Economics Interview Questions and Answers

101 :: How do you define a control in economics?

A control in economics means a steady profit rate that is increasing. Therefore, after one year you could have £1mill profit then the next year £3mill profit etc.

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102 :: Which is a better measure of economic well-being real GDP or Nominal GDP?

Well real GDP takes into account the inflation rate and thus is more accurate at recording the actual increase in production activities. Therefore, Real GDP is better.

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103 :: How do you calculate variable unit costs and total annual costs?

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 / 6000= 2.15

If the sales volume increases to 8000 units, then total cost= 14200 and cost per unit = 1.775

(0.65*8000) + 9000= 14200 / 8000 = 1.775

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104 :: What is a tariff?

A tax on goods leaving or entering some place

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105 :: What is Ramsay pricing?

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.

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