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Economics MCQ Questions & Answers

Economics MCQs : This section focuses on the "Economics". These Multiple Choice Questions (MCQs) should be practiced to improve the Economics skills required for various interviews (campus interview, walk-in interview, company interview), placement, entrance exam and other competitive examinations.




Question 1

A firm encounters its 'shutdown point' when

A. Average total cost equals price at the profit-maximizing level of output
B. Average variable cost equals price at the profit-maximizing level of output
C. Average fixed cost equals price at the profit-maximizing level of output
D. Marginal cost equals price at the profit-maximizing level of output

View Answer

Question 2

Price discrimination is not possible in case of

A. Perfect competition
B. Monopoly
C. Monopolistic competition
D. Oligopoly

View Answer

Question 3

When was Adam Smith's major work "An enquiry into the Nature and Causes of Wealth of Nations" published?

A. 1756
B. 1766
C. 1776
D. 1786

View Answer

Question 4

A horizontal supply curve parallel to the quantity axis implies that the elasticity of supply is

A. Zero
B. Infinite
C. Equal to 1
D. Greater than 0 but less than 1

View Answer

Question 5

Under ______ market condition, firms make normal profits in the long run.

A. Perfect competition
B. Monopoly
C. Oligopoly
D. None of the above

View Answer

Question 6

The elasticity of demand of durable goods is

A. Less than unity
B. Greater than unity
C. Equal to unity
D. Zero

View Answer

Question 7

According to Keynes, interest is a payment for

A. Consumer's preference
B. Producer's preference
C. Liquidity preference
D. State Bank's preference

View Answer

Question 8

Which of the following is one of the assumptions of perfect competition?

A. Few buyers and few sellers
B. Many buyers and few sellers
C. Many buyers and many sellers
D. All sellers and buyers are honest

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Question 9

If the marginal (additional) opportunity cost is a constant then the PPC would be

A. Straight line
B. Convex
C. Backward leading
D. Concave

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Question 10

Supply of a commodity is a

A. Stock concept
B. Flow concept
C. Both stock and flow concept
D. None of the above

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Question 11

Under Marginal utility analysis, utility is assumed to be a

A. Cardinal concept
B. Ordinal concept
C. Indeterminate concept
D. None of the above

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Question 12

Marginal revenue is always less than price at all levels of output in

A. Perfect competition
B. Monopoly
C. Both 'a' and 'b'
D. None of the above

View Answer

Question 13

Under which of the following forms of market structure does a firm have no control over the price of its product?

A. Monopoly
B. Monopolistic competition
C. Oligopoly
D. Perfect competition

View Answer

Question 14

The law of consumer surplus is based on

A. Indifference curve analysis
B. Revealed preference theory
C. Law of substitution
D. The law of diminishing marginal utility

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Question 15

A factor of production, whose supply is fixed in the short tun, may get additional earnings. These earnings are generally referred to as

A. Surplus value
B. Quasi-rent
C. Transfer earnings
D. Super normal profits

View Answer

Question 16

The total effect of a price change of a commodity is

A. Sustitution effect plus price effect
B. Substitution effect plus income effect
C. Substitution effect plus demonstration effect
D. Substitution effect minus income effect

View Answer

Question 17

Which of the following is NOT a characteristic of perfect competition?

A. Free entry and exit of the firms
B. The demand curve of firm is horizontal
C. The marginal revenue curve is horizontal
D. An individual firm can influence the price

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Question 18

When the perfectly competitive firm and industry are in long run equilibrium, then

A. P = MR = SAC = LAC
B. D = MR = SMC = LMC
C. P = MR = Lowest point on the LAC curve
D. All of the above

View Answer

Question 19

The second glass of lemonade gives lesser satisfaction to a thirsty biy, this is a clear case of

A. Law of demand
B. Law of diminishing returns
C. Law of diminishing marginal utility
D. Law of supply

View Answer

Question 20

The cost that a firm incurs in hiring or purchasing any factor of production is referred to as

A. Explicit cost
B. Implicit cost
C. Variable cost
D. Fixed cost

View Answer

Question 21

When as a result of decrease in price of good, the total expenditure made on it decreases we say that price elasticity of demand is

A. Less than unity
B. Unity
C. Zero
D. Greater than Unity

View Answer

Question 22

In case of inferior goods, the income elasticity is

A. Zero
B. Positive
C. Negative
D. None

View Answer

Question 23

The offer curves introduced by Alfred Marshall, helps us to understand how the ___ is established in international trade.

A. Terms of trade
B. Equilibrium price ratio
C. Exchange rate
D. Satisfaction level

View Answer

Question 24

The situation of monopolistic competition is created by

A. Small number of producers of a commodity
B. Lack of homogeneity of the product produced by different firms
C. Imperfection of the market for that product
D. All of the above

View Answer

Question 25

Which of the following is CORRECT with respect to resources?

A. Money is a capital good
B. Human skills are a labour input
C. Entrepreneur is part of the labour input
D. Natural resources include human input

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Question 26

The structure of the cold drink industry in India is best described as

A. Perfectly competitive
B. Monopoly
C. Oligopoly
D. Monopolistically competitive

View Answer

Question 27

In the context of oligopoly, the kinked demand curve hypothesis is designed to explain

A. Price and output determination
B. Price rigidity
C. Price leadership
D. Collusion among rivals

View Answer

Question 28

When cross elasticity of demand is a large positive number, one can conclude that

A. The good is normal
B. The good is inferior
C. The good is a substitute
D. The good is complement

View Answer

Question 29

An economic theory is

A. An axiom
B. A proposition
C. A hypothesis
D. A tested hypothesis

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Question 30

Demand for intermediate consumption arises in

A. Household sector only
B. Government sector only
C. Corporate sector only
D. All producing sectors of the economy

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Question 31

Which of the following is NOT the assumption of the Marginal Productivity Theory of Distribution?

A. Homogenity of a factor
B. Perfect competition in the factor market
C. All factors, except one, are variable
D. Given stock of each factor and full employment

View Answer

Question 32

A firm decides to exit the industry when

A. AC starts rising
B. MC starts rising
C. Price is less than LAC
D. TC starts rising

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Question 33

Profit is maximum when

A. Slope of MC and Mr is the same
B. Slope of TC and TR is the same
C. Slope of AC and AR is the same
D. None of the above

View Answer

Question 34

All labour is

A. Homogeneous
B. Heterogeneous
C. Lazy
D. Intelligent

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Question 35

Which of the following is NOT an input?

A. Labour
B. Entrepreneurship
C. Natural resources
D. Production

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Question 36

Which of the following is a producer good?

A. Pen
B. Cycle
C. Mobile phone
D. Hammer

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Question 37

If elasticity of demand is very low, it shows that the commodity is

A. A necessity
B. A luxury
C. Has little importance in total budget
D. a' and 'c' above

View Answer

Question 38

Which one is not a assumption of the theory of demand based on analysis of indifference curves?

A. Given scale of preferences as between different combinations of two goods
B. Diminishing marginal rate of substitution
C. Constant marginal utility of money
D. Consumers would always prefer more of a particular good to less of it, other things remaining the same

View Answer

Question 39

What implication does resource scarcity have for the satisfaction of wants?

A. Not all wants can be satisfied
B. We will never be faced with the need to make choices
C. We must develop ways to decrease our individual wants
D. The discovery of new natural resources is necessary to increase our ability to satisfy wants

View Answer

Question 40

Which of the following are sources of growth?

A. Natural resources
B. Human capital
C. Physical capital
D. All of the above

View Answer

Question 41

Demand for final consumption arises in

A. Household sector only
B. Government sector only
C. Both household and government sector
D. Neither household nor government sector

View Answer

Question 42

Economic problems arise because

A. Wants are unlimited
B. Resources are scarce
C. Scare resources have alternative uses
D. All of the above

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Question 43

In long-run, all firms in monopolistic competition

A. Earn supernormal profits
B. Earn normal profits
C. Incur losses
D. May earn normal profit, super normal profit or incur losses

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Question 44

Supply curve represents ________ relationship between quantity and price.

