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Economics Interview Questions & Answers - Learning Mode

Economics Interview Questions & Answers - Learning Mode

Economics is the scientific study of the ownership, use, and exchange of scarce resources - often shortened to the science of scarcity. Economics is regarded as a social science because it uses scientific methods to build theories that can help explain the behaviour of individuals, groups and organizations. It?s the study of scarcity, the study of how people use resources, or the study of decision-making. Economics often involves topics like wealth, finance, recessions, and banking, leading to the misconception that economics is all about money and the stock market. Actually, it?s a much broader discipline that helps us understand historical trends, interpret today?s headlines, and make predictions for coming decades.

Try Economics Interview Questions & Answers - Exam Mode

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Economics Interview Questions & Answers - Learning Mode
Try Economics Interview Questions & Answers - Exam Mode
Question: What is Ramsay pricing?

Answer: It assigns costs based on the price elasticity of demand. Yet higher the elasticity (elastic), the lower the charge of fixed costs when allocated amongst products. Source:
Question: What is the impact on the economy if price ceiling or price floor were removed?

Answer: Price ceiling is government rules or laws setting price floors or ceilings that forbid the adjustment of price to clear markets. Price ceilings make it illegal for sellers to charge more than a specific maximum price. Ceilings may be introduced when a shortage of a commodity threatens to raise its price a lot. Source:
Question: How does the current situation in the Middle East affect the US economy?

Answer: An interruption in supply and demand and economic warfare, coupled with unfair business practices in the US causes the price of fuel to rise. During the original invasion of Iraq, tanker traffic in the Persian Gulf was drastically cut for fear of losing ships and cargo. This caused a minor shortage of crude oil. OPEC only sales crude, it is refined (distilled) locally. In capitalist free markets, suppliers are allowed to raise prices during shortages, so that they can outbid other consumers when Source:
Question: What kind of market structure is the automotive industry?

Answer: There are many ways to describe the market structure of the automotive industry. Here are two:

One of heterogeneous buyers makes up the population and nearly homogeneous sellers. This means that everyone (the population) needs a car (because a car is not a luxury item), but everyone has different needs (i.e.: compare a mother of 4 to a construction worker). Thus, buyers are everyone in the population, and they are heterogeneous (different). However, sellers are practically the same. GM, F Source:
Question: Why does an indifference curve never meet?

Answer: No indifference curve can intersect because all points on indifference curve are ranked equally preferred and ranked or less more preferred than every other point on the curve. Source:
Question: What is the importance of microeconomics in study of managerial economics?

Answer: It?s a economics for decision making where we have to be very optimize and implement those situation which will be helpful in profit maximization in our business effectively and efficiently

Since the microeconomics explains the concepts like demand, production, supply analysis, so that it maximizes the profit. Source:
Question: Is there a rule of thumb for office rent or lease per gross income?

Answer: There is a GRM (Gross Rent Multiplier) that compares the total rental/lease income to the value or price of the property.

The price can run 8 to 10 times the gross income, but that can vary based on market conditions, interest rates, management, building type, quality.

Capitalization Rate (cap rate) is a more comprehensive way of evaluation, but if the GRM is known for a building type and location, you can quickly determine a ballpark value. Source:
Question: What is the difference between project proposal and project feasibility study?

Answer: Project feasibility study is required to make a decision whether the project proposal is technically and economically feasible. After finalization of the project feasibility report by the experts (technical & economical), the decision for going ahead for preparation of Detailed Project Report (DPR) for the project proposal. Source:
Question: What are financial centers?

Answer: Banks and brokerage firms are considered financial centers Source:
Question: What are the advantages of free market economy?

Answer: There are many advantages to a free market economy. They range from the moral issues to the practical issues. We will deal mainly with the practical ones.

Unprecedented innovation - Free markets are wrought with inventions and the capital to research them. Countries classified as having a free market have been responsible for the vast majority of inventions since the 19th century.

Very high-income mobility - This means that under a free market system it is easier to move around inc Source:
Question: Who are Canadas top three trading partners?

