Economics Questions and Answers

Primary products are goods that are available from cultivating raw materials without a manufacturing process. Significant primary product industries include agriculture, fishing, mining and forestry. Examples of primary products are: oil, water, fish, fruit, crops, wood etc.

Transfer payment are payment of receipts not resulting from contribution to productive activities in the economy. They are mere transfers from one person to another, for example: pension, bursary, award, gift, unemployment benefit etc. When estimating or calculating national income, transfer payment are excluded.

A perfect elastic supply curve is the one in which the supply curve is perfectly horizontal. It is a theoretical curve and such a curve does not actually exist in practice.

Law of diminishing returns also known as known as law of variable proportion. It is applied to the short run analysis of production . However, the causes of diminishing returns are: fixed costs, limited demand, No change in technology,scarce factors etc.

Net National Product is the gross national product minus depreciation i.e NNP = GNP - Depreciation or Capital consumption allowance.