A. Direct
B. Inverse
C. Either direct or inverse
D. None of the above

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Question 45

When a market is in equilibrium

A. No shortage exists
B. Quantity demanded equals quantity supplied
C. A price is established that clears the market
D. All of the above are correct

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Question 46

The transformation of resources into economic goods and services is called

A. Technical efficiency
B. Input
C. Production
D. Increasing returns

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Question 47

A necessity is defined as a good having

A. A positive income elasticity of demand
B. A negative income elasticity of demand
C. An income elasticity of demand between zero and 1
D. An income elasticity of more than 1

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Question 48

The 'substitution effect' takes place due to change in

A. Income of the consumers
B. Prices of the commodity
C. Relative prices of the commodities
D. All of the above

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Question 49

In perfect competition, the firm's _____ above AVC has the identical shape of the firm's supply curve

A. Marginal revenue curve
B. Marginal cost curve
C. Average cost curve
D. None of the above

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Question 50

In the case of a Giffen good, the demand curve will be

A. Horizontal
B. Downward to the right
C. Upward to the right
D. Vertical

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Question 51

Elinor Ostrom and Oliver Williamson are the Nobel Prize Laureates in Economics in 2009. Do you know in which year was Francois Quesnay's Tableu Economique published?

A. 1767
B. 1764
C. 1761
D. 1758

View Answer

Question 52

According to Keynes, interest is a payment for

A. Use of durable goods
B. Use of capital
C. Use of money
D. Use of land

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Question 53

All the following curves are U-shaped except

A. AVC
B. AFC
C. AC
D. MC

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Question 54

Some economists say that profit earner is a kind of

A. Rent receiver
B. Interest receiver
C. Wage earner
D. Government officer

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Question 55

In a competitive economy, the uncrowned king is

A. Government
B. Producer
C. Consumer
D. Seller

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Question 56

According to Joseph Schumpeter, profit is the reward for

A. Innovation
B. Uncertainty-bearing
C. Risk-taking
D. Management

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Question 57

One characteristic not typical of oligopolistic industry is

A. Too much importance to non-price competition
B. Price leadership
C. Horizontal demand curve
D. A small number of firms in the industry

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Question 58

Fisher's ideal index number is

A. Arithmetic mean of Laspeyre's and Paasche's index
B. Harmonic mean of Laspeyre's and Paasche's index
C. Geometric mean of Laspeyre's and Paasche's index
D. None of the above

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Question 59

Ten rupees is the equilibrium price for good X. If government fixes the price at Rs.5, there is

A. A shortage
B. A surplus
C. Excess supply
D. Loss

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Question 60

If the price of 'X' rises by 10 percent and the quantity demanded falls by 10 percent, 'X' has

A. Inelastic demand
B. Unitarily elastic demand
C. Zero elastic demand
D. Elastic demand

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Question 61

When indifference curve is L shaped, then two goods will be

A. Perfect substitute goods
B. Substitute goods
C. Perfect complementary goods
D. Complementary goods

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Question 62

If the price of Pepsi decreases relative to the price of Coke and 7-Up, the demand for

A. Coke will rise
B. 7-Up will decrease
C. Coke and 7-Up will increase
D. Coke and 7-Up will decrease

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Question 63

Profits

A. Are lower in the long run than in the short run
B. Can be negative
C. Are less in perfect competition than in monopoly
D. All of the above

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Question 64

In which year, IDBI was restructured and separated from control of Reserve Bank of India?

A. 1972
B. 1974
C. 1976
D. 1980

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Question 65

The necessary condition for equilibrium position of a firm is

A. MR>MC
B. MC>Price
C. MC=MR
D. MC=AC

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Question 66

The Purchasing Power Parity Theory' came into prominence in 1916 through the writings of

A. J.M.Keynes
B. L.E.Von Miser
C. Gustav Cassel
D. F.A.von Hayek

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Question 67

The labour force participation rate is the

A. Proportion of population that is working
B. Proportion of population working or looking for work
C. Proportion of skilled workers population
D. Proportion of female workers to male workers

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Question 68

Which one is increasing function of price?

A. Demand
B. Utility
C. Supply
D. Consumption

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Question 69

When total utility becomes maximum, then marginal utility will be

A. Minimum
B. Average
C. Zero
D. Negative

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Question 70

If the price of good A increases relative to the price of substitutes B and C, the demand for

A. B will increase
B. C will increase
C. Both B and C will increase
D. B and C will decrease

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Question 71

The minimum wage is an example of

A. Price floor
B. Price ceiling
C. Equilibrium wage
D. Efficiency of labour

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Question 72

Economic development of a country requires

A. Skilled labour
B. Diplomacy
C. Abundant natural resources
D. a' and 'c' both

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Question 73

Marginal utility is equal to average utility at that time when average utility is

A. Increasing
B. Maximum
C. Falling
D. Minimum

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Question 74

Human wants are

A. One thousand
B. Few
C. Innumerable
D. Countable

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Question 75

Total utility of a commodity is measured by which price of that commodity?

A. Value in use
B. Value in exchange
C. Both of above
D. None of above

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Question 76

If regardless of changes in its price, the quantity demanded of a commodity remains unchanged, then the demand curve for the commodity will be

A. Horizontal
B. Vertical
C. Positively sloped
D. Negatively sloped

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Question 77

Larger production of ___ goods would lead to higher production in future

A. Consumer goods
B. Capital goods
C. Agricultural goods
D. Public goods

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Question 78

The cost of one thing in terms of the alternative given up is called

A. Real cost
B. Production cost
C. Physical cost
D. Opportunity cost

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Question 79

The kinked demand curve model of oligopoly assumes that

A. Response to a price increase is less than the response to a price decrease
B. Response to a price increase is more than the response to a price decrease
C. Elassticity of demand is constant regardless of whether price increases or decreases
D. Elasticity of demand is perfectly elastic if price increases and perfectly inelastic if price decreases

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Question 80

The upper portion of the kinked demand curve is relatively

A. More inelastic
B. More elastic
C. Less elastic
D. Inelastic

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Question 81

Marginal revenue will be negative if elasticity of demand is

A. Less than unity
B. More than 1
C. Equal to 1
D. Equal to zero

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Question 82

During a particular year, farmers experienced a dry weather. If all the other factors remain constant, farmers supply curve for wheat will shift

A. Rightward
B. Leftward
C. Upward
D. None of the above

View Answer

Question 83

The human effort applied to the production of goods is called in economics

A. Labour
B. Skill
C. Experience
D. Service

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Question 84

Demand curve slopes downward because of the law of

A. Consumer equilibrium
B. Utility maximization
C. Utility minimization
D. Diminishing marginal utility

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Question 85

Passive factor of production is

A. Only Land
B. Only Capital
C. Both Land & Capital
D. Neither Land nor Capital

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Question 86

Which among the following statement is INCORRECT?

A. Floating exchange rate system works on the market mechanism
B. Floating exchange rate breeds uncertainties and speculation
C. Economic and political factors and value judgement influence the choice of the exchange rate system
D. The system of floating exchange rate requires comprehensive government intervention

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Question 87

The 'Diamond water' controversy is explained by

A. Total utility
B. Marginal utility
C. Price offered
D. Quantity supplied

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Question 88

Economies of scale are of two kinds

A. Temporary and permanent
B. Internal and external
C. Managerial and industrial
D. Natural and artificial

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Question 89

Total costs in the short-term are classified into fixed costs and variable costs. Which one of the following is a variable cost?

A. Cost of raw material
B. Cost of equipment
C. Interest payment on past borrowing
D. Payment of rent on buildings

View Answer

Question 90

A decrease in demand causes the equilibrium price to

A. Rise
B. Fall
C. Remain constant
D. Indeterminate

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Question 91

Which is the first-order condition for the profit of a firm to be maximum?

