McqMate
| 1. |
Total utility is maximum when |
| A. | marginal utility is zero |
| B. | marginal utility is maximum |
| C. | marginal utility increases |
| D. | average utility is maximum |
| Answer» A. marginal utility is zero | |
| 2. |
Which of the following is called gossans first law |
| A. | law of substitution |
| B. | law of equi marginal utility |
| C. | law of diminishing marginal utility |
| D. | none of the above |
| Answer» C. law of diminishing marginal utility | |
| 3. |
When individuals income falls (everything remain the same) his demand for an inferior good |
| A. | rises |
| B. | falls |
| C. | remains the same |
| D. | we cannot say without additional information |
| Answer» A. rises | |
| 4. |
If negative income effect is greater than positive substitution effect : the product will be |
| A. | a normal good |
| B. | an inferior good |
| C. | a giffen good |
| D. | a complementary good |
| Answer» C. a giffen good | |
| 5. |
Which of the following statement is FALSE with regard to marginal utility |
| A. | marginal utility is the utility derived from last unit |
| B. | as consumption increases marginal utility goes on diminishing |
| C. | at saturation point marginal utility is zero |
| D. | marginal utility increases at a diminishing range |
| Answer» D. marginal utility increases at a diminishing range | |
| 6. |
According to Marshall consumer surplus is: |
| A. | total utility – marginal utility |
| B. | total utility + marginal utility |
| C. | total utility derived – price |
| D. | price – marginal utility |
| Answer» C. total utility derived – price | |
| 7. |
If both the products X & Y are normal goods |
| A. | slopes down towards right |
| B. | slopes up towards right |
| C. | slopes up towards left |
| D. | slopes down towards left |
| Answer» B. slopes up towards right | |
| 8. |
Which of the following statement is TRUE with regard to total utility |
| A. | total utility is the utility derived from last unit |
| B. | total utility increases at a diminishing range |
| C. | as consumption increases total utility goes on diminishing |
| D. | at saturation point total utility is negative |
| Answer» B. total utility increases at a diminishing range | |
| 9. |
If negative income effect is less than positive substitution effect : the product will be |
| A. | a normal good |
| B. | an inferior good |
| C. | a giffen good |
| D. | a complementary good |
| Answer» B. an inferior good | |
| 10. |
Which of the following statements is true |
| A. | hicksian substitution effect is greater than slutsky substitution effect |
| B. | slutsky substitution effect is greater than hicksian substitution effect |
| C. | hicksian substitution effect is same and equal to slutsky substitution effect |
| D. | hicksian substitution effect is the reverse of slutsky substitution effect |
| Answer» B. slutsky substitution effect is greater than hicksian substitution effect | |
| 11. |
According to Hicks substitution effect is |
| A. | the movement to a higher indifference curve |
| B. | the movement to a lower indifference curve |
| C. | the movement along an indifference curve |
| D. | the movement to a decreased consumption |
| Answer» C. the movement along an indifference curve | |
| 12. |
Strong ordering means |
| A. | absence of indifference |
| B. | presence of indifference |
| C. | no difference between different combinations |
| D. | none of the above |
| Answer» A. absence of indifference | |
| 13. |
In the fundamental theorem of consumption and to prove the law of demand, Samualson uses |
| A. | compensating variation in income |
| B. | the cost difference |
| C. | the over compensation effect |
| D. | substituting variation in price |
| Answer» C. the over compensation effect | |
| 14. |
If negative income effect is greater than positive substitution effect : price effect will be |
| A. | zero |
| B. | negative |
| C. | positive |
| D. | positive and greater than one |
| Answer» B. negative | |
| 15. |
As per indifference curve analysis consumer equilibrium is attained when |
| A. | slope of indifference curve is constant |
| B. | slopes of both indifference curve and income price line are equal |
| C. | slopes of both indifference curve and income price line are opposite |
| D. | both income price line and indifference curve are parallel. |
| Answer» B. slopes of both indifference curve and income price line are equal | |
| 16. |
The slope of a budget line is |
| A. | the satisfaction level of both the commodities |
| B. | the income level of the consumer |
| C. | the price ratio of both the commodities under consideration |
| D. | price level of a country |
| Answer» C. the price ratio of both the commodities under consideration | |
| 17. |
At the point of tangency the slope of indifference curve is |
| A. | differ from point to point |
| B. | is equal on the other side of the mid point |
| C. | is the same |
| D. | is increasing |
| Answer» C. is the same | |
| 18. |
The slope of a budget line throughout its length is |
| A. | the satisfaction level of both the commodities |
| B. | the income level of the consumer |
| C. | the price ratio of both the commodities under consideration |
| D. | price level of a country |
| Answer» C. the price ratio of both the commodities under consideration | |
| 19. |
The income effect for a commodity is |
| A. | is always positive |
| B. | is always negative |
| C. | depends upon price effect |
| D. | determines the nature of the commodity |
| Answer» D. determines the nature of the commodity | |
| 20. |
The substitution effect for a commodity is |
| A. | is always positive |
| B. | depends upon the nature of the commodity |
| C. | depends upon price effect |
| D. | sometimes negative and sometimes positive |
| Answer» A. is always positive | |
| 21. |
Price effect is |
| A. | income effect – substitution effect |
| B. | substitution effect – income effect |
