| 1. |
The subject matter of economics is concerned with |
| A. | Production |
| B. | Consumption |
| C. | Distribution and exchange |
| D. | All of the above |
| Answer» D. All of the above | |
| 2. |
The economic problem arises since |
| A. | Wants are unlimited |
| B. | Resources are limited |
| C. | Resources are capable of alternative uses |
| D. | All of the above |
| Answer» D. All of the above | |
| 3. |
The wants of the people are |
| A. | Limited |
| B. | Satiable |
| C. | Unlimited |
| D. | All of the above |
| Answer» C. Unlimited | |
| 4. |
Economic problem arises in |
| A. | Planned economies |
| B. | Free market economies |
| C. | Mixed economies |
| D. | All of the above |
| Answer» D. All of the above | |
| 5. |
The resources are : |
| A. | Limited |
| B. | Unlimited |
| C. | Not only limited but are capable of alternative uses |
| D. | None of the above |
| Answer» C. Not only limited but are capable of alternative uses | |
| 6. |
Which one of the following is an example of an economic good |
| A. | Sunlight |
| B. | Air |
| C. | Petrol |
| D. | None of the above |
| Answer» C. Petrol | |
| 7. |
----- is not an example of free good |
| A. | Sunlight |
| B. | Car |
| C. | Petrol |
| D. | Computer |
| Answer» A. Sunlight | |
| 8. |
The term production refers to: |
| A. | Producing things which are capable of satisfying human wants |
| B. | Creation or addition of utilities |
| C. | Transformation of inputs into output |
| D. | All of the above |
| Answer» D. All of the above | |
| 9. |
The problem of allocation of resources is concerned with: |
| A. | What to produce |
| B. | How to produce |
| C. | For whom to produce |
| D. | All of the above |
| Answer» A. What to produce | |
| 10. |
The distribution of national product among the members of the society is the problem of: |
| A. | What to produce |
| B. | How to produce |
| C. | For whom to produce |
| D. | All of the above |
| Answer» C. For whom to produce | |
| 11. |
Production is said to be efficient when: |
| A. | The re-allocation of resources cannot increase the production o the article even by one unit |
| B. | More output is produced with the given input |
| C. | Resources are fully employed |
| D. | All of the above |
| Answer» A. The re-allocation of resources cannot increase the production o the article even by one unit | |
| 12. |
Which one of the following come under macro economics: |
| A. | Per capita income |
| B. | Study of a firm |
| C. | Individual income |
| D. | Theory of factor pricing |
| Answer» A. Per capita income | |
| 13. |
Which one of the following is not come under macro economics |
| A. | National income |
| B. | Per capita income |
| C. | Disposable income |
| D. | Individual income |
| Answer» D. Individual income | |
| 14. |
Partial equilibrium analysis come under: |
| A. | Micro economics |
| B. | Macro economics |
| C. | Welfare economics |
| D. | International economics |
| Answer» A. Micro economics | |
| 15. |
“The starting point of all economic activity is the existence of human wants” Who said this? |
| A. | Adam Smith |
| B. | Selligman |
| C. | Ricardo |
| D. | Alfred Marshall |
| Answer» B. Selligman | |
| 16. |
Production and consumption takes place simultaneously in the case of |
| A. | Goods |
| B. | Services |
| C. | Both in the case of goods and services |
| D. | Neither in the case of goods and services |
| Answer» B. Services | |
| 17. |
Economics is a social science because |
| A. | The central point in economics is man and his problems |
| B. | Economics uses scientific approach to derive its laws |
| C. | Like History, Politics and Psychology economics deals with the problems of human being |
| D. | All of the above |
| Answer» D. All of the above | |
| 18. |
Economic growth can be achieved through |
| A. | Advanced technology |
| B. | Expansion of resources |
| C. | Both A & B |
| D. | Neither A & B |
| Answer» C. Both A & B | |
| 19. |
Micro economics doesn’t deal with: |
| A. | The study of individual economic units |
| B. | Determination of factor prices |
| C. | Price determination of commodities |
| D. | General equilibrium analysis |
| Answer» D. General equilibrium analysis | |
| 20. |
Name the economist who analyses the subject matter of economics into two branches: micro economic analysis and macro economic analysis. |
| A. | Adam Smith |
| B. | Alfred Marshall |