A. AC=MR
B. MC=MR
C. MR=AR
D. AC=AR

View Answer

Question 92

A vertical supply curve parallel to the price axis implies that the elasticity of supply is

A. Zero
B. Infinity
C. Equal to one
D. Greater than zero but less than infinity

View Answer

Question 93

Supply curve will shift when

A. Price falls
B. Price rises
C. Demand shots
D. Technology changes

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Question 94

If the demand for a good is inelastic, an increase in its price will cause the total expenditure of the consumers of the good to

A. Increase
B. Decrease
C. Remain the same
D. Become zero

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Question 95

Interest is paid because

A. Capital is scarce
B. Capital is productive
C. Capital is attractive
D. Capital is surplus

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Question 96

Normal profit is called normal because

A. It is neither very high nor very low
B. It is minimum acceptable to the producer
C. It is minimum which buyer wants to pay
D. It is the maximum allowed by government

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Question 97

The economic analysis expects the consumer to behave in a manner which is

A. Rational
B. Irrational
C. Emotional
D. Indifferent

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Question 98

A competitive firm maximizes profit at the output level where

A. Price equals marginal cost
B. The slope of the firm's profit function is equal to zero
C. Marginal revenue equals marginal cost
D. All of the above

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Question 99

Economic rent can accrue to

A. Land only
B. Capital only
C. Specialized technical personnel only
D. Any of the factors of production

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Question 100

Which of the following is Microeconomics concerned with?

A. The size of national output
B. The level of employment
C. Changes in general level of prices
D. None of the above

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Question 101

Credit creation power of the commercial banks gets limited by which of the following?

A. Banking habits of the people
B. Cash Reserve Ratio
C. Credit policy of the central bank
D. All of the above

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Question 102

The cost which a firm incurs for purchasing or hiring factors is called

A. Implicit
B. Explicit
C. Real
D. Nominal

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Question 103

"The real price of everything, what every thing really costs to the man who wants to require it, is the toil and trouble of acquiring it. Who made this statement?

A. Karl Marx
B. Adam Smith
C. David Ricardo
D. J.S.Mill

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Question 104

Some economists refer to iso-product curves as

A. Engels curve
B. Production indifference curve
C. Budget line
D. Ridge line

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Question 105

In a typical demand schedule, quantity demanded

A. Varies directly with price
B. Varies proportionately with price
C. Varies inversely with price
D. Is independent of price

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Question 106

Price and demand are positively correlated in case of

A. Normal goods
B. Comforts
C. Giffen goods
D. Luxuries

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Question 107

Which one of the following pairs of commodities is an example of substitutes?

A. Tea and sugar
B. Tea and coffee
C. Pen and ink
D. Shirt and trousers

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Question 108

Which is a condition for existence of monopoly?

A. Big size
B. Identical product
C. Absence of government taxes
D. No close substitute

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Question 109

Other things remaining the same, the quantity of a product demanded increases with ____________ in price.

A. Increase
B. Decrease
C. Variation
D. None of the above

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Question 110

TC curve

A. Rises continously
B. Falls after reaching a maximum
C. Is horizontal
D. None of the above

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Question 111

All of the following are determinants of demand except

A. Tastes and preferences
B. Quantity supplied
C. Income
D. Price of related goods

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Question 112

Number of times a unit of money changes hands in the course of a year is called

A. Supply of money
B. Purchasing power of money
C. Velocity of money
D. Value of money

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Question 113

When Marginal Utility is zero, Total Utility is

A. Minimum
B. Maximum
C. Law of return
D. None of the above

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Question 114

Standard of living of a country can be raised if it increases

A. Labour force
B. Production
C. Money supply
D. Exports

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Question 115

The Communist Manifesto, written jointly by Marx and Engels's was published in

A. 1843
B. 1848
C. 1853
D. 1859

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Question 116

The degree of monopoly power is measured in terms of difference between

A. Marginal cost and the price
B. Marginal cost and average revenue
C. Marginal cost and average cost
D. Marginal revenue and average cost

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Question 117

Who is known as father of the green revolution in the world?

A. Linus pauling
B. Ralph Bunche
C. Norman Borlaug
D. M.S.Swaminathan

View Answer

Question 118

When price elasticity of demand for normal goods is calculated, the value is always

A. Positive
B. Negative
C. Constant
D. Greater than 1

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Question 119

Contraction of demand is the result of

A. Decrease in the number of consumers
B. Increase in the price of the commodity concerned
C. Increase in the prices of other goods
D. Decrease in the income of purchasers

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Question 120

"Rent is a creation of value, not of wealth". Who made this observation?

A. Adam Smith
B. David Ricardo
C. Alfred Marshall
D. A.C.Pigou

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Question 121

Price of a product falls by 10% and its demand rises by 30%. The elasticity of demand is

A. 10%
B. 30%
C. 3
D. 1

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Question 122

‐‐‐‐‐‐ is not an example of ‘near money’

A. Bill of exchange
B. Treasury bills
C. Bond
D. Currency notes

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Question 123

In economics, what a consumer is ready to pay minus what he actually pays, is termed as

A. Consumer's equilibrium
B. Consumer's surplus
C. Consumer's expenditure
D. None of the above

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Question 124

Utility is more closely related to the term

A. Useful
B. Useless
C. Necessary
D. Satisfaction

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Question 125

The law of variable proportions come into being when

A. There are only two variable factors
B. There is a fixed factor and a variable factor
C. All factors are variable
D. Variable factors yield less

View Answer

Question 126

Profit is maximum when

A. TC and TR curves are parallel
B. MC and MR curves are parallel
C. TC and TR curves cross each other
D. AC and AR curves cross each other

View Answer

Question 127

A firm should shut down in the short run if it is not covering its

A. Variable cost
B. Fixed cost
C. Total cost
D. Explicit cost (money outlays)

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Question 128

Identify the aspect of taxation which is related to normative economics

A. Incidence of tax
B. Effect of tax on the capacity willingness to work
C. Equity of tax
D. None of the above

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Question 129

The supply of a good refers to

A. Stock available for sale
B. Total stock in the warehouse
C. Actual production of the good
D. Quantity of the good offered for sale at a particular price per unit of time

View Answer

Question 130

If price and total revenue move in the same direction, then demand is

A. Inelastic
B. Elastic
C. Unrelated
D. Perfectly elastic

View Answer

Question 131

The most efficient scale of production of a firm is where

A. LAC is minimum
B. SAC is minimum
C. LMC is minimum
D. SMC is minimum

View Answer

Question 132

Which statement relates to macroeconomics?

A. Oil prices are rising in Pakistan
B. Profit rate is high on textile industry
C. The firms try to make huge profits
D. The government has failed to control inflation

View Answer

Question 133

The following are some of the costs of a clothing manufacturer. State which among them will you consider as fixed cost?

A. Cost of cloth
B. Piece wages paid to workers
C. Depreciation on machines owing to time
D. Cost of electricity for running machines

View Answer

Question 134

The Rate at which the Reserve Bank of India discounts the Bills of Exchange of the commercial Banks is known as the following?

A. Base Rate
B. Repo rate
C. Reverse Repo Rate
D. Bank Rate

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Question 135

If two goods are complements, this means that a rise in the price of one commodity will induce

A. An upward shift in demand for the other commodity
B. A rise in the price of the other commodity
C. A downward shift in demand for the other commodity
D. No shift in the demand for the other commodity

View Answer

Question 136

Lesser production of ____ would lead to lesser production in future.

A. Public goods
B. Consumer goods
C. Capital goods
D. Agricultural goods

View Answer

Question 137

Risks in the business arise because of

A. Introduction of the new products
B. Uncertain policy of rival firms
C. Changes in tastes
D. All of the above

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Question 138

A factor of production, whose supply is fixed in the short run, may get additional earnings. These earnings are generally referred to as

A. Surplus value
B. Quasi-rent
C. Transfer earnings
D. Super normal profits

View Answer

Question 139

The exception to law of demand is

A. Veblen goods
B. Giffen goods
C. Both 'a' and 'b'
D. None

View Answer

Question 140

In the case of an inferior good, the income elasticity of demand is

A. Positive
B. Zero
C. Negative
D. Infinite

View Answer

Question 141

The Revealed Preference Theory deduces the inverse price-quantity relationship from

A. Assumption of indifference
B. Postulate of utility maximization
C. Observed behavior of the consumer
D. Introspection

View Answer

Question 142

Demand for a commodity refers to a

A. Desire for the commodity
B. Need for the commodity
C. Quantity demanded of that commodity
D. Quantity of the commodity demanded at a certain price during any particular period of time

View Answer

Question 143

Elasticity of supply refers to the degree of responsiveness of supply of a commodity to changes in its

A. Demand
B. Price
C. Cost of production
D. State of technology

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Question 144

If a firm shuts down temporarily, it will incur loss equal to

A. AFC
B. AVC
C. TFC
D. TVC

View Answer

Question 145

Who is the 'father of economics'?

