economic problem  asserts that an  economy 's  finite resources are insufficient to satisfy all human wants and needs. It assumes that human wants are unlimited, but the means to satisfy human wants are scarce.

Correct Answer :- c

Explanation : 22000-20000 = 2000

Profit from sale of patent will be deducted from operating activities and 22000 will be added in investing activities because cash from sale of patent is inflow of cash in organization.

These are the company 's core business  activities, such as manufacturing, distributing, marketing and selling a product or service. Operating activities  should generally provide the majority of a company 's cash flow and largely determine whether a company is profitable.

Interest received on investment is a revenue receipt and added in investing activities while preparing cash flow statement.

Purchses= (Closing stock+Sales)-(Opening stock + Profit). Purchase of investment during the year Rs.3,75,000 i.e. (5,00,000 + 1,37,500) –(2,50,000 + 12,500) = 3,75,000

Sale of shares of other company are part of investment which is now sold by the company. It is sale of investment, so it will take place in investing activity.

Correct Answer :- a

Explanation : Loose tools, stores and spares its treated as inventory . therefore its  classified  as non current asset .

inventory turnover ratio = cost of goods sold / average inventory  

average inventory = opening stock + closing stock /2

Cash  from  operating activities  usually refers to the net  cash  inflow reported in the first section of the statement of  cash flows. Cash  from  operating activities  focuses on the  cash  inflows and outflows from a company 's main business  activities  of buying and selling merchandise, providing services, etc.

Factors of production is an economic term that describes the inputs that are used in the production of goods or services in order to make an economic profit. This include land, labour, capital and entrepreneurship.

Economic resources are the assets which an economy may have available to supply and produce goods and services to meet the ever changing needs and wants of individuals and society as a whole.

Positive economics is the branch of economics that concerns the description and explanation of economic phenomena.

Normative economics is a part of economics that expresses value or normative judgements about economic fairness or what the outcome of the economy or goals of public policy ought to be.

The  decision Making Unit  is a collection or team of  individuals  who participate in a buyer  decision  process.