| C. | Ragner Frisch |
| D. | P A Samuelson |
| Answer» C. Ragner Frisch | |
| 21. |
Transformation of inputs into outputs is known as |
| A. | Production |
| B. | Consumption |
| C. | Distribution |
| D. | Exchange |
| Answer» A. Production | |
| 22. |
----- is an example of secondary input |
| A. | Land |
| B. | Labour |
| C. | Capital |
| D. | Raw material |
| Answer» D. Raw material | |
| 23. |
Odd-man out from the following |
| A. | Steel |
| B. | Medicine |
| C. | Education |
| D. | Train |
| Answer» C. Education | |
| 24. |
The choice of techniques of production is related to the problem of |
| A. | What to produce |
| B. | How to produce |
| C. | For whom to produce |
| D. | None of the above |
| Answer» B. How to produce | |
| 25. |
The functional relationship between inputs and outputs is called |
| A. | Production function |
| B. | Consumption function |
| C. | Investment function |
| D. | Saving function |
| Answer» A. Production function | |
| 26. |
Firms owned by one individual is known as |
| A. | Proprietorship |
| B. | Partnership |
| C. | Corporations |
| D. | None of the above |
| Answer» A. Proprietorship | |
| 27. |
Firms owned by two or more individuals is known as |
| A. | Proprietorship |
| B. | Partnership |
| C. | Corporations |
| D. | None of the above |
| Answer» B. Partnership | |
| 28. |
Firms owned by stock holders are known as |
| A. | Proprietorship |
| B. | Partnership |
| C. | Corporations |
| D. | None of the above |
| Answer» C. Corporations | |
| 29. |
The major objective of a firm is |
| A. | Profit maximization |
| B. | Revenue maximization |
| C. | Sales maximization |
| D. | None of the above |
| Answer» A. Profit maximization | |
| 30. |
Which one of the following is an example of fixed input |
| A. | Raw materials |
| B. | Casual workers |
| C. | Plant and equipments |
| D. | All of the above |
| Answer» C. Plant and equipments | |
| 31. |
In short-run |
| A. | All inputs are fixed |
| B. | All inputs are variable |
| C. | Some inputs are fixed and some are variable |
| D. | None of the above |
| Answer» C. Some inputs are fixed and some are variable | |
| 32. |
In long-run |
| A. | All inputs are fixed |
| B. | All inputs are variable |
| C. | Some inputs are fixed and some are variable |
| D. | None of the above |
| Answer» B. All inputs are variable | |
| 33. |
Marginal product of a factor is |
| A. | The additional product received by the firm due to the employment of an additional unit of a variable factor |
| B. | Addition to the total product when one more unit of a factor is employed |
| C. | The rate of change in the total product per unit change in the variable factor. |
| D. | All of the above |
| Answer» D. All of the above | |
| 34. |
Production function expresses |
| A. | The relationship between input and output |
| B. | How maximum output is produced with the given input |
| C. | What is the least-cost combination of input to produce the given output |
| D. | All of the above |
| Answer» D. All of the above | |
| 35. |
The variable cost of a firm vary in direct proportion to the |
| A. | Volume of its output |
| B. | Extent of its profits |
| C. | Volume of its sale |
| D. | All of the above |
| Answer» A. Volume of its output | |
| 36. |
Law of variable proportions is concerned with |
| A. | Long-run production function |
| B. | Laws of returns to scale |
| C. | Short-run production function |
| D. | None of the above |
| Answer» C. Short-run production function | |
| 37. |
The ‘point of inflection’ come in which stage of the law of variable proportions |
| A. | Stage I |
| B. | Stage II |
| C. | Stage III |
| D. | None of the above |
| Answer» A. Stage I | |
| 38. |
A rational producer will select his level of production in which stage of the law of variable proportions |
| A. | Stage I |
| B. | Stage II |
| C. | Stage III |
| D. | Either Stage I or Stage II |
| Answer» B. Stage II | |
| 39. |
Total product reaches at maximum when |
| A. | MP is increasing |
| B. | MP is maximum |
| C. | MP = 0 |
| D. | MP is negative |
| Answer» C. MP = 0 | |
| 40. |
At the ‘point of inflection’ |
| A. | MP is maximum |
| B. | AP is maximum |
| C. | TP is maximum |
| D. | All of the above |
| Answer» A. MP is maximum | |
| 41. |
Returns to scale refers to the production function where |
| A. | All factors are fixed |