A. Max Muller
B. Adam Smith
C. Karl Marx
D. None of the above

View Answer

Question 146

Which of the following is not an essential condition of pure competition?

A. Large number of buyers and sellers
B. Homogeneous product
C. Freedom of entry
D. Absence of transport cost

View Answer

Question 147

Price-taking firms i.e., firms that operate in a perfectly competitive market, are said to be 'small' relative to the market. Which of the following best describes this smallness?

A. The individual firm must have fewer than 10 employees
B. The individual firm faces a downward-sloping demand curve
C. The individual firm has assets less than Rs. 20 lakhs
D. The individual firm is unable to affect market price through its output decisions

View Answer

Question 148

A dual system of pricing exists in

A. Capitalist economy
B. Socialist economy
C. Mixed economy
D. None of these

View Answer

Question 149

Where is Global Automotive Research Centre (GARC) located?

A. Hyderabad
B. Noida
C. Chennai
D. Mumbai

View Answer

Question 150

Who stated explicitly for the first time, the Law of Comparative Costs?

A. David Ricardo
B. Adam Smith
C. James Mill
D. Thomas Mun

View Answer

Question 151

Law of substitution is another name for law of

A. Law of diminishing MU
B. Law of Equi-MU
C. Law of demand
D. Satisfaction

View Answer

Question 152

Price of a product is determined in a free market by

A. Demand for the product
B. Supply of the product
C. Both demand and supply
D. The government

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Question 153

Under perfect competition

A. AC=AVC
B. AR=AC
C. AR=MC
D. AR=MR

View Answer

Question 154

A rise in supply and demand in equal proportion will result in

A. Increase in equilibrium price and equilibrium quantity
B. Decrease in equilibrium price and increase in equilibrium quantity
C. No change in equilibrium price and increase in equilibrium quantity
D. Increase in equilibrium price and no change in equilibrium quantity

View Answer

Question 155

The standard of living of workers depends upon their

A. Nominal wages
B. Real wages
C. Average product
D. Government policy

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Question 156

The budget line is also known as the

A. Iso-utility curve
B. Production possibility line
C. Isoquant
D. Consumption possibility line

View Answer

Question 157

For inferior commodities, income effect is

A. Zero
B. Negative
C. Infinite
D. Positive

View Answer

Question 158

In which form of the market structure is the degree of control over the price of its product by a firm very large?

A. Monopoly
B. Imperfect condition
C. Oligopoly
D. Perfect competition

View Answer

Question 159

What is the shape of the demand curve faced by a firm under perfect competition?

A. Horizontal
B. Vertical
C. Positively sloped
D. Negatively sloped

View Answer

Question 160

If all inputs are trebled and the resultant output is doubled, this is a case of

A. Constant returns to scale
B. Increasing returns to scale
C. Diminishing returns to scale
D. Negative returns to scale

View Answer

Question 161

The following are causes of shift in demand EXCEPT

A. Change in income
B. Change in price
C. Change in fashion
D. Change in prices of substitutes

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Question 162

A market structure in which many firms sell products that are similar but not identical is known as

A. Monopolistic competition
B. Monopoly
C. Perfect competition
D. Oligopoly

View Answer

Question 163

Scarcity means

A. Non-availibility of goods
B. High price of goods
C. Less supply than demand
D. High profit of the firms

View Answer

Question 164

Who expressed the view that 'Economics should be neutral between ends'?

A. Robbins
B. Marshall
C. Pigou
D. Adam Smith

View Answer

Question 165

Which of the following is also known as plant curves?

A. Long-run average cost (LAC) curves
B. Short-run average cost (SAC) curves
C. Average variable cost (AVC) curves
D. Average total cost (ATC) curves

View Answer

Question 166

In monopoly, the relationship between average and marginal revenue curves is as follows

A. AR curve lies above the MR curve
B. AR curve coincides with the MR curve
C. AR curve lies below the MR curve
D. AR curve is parallel to the MR curve

View Answer

Question 167

Law of return applies to firms working in

A. Perfect competition
B. Monopoly
C. Small firm
D. All kinds of market situations

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Question 168

The cost on one thing in terms of the alternative given up is known as

A. Production cost
B. Physical cost
C. Real cost
D. Opportunity cost

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Question 169

Other things equal, if a good has more substitutes, its price elasticity of demand is

A. Larger
B. Smaller
C. Zero
D. Unity

View Answer

Question 170

Discriminating monopoly is possible if two markets have

A. Rising cost curves
B. Rising and declining cost curves
C. Different elasticity of demand
D. Equal elasticity of demand

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Question 171

If a firm's average variable cost curve is rising, its marginal cost curve must be

A. Constant
B. Above the total cost curve
C. Above the average variable cost curve
D. All of the above

View Answer

Question 172

Which of the following is studied under Micro Economics ?

A. Individual unit
B. Economic Aggregate
C. National Income
D. None of these

View Answer

Question 173

Consumer's surplus left with the consumer under price discrimination is

A. Maximum
B. Minimum
C. Zero
D. Not predictable

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Question 174

When equilibrium price rises but equilibrium quantity remains unchanged, the cause is

A. Supply and demand both increase equally
B. Supply and demand both decrease equally
C. Supply decreases and demand increases
D. Supply increases and demand decreases

View Answer

Question 175

Suppose the demand for meals at a medium-priced restaurant is elastic. If the management of the restaurant is considering rasiing prices, it can expect a relatively

A. Large fall in quantity demanded
B. Large fall in demand
C. Small fall in quantity demanded
D. Small fall in demand

View Answer

Question 176

TC curve

A. Starts from origin
B. Does not start from origin
C. Is parallel to Y-axis
D. None of the above

View Answer

Question 177

Temporary unemployment is _____________, according to the Classical economists:

A. Impossible
B. Permanent
C. Possible
D. None of these

View Answer

Question 178

The AR curve and industry demand curve are same in case of

A. Monopoly
B. Oligopoly
C. Perfect competition
D. None of the above

View Answer

Question 179

He described economics as a science of material welfare

A. Robbins
B. Marshall
C. Ricardo
D. Keynes

View Answer

Question 180

Equilibrium in the economy is settled by _________, according to the Classicals.

A. Centralized planning
B. Price mechanism
C. Both the planning and price mechanism
D. None of these

View Answer

Question 181

In market equilibrium, supply is vertical line. The downward sloping demand curve shifts to the right. Then

A. Price will fall
B. Price remains same
C. Price will rise
D. Quantity rises

View Answer

Question 182

The three broad types of productive resources are

A. Money, profit and interest
B. Capital, labour and natural resources
C. Bond, stock shares and deposits
D. Technology, human capital and markets

View Answer

Question 183

Which of the following cost curves is never U-shaped?

A. Average cost curve
B. Marginal cost curve
C. Average variable cost curve
D. Average fixed cost curve

View Answer

Question 184

Union leaders are in better position to bargain for higher wages if demand for labour is

A. Elastic
B. Inelastic
C. Very large
D. Permanent

View Answer

Question 185

Mixed economy means an economy where

A. Both agriculture and industry are equally promoted by the state
B. There is co-existence of public sector along with private sector
C. There is importance of small scale industries along with heavy industries
D. Economy is controlled by military as well as civilian rulers

View Answer

Question 186

These are kinds of rent EXCEPT

A. Differential rent
B. Scarcity rent
C. Mobility rent
D. Location rent

View Answer

Question 187

Which of the following oligopoly models is concerned with the maximization of joint profits?

