Economics and Globalisation - Desklib Study Material

ECONOMICS AND
GLOBALISATION

Question 1
Option D
Macdonald's is into the business of providing food services across the globe through creation of
franchisee. Therefore, by providing services in the form of transforming food coming from
secondary level and by paying service taxes, output obtained from Macdonald's restaurant would
be classified as tertiary production.
Question 2
Option D
Cost of food that has been consumed at the time of attending university is not an opportunity cost
of attending university because eating food is necessity and hunger is natural that would occur
even if the university was not attended.
Question 3
Option B
All firms operating in perfectly competitive market produces similar goods and there are large
numbers of buyers and sellers in the market. Accordingly, the price of goods are being
determined through market forces of demand and supply and thus both producers and consumers
are considered to be the price takers.
The following diagram indicates that price remains constant at all levels of production and
consumption within the perfectly competitive market.
Question 4
Option D

The demand curve is drawn on the basis of law of demand. The law of demand states “Keeping
all other factors as constant, quantity demanded of a commodity rises with the fall in price and
vice versa.” Therefore, when movement along the demand curve takes place, all other factors
that is, tastes & preferences, household income and price of substitute goods are kept constant.
Movement along the same demand curve
Question 5
Option C
Positively sloped supply curve implies that when the price rises, the supplier tend to produce or
supply more at higher price. Accordingly, if there are higher demand for a good in the market,
the supplier is able to charge more along with supplying more at an increased price.
Positively sloped supply curve
Question 6
Option C
Inferior goods can be best defined as the good whose demand with the rise in the income
of people. This situation occurs as inferior goods are considered to be low in quality which

people tend to buy at low income level. However, with the rise in income, people shift their
demand towards normal goods and thus, demand for inferior goods fall.
Question 7
Option C
When the supply increases as a result of change in factor other than the price of good
itself, there is a shift in the supply curve, therefore if supply rises due to change in factor other
than the price, there will be rightward shift in supply curve.
Shift in supply curve due to change in factors other than the price
Question 8
Option B
When there is an expectation of either rise or fall in the price of commodity, both demand and
supply curve affected. Supply curve shifted to right while demand curve shifted to left with the
expectation of rise in price and vice versa.
Question 9
Option B
Cost of producing a good is a factor other than the price of the good itself. Therefore, if price of
Good A fall, there would be a shift in the supply curve of Good A because now the supplier
tends to raise the quantity supplied at lower cost of production which leads to increase in their
profitability.
Question 10
Option C