Economics Questions and Answers

Liquidity refers to how easily an asset can be converted into cash without loss of value. Cash is the most liquid asset because it can be used to purchase goods and services immediately. Shares, bonds, and cheques are less liquid because they cannot be converted into cash as easily.

The average revenue curve of a firm in a perfect market is the same as the demand curve of the firm. This is because in a perfect market, the firm is a price taker, meaning that they cannot influence the market price. As a result, the firm's demand curve is also the market demand curve, and the average revenue curve is equal to the demand curve.

Taxes levied on goods and services by the government are called indirect taxes. Indirect taxes are taxes that are collected from businesses when they sell goods or services. The businesses then pass the tax on to consumers in the form of higher prices.

Many workers are employed in the agricultural sector of developing countries because labour intensive method is mostly adopted.

In developing countries, the agricultural sector is often the most labor-intensive sector of the economy. This is because the land is often not suitable for mechanized farming, and the labor force is often abundant and relatively inexpensive.

As a result, the agricultural sector employs a large number of people, even though it is not the most productive sector of the economy. This is why many workers are employed in the agricultural sector of developing countries.

If a firm retrenches some of its factory workers, its variable cost will decline. This is because variable costs are costs that vary with the level of output. When the number of workers is reduced, the amount of variable costs will also be reduced.