A. Price leadership model
B. Bertrand's model
C. Collusive model
D. Edgeworth's model

View Answer

Question 188

Quality of a commodity that satisfies some human want or need is called

A. Service
B. Demand
C. Utility
D. Efficiency

View Answer

Question 189

Economic profit is

A. Part of total cost
B. Total revenue minus total cost
C. Total revenue minus explicit cost
D. Total variable cost minus total fixed cost

View Answer

Question 190

Income elasticity of demand is defined as the responsiveness of

A. Quantity demanded to a change in income
B. Quantity demanded to a change in price
C. Price to a change in income
D. Income to a change in quantity demanded

View Answer

Question 191

Under law of demand

A. Price of commodity is an independent variable
B. Quantity demanded is a dependent variable
C. Reciprocal relationship is found between price and quantity demanded
D. All of the above

View Answer

Question 192

Which one of the following is the task of the Planning Commission?

A. Preparation of the plan
B. Implementation of the plan
C. Financing of the plan
D. None of the above

View Answer

Question 193

Which is not a central problem of an economy?

A. What to produce
B. How to produce
C. How to maximize private profit
D. For whom to produce

View Answer

Question 194

Utility means

A. Power to satisfy a want
B. Usefulness
C. Willingness of a person
D. Harmfulness

View Answer

Question 195

In which of the following market structure is the degree of control over the price of its product by a firm very large?

A. Imperfect competition
B. Perfect competition
C. Monopoly
D. In A and B both

View Answer

Question 196

Price discrimination will be profitable only if the elasticity of demand in different markets into which the total market has been divided is

A. Uniform
B. Different
C. Less
D. Zero

View Answer

Question 197

Which of the following is the relation that the law of demand defines?

A. Income and price of a commodity
B. Price and quantity of a commodity
C. Income and quantity demanded
D. Quantity demanded and quantity supplied

View Answer

Question 198

Which is the other name that is given to the average revenue curve?

A. Profit curve
B. Demand curve
C. Average cost curve
D. Indifference curve

View Answer

Question 199

All but one of the following are assumed to remain the same while drawing an individual's demand curve for a commodity. Which one is it?

A. The preferences of the individual
B. His monetary income
C. The price of the commodity under consideration
D. The prices of other goods

View Answer

Question 200

In short run, a firm in monopolistic competition

A. Always earns profits
B. Incurs losses
C. Earns normal profit only
D. May earn normal profit, super normal profit or incur losses

View Answer

Question 201

A firm earns economic profit when total profit exceeds

A. Normal profit
B. Implicit costs
C. Explicit costs
D. Variable costs

View Answer

Question 202

In monopoly and perfect competition, the cost curves are

A. Same
B. Different
C. Opposite
D. None of the above

View Answer

Question 203

Unemployment of labour means that

A. A worker does not get full time job
B. A worker is not happy with his present job
C. A person does not get job according to his qualification
D. a' and 'c' both

View Answer

Question 204

Identify the economist who had little formal education and started working in the money market at an early age of fourteen.

A. David Ricardo
B. Adam Smith
C. V.F.D. Pareto
D. A.A. Cournot

View Answer

Question 205

This is an assumption of law of demand

A. Price of the commodity should not change
B. Quantity should not change
C. Supply should not change
D. Income of consumer should not change

View Answer

Question 206

A firm under perfect competition is

A. Price maker
B. Price breaker
C. Price taker
D. Price shaker

View Answer

Question 207

According to M. Kalecki, the true measure of the degree of monopoly power is the

A. Ratio between price and marginal cost
B. Extent of monopolistic profit enjoyed by the monopolist
C. Cross-elasticity of demand for the product of the monopolist
D. Price charged by the monopolist minus marginal cost of production

View Answer

Question 208

An ISO-product slopes

A. Downward to the left
B. Downward to the right
C. Upward to the left
D. Upward to the right

View Answer

Question 209

According to Malthus, population increases by progression of which kind?

A. Systematic
B. Arithmetic
C. Geometric
D. Automatic

View Answer

Question 210

When supply of a commodity increases without change in price, it is called

A. Fall in supply
B. Expansion in supply
C. Contraction in supply
D. Rise in supply

View Answer

Question 211

Demand is a function of

A. Price
B. Quantity
C. Supply
D. None of the above

View Answer

Question 212

Rational decision making requires that

A. One's choices be arrived at logically and without errors
B. One's choices be consistent with one's goals
C. One's choices never vary
D. One makes choices that do not involve trade offs

View Answer

Question 213

Mr. Raees Ahamd bought 50 litres of petrol when his monthly income was Rs.25000. Now his monthly income has risen to Rs.50,000 and he purchases 100 litres of petrol. His income elasticity of demand for petrol is

A. 1
B. 100%
C. Less than 1
D. More than 1

View Answer

Question 214

____ is the official minimum rate at which the Central Bank of a country is prepared to rediscount approved bills held by the commercial banks

A. Repo rate
B. Bank rate
C. Prime lending rate
D. Reverse repo rate

View Answer

Question 215

TVC curve

A. Starts from origin
B. Does not start from origin
C. Is parallel to Y-axis
D. None of the above

View Answer

Question 216

In May 2013, firm was supplying 500kg of sugar at market price of Rs.30/- per kg. During June 2013, firm's supply of sugar had decreased to 450kg at price of Rs.20/- per kg. These changes show that supply of sugar is

A. Oerfectly elastic
B. Perfectly inelastic
C. Less elastic
D. More elastic

View Answer

Question 217

The classical theory explained interest as a reward for

A. Parting with liquidity
B. Abstinence
C. Saving
D. Inconvenience

View Answer

Question 218

Consumer surplus is highest in case of

A. Necessities
B. Luxuries
C. Comforts
D. Conventional necessities

View Answer

Question 219

Which of the following is NOT a feature of iso-product curve? Iso-product curves

A. Are downward sloping to the right
B. Show different input combination producing the same output
C. Intersect each other
D. Are convex to the origin

View Answer

Question 220

According to Marshall, the basis of consumer surplus is

A. Law of diminishing MU
B. Law of Equi-MU
C. Law of proportions
D. All of the above

View Answer

Question 221

If the demand for a good is inelastic, an increase in the price of the good will cause the total expenditure of the consumers of the good to

A. Remain the same
B. Increase
C. Decrease
D. Any of the above

View Answer

Question 222

An indifference curve slopes down towards right since more of one commodity and less of another result in

A. Same satisfaction
B. Greater satisfaction
C. Maximum satisfaction
D. Decreasing expenditure

View Answer

Question 223

Diminishing marginal utility is the basis of

A. Law of supply
B. Law of demand
C. Law of returns
D. None of the above

View Answer

Question 224

During short period, diminishing returns may follow because

A. Quantity of labour is fixed
B. Quantity of output is fixed
C. Quantity of capital is fixed
D. Quantity of any one factor is fixed

View Answer

Question 225

A firm's average fixed cost is Rs.20 at 6 units of output. What will it be at 4 units of output?

A. Rs.60
B. Rs.30
C. Rs.40
D. Rs.20

View Answer

Question 226

If price changes by 1% and supply changes by 2%, then supply is

A. Elastic
B. Inelastic
C. Indeterminate
D. Static

View Answer

Question 227

Which of the following markets comes closest to perfect market?

A. Wheat market
B. Cigarette market
C. Cold drinks market
D. Stock market

View Answer

Question 228

What do you mean by the supply of goods?

A. Stock available for sale
B. Total stock in the warehouse
C. The actual production of the goods
D. Quantity of the goods offered for sale at a particular price per unit of time

View Answer

Question 229

In which form, the largest percentage of national income is earned?