| B. | Some factors are fixed and others are variable |
| C. | All factors are variable |
| D. | None of the above |
| Answer» C. All factors are variable | |
| 42. |
In the case of diminishing returns to scale, a given proportionate increase in all factors causes |
| A. | A more than proportionate increase in output |
| B. | An equal proportionate increase in output |
| C. | A less than proportionate increase in output |
| D. | None of the above |
| Answer» C. A less than proportionate increase in output | |
| 43. |
Increasing returns to scale occurs due to |
| A. | Division of labour |
| B. | Specialization |
| C. | Economies of scale |
| D. | All of the above |
| Answer» D. All of the above | |
| 44. |
The cause for diminishing returns to scale is: |
| A. | Improper proportion of factors of production |
| B. | Difficulty in the combination of certain factors |
| C. | Excess combination of certain factors |
| D. | All of the above |
| Answer» D. All of the above | |
| 45. |
The solution to diminishing returns to scale is : |
| A. | Technical progress |
| B. | Expansion of resources |
| C. | Proper combination or resources |
| D. | All of the above |
| Answer» D. All of the above | |
| 46. |
Economies of scale refers to: |
| A. | Advantages resulting from large scale production |
| B. | Disadvantages resulting from large scale production |
| C. | Advantages resulting from the increase in the number of consumers |
| D. | All of the above |
| Answer» A. Advantages resulting from large scale production | |
| 47. |
Which one of the following is not related to economies of scale: |
| A. | Scope for division of labour and specialization |
| B. | Scope for getting inputs at cheaper rates |
| C. | Difficulty faces by the managers to coordinate the business |
| D. | Scope for better storage facilities |
| Answer» C. Difficulty faces by the managers to coordinate the business | |
| 48. |
The law of Diminishing returns is applicable to: |
| A. | Agriculture only |
| B. | Industry only |
| C. | In short-run only |
| D. | Universally |
| Answer» D. Universally | |
| 49. |
Let a firm employs 5 labourers and produces 120 units of output. When 6 labourers are employed the firm produces 136 units of output. Then the marginal product is --- |
| A. | 120 |
| B. | 136 |
| C. | 6 |
| D. | 16 |
| Answer» D. 16 | |
| 50. |
A firm produces 200 units of commodity X by employing 10 workers and 240 units of the same commodity by employing 12 workers. Then the Average Product of the worker is -------- |
| A. | 200 |
| B. | 240 |
| C. | 20 |
| D. | 40 |
| Answer» C. 20 | |
| 51. |
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 |
| Answer» B. Decrease | |
| 52. |
When total utility is maximum, marginal utility is: |
| A. | Maximum |
| B. | One |
| C. | Zero |
| D. | Infinite |
| Answer» C. Zero | |
| 53. |
For complementary goods, the cross elasticity of demand: |
| A. | Positive |
| B. | Negative |
| C. | Zero |
| D. | None |
| Answer» B. Negative | |
| 54. |
Relation between price of a commodity and demand for another commodity is measured by: |
| A. | Price elasticity |
| B. | Income elasticity |
| C. | Cross elasticity |
| D. | Elasticity of substitution |
| Answer» C. Cross elasticity | |
| 55. |
When TU falls, MU is: |
| A. | Rises |
| B. | Zero |
| C. | Positive |
| D. | Negative |
| Answer» D. Negative | |
| 56. |
Demand varies ------------- with price. |
| A. | Directly |
| B. | Positively |
| C. | Inversely |
| D. | None of the above |
| Answer» C. Inversely | |
| 57. |
When Q = f (P), the elasticity coefficient is measured by: |
| A. | ∆Q/∆P / P/Q |
| B. | ∆P/∆Q * Q/P |
| C. | ∆Q/∆P * P/Q |
| D. | ∆P/∆Q / Q/P |
| Answer» C. ∆Q/∆P * P/Q | |
| 58. |
Income elasticity of demand for inferior good is: |
| A. | Negative |
| B. | Positive |
| C. | Zero |
| D. | Unity |
| Answer» A. Negative | |
| 59. |
In the case of luxury goods, the income elasticity of demand will be: |
| A. | Less than unity |
| B. | Unity |
| C. | More than unity |
| D. | All the above |
| Answer» C. More than unity | |
| 60. |
Income elasticity is positive, but less than unity in the case of: |
| A. | Necessity |
| B. | Luxury |
| C. | Inferior |
| D. | Substitutes |
| Answer» A. Necessity | |
| 61. |
In drawing an individual demand curve for a commodity, all but which of the following are kept constant: |
| A. | Individual’s money income |
| B. | The prices of the related commodity |