Answer: 1 U.S

2 Japan

3 United Kingdom Source:
Question: Who decides what goods services will be produced and sold in the US?

Answer: It is mostly the American consumer. The US government also plays a large role in the nation's economy, constituting roughly 36% of GDP - making it the largest and thus most influential economic institution and consumer. Manufacturers or those controlling supply may also manipulate demand through advertising and popular media. Source:
Question: What are the functions of price mechanism in a free market economy?

Answer: Price Mechanism

Price mechanism is the point, which equilibrates supply and demand within a market. It is a mechanism of pricing. The price mechanism is one, which allows the prices of good and services to be decided by the interplay between supply and demand. There is no centralized price fixing.

The price mechanism is the concept that the free market, when left to its own devices, will formulate fair prices of the goods or services on its own by the natural laws of supply and dem Source:
Question: What are the differences between perfect competition and monopoly competition?

Answer: In a monopoly, you are gaining an unfair advantage over any competition because you own so many infrastructures. Monopolies used to be known as trusts, which is why you sometimes hear of Anti-Trust Law violations.

At one time, AT&T owned every phone line, every phone and every piece of phone equipment in the country. They monopolized the industry; how could you compete with them when they owned everything? Similarly, the Post Office has an excellent infrastructure for delivering mail, but Source:
Question: What are the advantages of capitalism?

Answer: The advantages of capitalism are that the governments have limited control over other business, which lets business compete. Source:
Question: How do you calculate variable unit costs and total annual costs?

Answer: Annual units sold, 1000. Raw materials annual cost 650. Building rent annual cost 9000. If sales volume increased to 6000 units and 8000 units, what is the total annual cost and unit cost for fixed variable?

Cost per unit of raw material=650/1000= 0.65

Fixed cost (Rent) =9000

Fixed cost per unit= 9000/1000= 9.00

If the sales volume increases to 6000 units, then total cost= 12900 and cost per unit = 2.150

Variable cost+ fixed cost= (0.65*6000) + 9000= 12900 / 60 Source:
Question: Why do some people believe that a mixed economic system solves basic economic problems?

Answer: It is because both the private sector and public sector have a say in answering the basic economic questions, thus, there will be a degree of high efficiency (due to the private sector involvement) and social welfare too (due to the public sector involvement).

It allows the Government to intervene when the economy faces market failure. The mixed economic system allows markets to operate freely until it fails to allocate resources efficiently, after this, the government agencies, such as t Source:
Question: What is the difference between service industry and industry in economy?

Answer: Industry is a generic term, but is most commonly used as a substitute term for a manufacturer of goods such as Pepsi or Ford. The term industry can also be used to refer to a very specific group of companies.

The service industry is essentially non-good producing industries such as retail trade, wholesale trade, and the service industries. According to the U.S. Census Bureau, these companies make up 70% of the total economic activity in the United States. Good examples of the service indu Source:
Question: What is the role of Indian government in Indian economy?

Answer: Keynesian (John Keynes) economics is all about using monetary and fiscal (Government) policies to help direct the market towards equilibrium. Keynes did not believe that the market was self-correcting, and thus required government involvement. Keynesian economics also uses the view that prices are constant in the short term and only adjust in the long term (sticky price theorem). This delay in price adjustment pulls the market away from equilibrium. Source:
Question: What is BOP?

Answer: It is called as Balance of payments - an economic term. (BOP) measures the payments that flow between any individual country and all other countries. It is used to summarize all international economic transactions for that country during a specific time, usually a year. The BOP is determined by the country's exports and imports of goods, services, and financial capital, as well as financial transfers. It reflects all payments and liabilities to foreigners (debits) and all payments and obliga Source:

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Latest 20 Questions
Payment of time- barred debt is: (a) Valid (b) Void (c) Illegal (d) Voidable
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Consideration must move at the desire of: (a) The promisor (b) The promisee (c) The promisor or any other party (d) Both the promisor and the promisee
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