A. Interest income
B. Proprietor's income
C. Employee' wages
D. Rental income

View Answer

Question 230

A significant property of the Cobb-Douglas production function is that the elasticity of substitution between inputs is

A. Equal to 1
B. More than 1
C. Less than 1
D. 0

View Answer

Question 231

Indifference curves are convex to the origin because

A. Two goods are perfect substitutes
B. Two goods are imperfect substitutes
C. Two goods are perfect complementary goods
D. None of the above

View Answer

Question 232

At the point of inflexion, the marginal product is

A. Increasing
B. Decreasing
C. Maximum
D. Negative

View Answer

Question 233

The contribution of service sector to GDP in 2011‐12 is:

A. 13.90%
B. 14.50%
C. 56.30%
D. 29.10%

View Answer

Question 234

What is meant by Autarky in international trade?

A. Monopoly in international trade
B. Imposition of restrictions in international trade
C. Removal of all restrictions from international trade
D. The idea of self sufficiency and no international trade by a country

View Answer

Question 235

When marginal is negative, it must be true that

A. The average is negative
B. The average is decreasing
C. The total is negative
D. The total is decreasing

View Answer

Question 236

If the income elasticity is greater than one, the commodity is

A. Necessity item
B. Luxury item
C. Inferior good
D. None

View Answer

Question 237

The producer's demand for a factor of production is governed by the ____ of the factor.

A. Price will decrease
B. Marginal productivity
C. Availability
D. Profitability

View Answer

Question 238

Which among the following is a function of the Reserve Bank of India?

A. Bank issues the letters of credit to their customers certifying their credibility
B. Collecting and compilation of statistical information relating to banking & other financial sector
C. Banks underwrite the securities issued by public or private organizations
D. Accepting deposits from the public

View Answer

Question 239

The MC curve cuts the AVC and ATC curves at

A. The falling part of each
B. Different points
C. Their respective minimas
D. The rising part of each

View Answer

Question 240

Every factor of production gets rewarded equal to its

A. Cost
B. Marginal product
C. Price
D. Increasing return

View Answer

Question 241

Who defined Economics as a 'science which studies human behaviour as a relationship betweeen ends and means which have alternative uses'?

A. L. Robbins
B. Alfred Marshall
C. Joan Robinson
D. Paul A. Samuelson

View Answer

Question 242

Which among the following statement is INCORRECT?

A. Welfare economics is based on value judgements
B. Welfare economics is also called 'economics with a heart'
C. Welfare economics focuses on questions about equity as well as efficiency
D. The founder of Welfare economics was Alfred Marshall

View Answer

Question 243

In order to control credit, Reserve Bank of India should

A. Increase CRR and decrease Bank rate
B. Decrease CRR and reduce Bank rate
C. Increase CRR and increase Bank rate
D. Reduce CRR and increase Bank rate

View Answer

Question 244

If lowering of fares reduces railway's revenues and increasing of fares increases, then the demand for rail travel has a price elasticity of

A. Zero
B. Greater than Zero but less than One
C. One
D. Greater than One

View Answer

Question 245

The horizontal demand curve parallel to x-axis implies that the elasticity of demand is

A. Zero
B. Infinite
C. Equal to 1
D. Greater than zero but less than infinity

View Answer

Question 246

Under which market structure, average revenue of a firm is equal to its marginal revenue

A. Oligopoly
B. Monopoly
C. Perfect competition
D. Monopolistic competition

View Answer

Question 247

Law of demand shows relation between

A. Income and price of commodity
B. Price and quantity of commodity
C. Income and quantity demanded
D. Quantity demanded and quantity supplied

View Answer

Question 248

In the case of two perfect substitutes, the indifference curve will be

A. Straight line
B. L-shaped
C. U-shaped
D. C-shaped

View Answer

Question 249

If there are implicit costs of production

A. Economic profit will be equal to accounting profit
B. Economic profit will be less than accounting profit
C. Economic profits will be zero
D. Economic profit will be more than accounting profit.

View Answer

Question 250

Normally a demand curve will have the shape

A. Horizontal
B. Vertical
C. Downward sloping
D. Upward sloping

View Answer

Question 251

As output increases, AC curve

A. Falls
B. Rises
C. Remains constant
D. All of the above

View Answer

Question 252

What is the shape of the average fixed cost (AFC) curve?

A. U-shape
B. Horizontal up to a point and then rising
C. Sloping down towards the right
D. Rectangular hyperbola

View Answer

Question 253

Land only

A. Is a free gift of nature
B. Lacks geographical mobility
C. Is not hirable
D. a' and 'b' both

View Answer

Question 254

Which of the following is example of external economies of scale?

A. Discount on purchases of raw materials
B. Technical progress leads to development of machine at low price
C. Hiring of specialized staff due to increase in scale of production
D. A firm starts producing by-products

View Answer

Question 255

Supply curve is

A. Vertical in long run
B. Flatter in long run
C. Same in long and short run
D. Horizontal in both short and long run

View Answer

Question 256

Who first raised the fear of a world food shortage?

A. David Ricardo
B. T.R.Malthus
C. J.S.Mill
D. J.B.Say

View Answer

Question 257

In case of monopoly

A. Marginal revenue curve always slopes upward
B. Total revenue curve always slopes upward
C. Marginal revenue is always equal to average revenue
D. Marginal revenue is always less than average revenue

View Answer

Question 258

The producer is in equilibrium at a point where the cost line is

A. Above the isoquant
B. Below the isoquant
C. Cutting the isoquant
D. Tangent to isoquant

View Answer

Question 259

An individual demand curve slopes downward to the right because of the

A. Working of the law of diminishing marginal utility
B. Substitution effect of decrease in price
C. Income effect of fall in price
D. All of the above

View Answer

Question 260

Economic survey is published by

A. Ministry of Finance
B. Planning Commission
C. Government of India
D. Indian Statistical Institute

View Answer

Question 261

The Critique of Political Economy, the first fruits of Karl Marx's long painstaking research at the British Museum, appeared in

A. 1859
B. 1857
C. 1855
D. 1853

View Answer

Question 262

Who is the 'lender of the last resort' in the banking structure of India?

A. State bank of India
B. Reserve bank of India
C. EXIM bank of India
D. Union bank of India

View Answer

Question 263

Which form of market structure is characterised by interdependence in decision-making as between the different competing firms?

A. Oligopoly
B. Perfect competition
C. Imperfect competition
D. None of the above

View Answer

Question 264

Excess capacity is not found under

A. Monopoly
B. Monopolistic competition
C. Perfect competition
D. Oligopoly

View Answer

Question 265

As for the cost of production of an individual farmer, the rent paid by him

A. Enters into the price of his product
B. Does not enter into price of his product
C. Is unjustified
D. None of the above

View Answer

Question 266

When the price of a substitute of X commodity falls, the demand for X

A. Rises
B. Falls
C. Remains unchanged
D. Any of the above

View Answer

Question 267

In which year, was the first volume of Das Capital by Karl Marx published?

A. 1848
B. 1859
C. 1867
D. 1873

View Answer

Question 268

The various combination of goods that can be produced in any economy when it uses its available resources and technology efficiency are depicted by

A. Demand curve
B. Production curve
C. Supply curve
D. Production possibility curve

View Answer

Question 269

At the point of satiety, marginal utility is

A. Zero
B. Positive
C. Maximum
D. Negative

View Answer

Question 270

In monopolistic competition, a firm is in long run equilibrium

A. At the minimum point of the LAC curve
B. In the declining segment of the LAC curve
C. In the rising segment of the LAC curve
D. When price is equal to marginal cost

View Answer

Question 271

Which one of the following is the condition of equilibrium for the monopolist?