| C. | Price of the commodity under consideration |
| D. | Tastes of the consumer |
| Answer» C. Price of the commodity under consideration | |
| 62. |
When an individual’s income rises, when everything else remains the same, his demand for normal goods: |
| A. | Rises |
| B. | Falls |
| C. | Remains the same |
| D. | Any of the above is possible |
| Answer» A. Rises | |
| 63. |
When an individual’s income falls, when everything else remains the same, his demand for inferior goods: |
| A. | Increases |
| B. | Decreases |
| C. | Remains unchanged |
| D. | Cannot say |
| Answer» A. Increases | |
| 64. |
When the price of the substitute commodity of X falls, the demand for X: |
| A. | Rises |
| B. | Falls |
| C. | Remains unchanged |
| D. | All of the above is possible |
| Answer» B. Falls | |
| 65. |
If the quantity demanded remains unchanged as the price of the commodity falls, the coefficient of price elasticity of demand is: |
| A. | Greater than |
| B. | one Equal to one |
| C. | Smaller than one |
| D. | Zero |
| Answer» D. Zero | |
| 66. |
If the income elasticity of demand is greater than one, then the commodity is: |
| A. | Necessity |
| B. | Luxury |
| C. | Inferior |
| D. | Non-related commodity |
| Answer» A. Necessity | |
| 67. |
If the amount of the commodity purchased remains unchanged when the price of another commodity changes, the cross elasticity of demand between them will be: |
| A. | Positive |
| B. | Negative |
| C. | Zero |
| D. | One |
| Answer» C. Zero | |
| 68. |
Which of the following is an exception to the law of demand? |
| A. | Giffen good |
| B. | Normal good |
| C. | Superior good |
| D. | All of the above |
| Answer» A. Giffen good | |
| 69. |
The law of diminishing marginal utility was popularized by: |
| A. | Keynes |
| B. | Marshall |
| C. | Smith |
| D. | Samuelson |
| Answer» B. Marshall | |
| 70. |
If the income elasticity of demand for a commodity is found to be 0.4, then the commodity concerned is: |
| A. | Luxury |
| B. | Necessity |
| C. | Giffen’s goods |
| D. | Independent good |
| Answer» B. Necessity | |
| 71. |
Cross elasticity of demand in the case of substitutes: |
| A. | Zero |
| B. | Negative |
| C. | Positive |
| D. | Infinity |
| Answer» C. Positive | |
| 72. |
If a small change in price leads to infinitely large change in quantity demanded, then the demand is: |
| A. | Perfectly elastic |
| B. | Perfectly inelastic |
| C. | Elastic |
| D. | Inelastic |
| Answer» A. Perfectly elastic | |
| 73. |
Net addition to total utility when one more unit is consumed is: |
| A. | AU |
| B. | MU |
| C. | MC |
| D. | TU |
| Answer» B. MU | |
| 74. |
Most important determinant of demand is : |
| A. | Income |
| B. | Wealth |
| C. | Price |
| D. | Advertisement |
| Answer» C. Price | |
| 75. |
Which of the following is the reason for law of demand: |
| A. | Price effect |
| B. | Backlash effect |
| C. | Income effect |
| D. | Real balance effect |
| Answer» C. Income effect | |
| 76. |
A market: |
| A. | Necessarily refers to a meeting place between buyer and sellers |
| B. | Does not necessarily refers to a meeting place between buyer and sellers |
| C. | Extends over the entire country |
| D. | Extends over a city |
| Answer» B. Does not necessarily refers to a meeting place between buyer and sellers | |
| 77. |
Net addition to total cost is called: |
| A. | Marginal cost |
| B. | Average cost |
| C. | Fixed cost |
| D. | Variable cost |
| Answer» A. Marginal cost | |
| 78. |
The market equilibrium for a commodity is determined by : |
| A. | Market demand |
| B. | Market supply |
| C. | Balancing of the forces of demand and supply |
| D. | Any of the above |
| Answer» C. Balancing of the forces of demand and supply | |
| 79. |
When there are only few sellers of the commodity, the market is called: |
| A. | Monopoly |
| B. | Duopoly |
| C. | Oligopoly |
| D. | Monopsony |
| Answer» C. Oligopoly | |
| 80. |
If the supply curve of the commodity is having a positive slope, a rise in the price of the commodity, results in: |
| A. | Increase in supply |
| B. | Increase in quantity supplied |
| C. | Decrease in supply |
| D. | Decrease in quantity supplied |
| Answer» B. Increase in quantity supplied | |
| 81. |
From the position of stable equilibrium, the market supply of a commodity decreases, while the market demand remains unchanged, then: |