A. MR=MC
B. MC=AR
C. MR=MC=Price
D. AC=AR

View Answer

Question 272

Demand for factors of production is

A. Derived demand
B. Joint demand
C. Composite demand
D. None of the above

View Answer

Question 273

_____ is an implicit cost of production

A. Wages of the labour
B. Charges for electricity
C. Interest on owned money capital
D. Payment for raw material

View Answer

Question 274

If the demand for a commodity is inelastic, an increase in its pice will cause the total expenditure of the consumers of the commodity to

A. Remain the same
B. Increase
C. Decrease
D. Any of the above

View Answer

Question 275

Which of the following input factor takes risk, innovates and coordinates

A. Capital
B. Labour
C. Productivity
D. Entrepreneur

View Answer

Question 276

Productivity of land can be raised by

A. Extensive cultivation
B. Intensive cultivation
C. Better marketing
D. a' and 'b' both

View Answer

Question 277

The supply of a commodity refers to

A. Actual production of the commodity
B. Total existing stock of the commodity
C. Stock available for sale
D. Amount of the commodity offered for sale at a particular price per unit of time

View Answer

Question 278

Invisible item are the part of ‐‐‐‐‐‐ account of balance of payment.

A. Current
B. Capital
C. Merchandise
D. None of the above

View Answer

Question 279

In the short run, when the output of a firm increases, its average fixed cost

A. Increases
B. Decreases
C. Remains constant
D. First declines and then rises

View Answer

Question 280

In case of perfect competition in the market

A. Marginal revenue curve always slopes upward
B. Marginal revenue curve always slopes downwards
C. Marginal revenue is always equal to average revenue
D. Marginal revenue is always less than average revenue

View Answer

Question 281

Profits are

A. Residual payment
B. Pre-determined
C. Fixed contract
D. Always higher than wages

View Answer

Question 282

The major difference between perfect competition and monopolistic competition is

A. Number of firms
B. Differentiated product
C. Rate of profit
D. Free exit and entry

View Answer

Question 283

Identify the coefficient of price-elasticity of demand when the percentage increase in the quantity of a commodity demanded is smaller than the percentage fall in its price

A. Equal to one
B. Greater than one
C. Small than one
D. Zero

View Answer

Question 284

Which statistical measure helps in measuring the purchasing power of money?

A. Arithmetic average
B. Index numbers
C. Harmonic mean
D. Time series

View Answer

Question 285

In the short run if a perfectly competitive firm finds itself operating at a loss, it will

A. Reduce the size of its plant to lower fixed costs
B. Raise the price of its product
C. Shut down
D. Continue to operate as long as it covers its variable cost

View Answer

Question 286

All inputs can be varied in

A. Short run
B. Long run
C. Both periods
D. None of the period

View Answer

Question 287

Discriminating monopoly implies that the monopolist charges different prices for its commodity

A. From different groups of consumers
B. For different uses
C. At different places
D. Any of the above

View Answer

Question 288

In the long run, any firm will eventually leave the industry if

A. Price does not at least cover average total cost
B. Price does not equal marginal cost
C. Economies of sale are being reaped
D. Price is greater than long run average cost

View Answer

Question 289

Which among the following statement is INCORRECT?

A. On a linear demand curve, all the five forms of elasticity can be depicted
B. If two demand curves are linear and intersecting each other, then, coefficient of elasticity would be same on different demand curves at the point of intersection.
C. If two demand curves are linear and parallel to each other, then, at a particular price, the coefficient of elasticity would be different on different demand curves.
D. The price elasticity of demand is expressed in terms of relaive not absolute changes in Price and Quantity demanded.

View Answer

Question 290

Which of the following is not a characteristic of a 'price taker'?

A. TR = P x Q
B. AR = Price
C. Negatively sloped demand
D. Marginal Revenue = Price

View Answer

Question 291

The IC curve approach assumes

A. Rationality
B. Consistency
C. Transitivity
D. All of the above

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Question 292

Excise tax is a part of

A. Fixed cost
B. Variable cost
C. Implicit cost
D. Is not a part of cost

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Question 293

The economist's objections to monopoly rest on which of the following grounds?

A. There is a transfer of income from consumers to the monopolist
B. There is welfare loss as resources tend to be misallocated under monopoly
C. Both A and B are incorrect
D. Both A and B are correct

View Answer

Question 294

The average total cost pf producing 50 units is Rs.250 and total fixed cost is Rs.1000. What is the average fixed cost of producing 100 units?

A. Rs.10
B. Rs.30
C. Rs.20
D. Rs.5

View Answer

Question 295

A higher indifference curve shows

A. A higher level of satisfaction
B. A higher level of production
C. A higher level of income
D. None of the above

View Answer

Question 296

If a good is a luxury, its income elasticity of demand is

A. Positive and less than 1
B. Negative but greater than 1
C. Positive and greater than 1
D. Zero

View Answer

Question 297

When ______, we know that the firms are earning just normal profits.

A. AC = AR
B. MC = MR
C. MC = AC
D. AR = MR

View Answer

Question 298

For ____ goods, increase in income leads to increase in demand.

A. Abnormal
B. Normal
C. Inferior
D. Superior

View Answer

Question 299

Giffen goods are those goods

A. For which demand increases as price increases
B. That have a high income elasticity of demand
C. That are in short supply
D. None of the above

View Answer

Question 300

The long run is a

A. Period of three years or longer
B. Period long enough to allow firms to change plant size and capacity
C. Period long enough to allow firm to make economic decisions
D. A period which affects larger than smaller firms

View Answer

Question 301

Which statement is true

A. ATC + AVC = AFC
B. ATC + MC = AFC
C. ATC + AFC = AVC
D. AFC + AVC = ATC

View Answer

Question 302

Which one is the assumption of law of demand

A. Price of the commodity should not change
B. Quantity demanded should not change
C. Prices of substitutes should not change
D. Demand curve must be linear

View Answer

Question 303

The growth rate of service sector in 2011‐12 is:

A. 3.30%
B. 9.40%
C. 10.50%
D. 6.30%

View Answer

Question 304

Suppose the total cost of producing commodity X is Rs.125000. Out of this cost, implicit cost is Rs.35000 and normal profit is Rs.25000. What will be the explicit cost of commodity X?

A. Rs.90000
B. Rs.65000
C. Rs.60000
D. Rs.100000

View Answer

Question 305

An isoquant slopes

A. Downward to the left
B. Downward to the right
C. Upward to the right
D. Upward to the left

View Answer

Question 306

An increase in the supply of a commodity is caused by

A. Improvements in technology
B. Fall in the prices of other commodities
C. Fall in the prices of factors of production
D. All of the above

View Answer

Question 307

The short run

A. Is less than one year
B. Requires that at least one input is fixed
C. Requires that all inputs are fixed
D. Is just long enough to permit entry and exit

View Answer

Question 308

What best explains a shift in market supply curve to the right?

A. An advertising campaign is successful in promoting the good
B. A new technique makes it cheaper to produce the good
C. The government introduces a tax on the good
D. The price of raw materials increases

View Answer

Question 309

Identify the work of Irving Fisher

A. A Treatese on Money
B. Policy against Inflation
C. The Making of Index numbers
D. Monetary Theory

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Question 310

Economics is the study of

A. how society manages its unlimited resources
B. how to reduce our wants until we are satisfied
C. how society manages its scarce resources
D. how to fully satisfy our unlimited wants

View Answer

Question 311

With which of the theories of wages, is the name of John Stuart Mill associated?

A. Marginal productivity theory of wages
B. Wages-fund theory
C. Subsistence theory of wages
D. Iron aw of wages

View Answer

Question 312

MC is given by

A. Slope of TFC
B. Slope of TC
C. Slope of AC
D. None of the above

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Question 313

Assume that consumer's income and the number of sellers in the market for good X both falls. Based on this information, we can conclude with certaintty that the equilibrium

A. Price will decrease
B. Price will increase
C. Quantity will decrease
D. Quantity will increase

View Answer

Question 314

Agricultural goods market depicts characteristics close to

A. Perfect competition
B. Oligopoly
C. Monopoly
D. Monopolistic competition

View Answer

Question 315

Normal profit is

A. Part of total cost
B. Part of economic profit
C. Total revenue minus total cost
D. Total revenue minus implicit cost

View Answer

Question 316

What do you mean by ‘under conditions of a perfect competition in the product market’?

A. MRP = VMP
B. MRP > VMP
C. VMP > MRP
D. None of the above

View Answer

Question 317

When marginal revenue is zero, total revenue is

A. Maximum
B. Minimum
C. Zero
D. Decreasing

View Answer

Question 318

As output increases

A. MC curve initially falls and then rises
B. MC initially rises and then falls
C. MC continuously rises
D. None of the above

View Answer

Question 319

The elasticity of substitution between two perfect substitutions is

A. Zero
B. Greater than zero
C. Less than infinity
D. Infinity

View Answer

Question 320

When ____, we know that the firms must be producing at the minimum point of the average cost curve and so there will be productive efficiency.

A. AC = AR
B. MC = AC
C. MC = MR
D. AR = MR

View Answer

Question 321

If demand is inelastic, a change in the price

A. Will change the quantity in same direction
B. Will change total revenue in same direction
C. Will change total revenue in the opposite direction
D. Will not change total revenue

View Answer

Question 322

In a perfectly competitive market

A. Firm is the price giver and industry the price taker
B. Firm is the price taker and industry the price giver
C. Both are price takers
D. None of the above

View Answer

Question 323

When a competitive firm achieves long run equilibrium, then,

A. P=MC
B. MR=MC
C. P=ATC
D. All of the above

View Answer

Question 324

The consumer is in equilibrium at a point where the budget line

A. Is above an indifference curve
B. Is below an indifference curve
C. Is tangent to an indifference curve
D. Cuts an indifference curve

View Answer

Question 325

J.B. Say was a _______________Economist.

A. Swedish
B. German
C. French
D. Americal

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Question 326

Which one of the following is true about Planning Commission?

A. It is a Ministry
B. It is a Government Department
C. It is an Advisory Body
D. It is an Autonomous Corporation

View Answer

Question 327

Which cost increases continuously with the increase in production?

A. Avearge cost
B. Marginal cost
C. Fixed cost
D. Variable cost

View Answer

Question 328

It describes the law of supply

A. Supply curve
B. Supply schedule
C. Supply equation
D. All of the above

View Answer

Question 329

When demand is perfectly inelastic, an increase in price will result in

A. A decrease in total revenue
B. An increase in total revenue
C. No change in total revenue
D. A decrease in quantity demanded

View Answer

Question 330

At the point of equilibrium of firm (under perfect competition)

A. MC curve must be rising
B. MC curve must be falling
C. MR cure must be rising
D. None of the above

View Answer

Question 331

The vertical difference between TVC and TC is equal to

A. MC
B. AVC
C. TFC
D. None of the above

View Answer

Question 332

Identify the author of "The principles of Political Economy and Taxation"

A. Alfred Marshall
B. J.S.Mill
C. David Ricardo
D. A. Turgot

View Answer

Question 333

If quantity demanded is completely unresponsive to changes in price, demand is

A. Inelastic
B. Unit elastic
C. Elastic
D. Perfectly inelastic

View Answer

Question 334

A consumer is in equilibrium when marginal utilities are

A. Minimum
B. Highest
C. Equal
D. Increasing

View Answer

Question 335

A firm's average total cost of production is Rs.300 at 5 units of output and Rs.320 at 6 units of output. The marginal cost of producing the 6th unit is

A. Rs.20
B. Rs.120
C. Rs.320
D. Rs.420

View Answer

Question 336

Profit is maximum when

A. Distance between TR and TC is maximum
B. Distance between AR and AC is maximum
C. Distance between MR and MC is maximum
D. None of the above

View Answer

Question 337

If demand is unitary elastic, a 25% increase in price will result in

A. 25% change in total revenue
B. No change in quantity demanded
C. 1% decrease in quantity demanded
D. 25% decrease in quantity demanded

View Answer

Question 338

Professor Knight is famous for his theory of

A. Rent
B. Profit
C. Population
D. Wages

View Answer

Question 339

Total utility is maximum when

A. Marginal utility is zero
B. Marginal utility is at its highest point
C. Marginal utility is equal to average
D. Average utility is maximum

View Answer

Question 340

When Marginal Utility is positive, Total Utility

A. Increases
B. Decreases
C. Remains constant
D. Is highest

View Answer

Question 341

Mobility of labour

A. Increases efficiency of labour
B. Spoils labour
C. Increases division of labour
D. a' and 'c' both

View Answer

Question 342

Unit cost is another name for

A. MC
B. AVC
C. ATC
D. AFC

View Answer

Question 343

What does price elasticity of demand measure?

A. Change in price caused by changes in demand
B. The rate of change of sales
C. The responsiveness of demand to price changes
D. The value of sales at a given price

View Answer

Question 344

Ceteris Paribus means

A. Other things remaining same
B. All variables are independent
C. Enable economists to simplify reality
D. That no other assumptions are made

View Answer

Question 345

Demand curve can be derived from

A. MU curve
B. PCC
C. Both 'a' and 'b'
D. None

View Answer

Question 346

Who propounded the opportunity cost theory of international trade?

A. Ricardo
B. Marshall
C. Heckscher & Ohlin
D. Haberler

View Answer

Question 347

Under conditions of perfect competition in the product market

A. MRP = VMP
B. MRP > VMP
C. VMP > MRP
D. None of the above

View Answer

Question 348

Zubair has a special taste for college canteen's hotdogs. The owner of the canteen doubles the prices of hotdogs. Zubair did not respond to the increase in prices and kept on demanding the same quantity of hotdogs. His demand for hotdogs is

A. Perfectly elastic
B. Perfectly inelastic
C. Elastic
D. Less elastic

View Answer

Question 349

A mixed economy is characterized by the co-existence of

A. Modern and traditional industries
B. Public and private sectors
C. Foreign and domestic investments
D. Commercial and subsistence farming

View Answer

Question 350

If income elasticity for a good is 2, then it is a

A. Necessity item
B. Inferior good
C. Luxury item
D. Comfortable item

View Answer

Question 351

The average profit is the difference between

A. AC and TC
B. AC and VC
C. AC and AR
D. AC and TR

View Answer

Question 352

Microeconomics deals with the

A. Allocation of resources of the economy as between production of different goods and services
B. Determination of prices of goods and services
C. Behavior of industrial decision makers
D. All of the above

View Answer

Question 353

labourers are employed the firm produces 136 units of output. Thenthe marginal product is ___

A. 120
B. 136
C. 6
D. 16

View Answer

Question 354

In the case of a straight-line demand curve meeting the two axes, the price-elasticity of demand at the mid-point of the line would be

A. 0
B. 1
C. 1.5
D. 2

View Answer

Question 355

The capital that is consumed by an economy or a firm in the production process is known as

A. Capital loss
B. Production cost
C. Dead-weight loss
D. Depreciation

View Answer

Question 356

In Monopoly at various output levels

A. AR = MR
B. AR < MR
C. AR > MR
D. None of the above

View Answer

Question 357

If two goods were perfect substitutes of each other, it necessarily follows that

A. An indifference curve relating the two goods will be curvilinear
B. An indifference curve relating the two goods will be linear
C. An indifference curve relating the two goods will be divided into two segments which meet at a right angle
D. An indifference curve relating the two goods will be convex to the origin

View Answer

Question 358

Unemployment due to mechanization of agriculture is

A. Seasonal
B. Structural
C. Industrial
D. Personal

View Answer

Question 359

If rate of interest is 10%, the PV (present value) of Rs.100 received in 1 year's time is

A. 90
B. 90.9
C. 95
D. 110

View Answer

Question 360

The term 'marginal' in economics means

A. Unimportant
B. Additional
C. The minimum unit
D. Just barely passing

View Answer

Question 361

The shape of rectangular hyperbola is made by

A. MC
B. AFC
C. AVC
D. None of the above

View Answer

Question 362

Which is NOT a cause of shift in cost curves of a firm?

A. Excise tax
B. Prices of inputs
C. Increase in productivity
D. Price of product

View Answer

Question 363

When price is below equilibrium level, there will be

A. Surplus commodity in the market
B. Shortage of commodity in the market
C. Supply curve will shift
D. Demand curve will shift

View Answer

Question 364

Who is generally regarded as the founder of the 'Classical School'?

A. David Ricardo
B. Adam Smith
C. T.R.Malthus
D. J.S.Mill

View Answer