| A. | Equilibrium price falls |
| B. | Equilibrium quantity rises |
| C. | Both equilibrium price and equilibrium quantity decreases |
| D. | Equilibrium price rises, but equilibrium quantity falls |
| Answer» D. Equilibrium price rises, but equilibrium quantity falls | |
| 82. |
Elasticity of supply for a positively sloped straight line supply curve that intersects the price axis is: |
| A. | Equal to zero |
| B. | Equal to one |
| C. | Greater than one |
| D. | Constant |
| Answer» C. Greater than one | |
| 83. |
In which of the following market, advertisement is absent: |
| A. | Monopolistic competition |
| B. | Perfect competition |
| C. | Oligopoly |
| D. | None of the above |
| Answer» C. Oligopoly | |
| 84. |
-------------- cost can never become zero. |
| A. | Variable cost |
| B. | Fixed cost |
| C. | Marginal cost |
| D. | Average cost |
| Answer» B. Fixed cost | |
| 85. |
If a positively sloped linear supply curve crosses the quantity axis, the elasticity of supply is: |
| A. | Inelastic |
| B. | Elastic |
| C. | Unitary elastic |
| D. | Perfectly elastic |
| Answer» A. Inelastic | |
| 86. |
If a positively sloped linear supply curve passes through the origin, the elasticity of supply is |
| A. | Inelastic |
| B. | Elastic |
| C. | Unitary elastic |
| D. | Perfectly elastic |
| Answer» C. Unitary elastic | |
| 87. |
Average cost is the sum of AVC and |
| A. | MC |
| B. | TC |
| C. | AFC |
| D. | ATC |
| Answer» C. AFC | |
| 88. |
The horizontal supply curve parallel to quantity axis represents |
| A. | Elastic supply |
| B. | Inelastic supply |
| C. | Perfectly elastic supply |
| D. | Perfectly inelastic supply |
| Answer» C. Perfectly elastic supply | |
| 89. |
When output is zero, variable cost is -------- |
| A. | Maximum |
| B. | Minimum |
| C. | Infinity |
| D. | Zero |
| Answer» D. Zero | |
| 90. |
Change in quantity supplied of a product can result from |
| A. | Changes in own price |
| B. | Changes in cost of production |
| C. | Change in technology |
| D. | Change in price of related products |
| Answer» A. Changes in own price | |
| 91. |
At prices above the equilibrium price |
| A. | Quantity supplied exceeds quantity demanded |
| B. | Quantity demanded exceeds quantity supplied |
| C. | There is shortage |
| D. | All of the above is possible |
| Answer» A. Quantity supplied exceeds quantity demanded | |
| 92. |
When MC cuts AC, AC is at its ------------ |
| A. | Maximum |
| B. | Minimum |
| C. | Zero |
| D. | Negative |
| Answer» B. Minimum | |
| 93. |
An increase in market supply, demand remaining the same causes |
| A. | Increase in equilibrium price |
| B. | Decrease in equilibrium quantity |
| C. | Decrease in equilibrium price and increase in equilibrium quantity |
| D. | Both equilibrium price and quantity rises |
| Answer» C. Decrease in equilibrium price and increase in equilibrium quantity | |
| 94. |
Cost function relates cost to |
| A. | Input |
| B. | Output |
| C. | Raw material |
| D. | Machines |
| Answer» B. Output | |
| 95. |
An increase in market demand, supply remaining the same results in |
| A. | Decrease in equilibrium price |
| B. | Decrease in equilibrium quantity |
| C. | Decrease in equilibrium price and increase in equilibrium quantity |
| D. | Both equilibrium price and quantity rises |
| Answer» D. Both equilibrium price and quantity rises | |
| 96. |
There is no distinction between firm and industry in |
| A. | Perfect competition |
| B. | Monopoly |
| C. | Monopolistic competition |
| D. | Oligopoly |
| Answer» B. Monopoly | |
| 97. |
A fall in the market demand, supply remaining the same results in |
| A. | Increase in equilibrium price |
| B. | Increase in equilibrium quantity |
| C. | Increase in equilibrium price and decrease in equilibrium quantity |
| D. | Both equilibrium price and quantity falls |
| Answer» D. Both equilibrium price and quantity falls | |
| 98. |
The cost of next best alternative is called |
| A. | Marginal cost |
| B. | Average cost |
| C. | Opportunity cost |
| D. | Direct cost |
| Answer» C. Opportunity cost | |
| 99. |
When MC is greater than AC, AC |
| A. | Rises |
| B. | Falls |
| C. | Maximum |
| D. | Minimum |
| Answer» A. Rises | |
| 100. |
There is ------- relationship between price and quantity supplied |
| A. | Positive |
| B. | Negative |
| C. | Constant |
| D. | Inverse |
| Answer» A. Positive | |