| C. | income effect + substitution effect |
| D. | income effect + substitution effect- negative effects |
| Answer» C. income effect + substitution effect | |
| 22. |
For a giffen good, when price falls |
| A. | demand increases at a faster rate |
| B. | demand decreases |
| C. | demand remains constant |
| D. | demand curve has a negative slope |
| Answer» B. demand decreases | |
| 23. |
Inferior goods are the goods with |
| A. | falling income effect |
| B. | rising income effect |
| C. | negative income effect |
| D. | positive marshallian effects |
| Answer» C. negative income effect | |
| 24. |
Indifference curves are |
| A. | always parallel |
| B. | may be parallel |
| C. | may not be parallel |
| D. | both b and c |
| Answer» D. both b and c | |
| 25. |
Revealed preference theory assumes |
| A. | weak ordering |
| B. | strong ordering |
| C. | constant ordering |
| D. | multiple ordering |
| Answer» B. strong ordering | |
| 26. |
Hicks Allen indifference theory is based on |
| A. | weak ordering |
| B. | strong ordering |
| C. | constant ordering |
| D. | multiple ordering |
| Answer» A. weak ordering | |
| 27. |
Income consumption curve of an inferior commodity is |
| A. | positively sloped |
| B. | backward bending |
| C. | downward slopping straight line |
| D. | showing constant income effect |
| Answer» B. backward bending | |
| 28. |
In case of a convex indifference curve |
| A. | mrs xy is constant |
| B. | mrs xy is increasing |
| C. | mrs xy is negligible |
| D. | mrs xy is diminishing |
| Answer» D. mrs xy is diminishing | |
| 29. |
‘Higher the indifference curve higher will be level of satisfaction’. The statement is |
| A. | always true |
| B. | always false |
| C. | sometimes true and sometimes false |
| D. | true only if price effect is positive |
| Answer» A. always true | |
| 30. |
As per indifference curve analysis, consumer always try to reach |
| A. | higher indifference |
| B. | lower indifference curve |
| C. | middle indifference curve |
| D. | lower income price line |
| Answer» A. higher indifference | |
| 31. |
Which method is used by Hicks to eliminate the income effect when price of a product is changed |
| A. | compensating variation in income |
| B. | the cost difference |
| C. | the over compensation effect |
| D. | substituting variation in price |
| Answer» A. compensating variation in income | |
| 32. |
The basic doctrine of consumers’ surplus is based on |
| A. | indifference curve analysis |
| B. | revealed preference theory |
| C. | law of substitution |
| D. | law of diminishing marginal utility |
| Answer» D. law of diminishing marginal utility | |
| 33. |
According to Marshall, The law of diminishing marginal utility |
| A. | applies on money in the manner in which it applies on commodity |
| B. | do not applies on money except bank money |
| C. | does not applies on bank money but applies on cash |
| D. | applies on all commodities except money |
| Answer» D. applies on all commodities except money | |
| 34. |
An indifference curve represent |
| A. | four commodities |
| B. | less than two commodities |
| C. | only two commodities |
| D. | only one commodity |
| Answer» C. only two commodities | |
| 35. |
Indifference curve is always |
| A. | concave to the origin |
| B. | convex to the origin |
| C. | l shaped |
| D. | a straight line |
| Answer» B. convex to the origin | |
| 36. |
Engel curve for giffen good is |
| A. | positively sloped |
| B. | negatively sloped |
| C. | horizontal straight line |
| D. | vertical straight line |
| Answer» B. negatively sloped | |
| 37. |
Marginal utility is |
| A. | always zero |
| B. | increases at a diminishing rate |
| C. | the utility derived from last unit |
| D. | all the above |
| Answer» C. the utility derived from last unit | |
| 38. |
Total utility is |
| A. | the sum total of marginal utilities |
| B. | entire utility derived from whole consumption |
| C. | increases at a diminishing rate |
| D. | all the above |
| Answer» D. all the above | |
| 39. |
When Total utility is increasing at an decreasing rate, marginal utility is |
| A. | constant |
| B. | negative |
| C. | increasing |
| D. | decreasing |
| Answer» D. decreasing | |
| 40. |
Other things being equal a decrease in demand can be caused by |
| A. | a fall in price of the commodity |
| B. | a fall in income of the consumer |
| C. | a rise in price of the substitute |
| D. | none of these |
| Answer» B. a fall in income of the consumer | |
| 41. |
When price of a product falls, more of it is purchased because of |
| A. | the substitution effect |
| B. | the income effect |
| C. | neither substitution effect nor income effect |
| D. | both the substitution and income effects |
| Answer» D. both the substitution and income effects | |
| 42. |
“Utility or satisfaction is a subjective concept; therefore it could only be ranked”. The statement supports |
| A. | cardinal utility theorist |
| B. | ordinal utility theorist |
| C. | behavioral theorist of the firm |
| D. | none of the above |
| Answer» B. ordinal utility theorist | |
| 43. |
Ordinal utility analysis is otherwise known as |
| A. | gossens second law |
| B. | cardinality approach |
| C. | indifference curve analysis |
| D. | rationality approach |
| Answer» C. indifference curve analysis | |
| 44. |
Ordinal utility analysis Was developed by |
| A. | j.r.hicks & r.j.d. allen |
| B. | samualson |
| C. | marshall and jevons |
| D. | slutsky |
| Answer» A. j.r.hicks & r.j.d. allen | |
| 45. |
Total utility curve |
| A. | always rises |
| B. | first falls then rises |
| C. | always falls |
| D. | first rises and then falls after reaching its maximum |
| Answer» D. first rises and then falls after reaching its maximum | |
| 46. |
At saturation point MU of a commodity is |
| A. | positive |
| B. | negative |
| C. | zero |
| D. | increasing |
| Answer» C. zero | |
| 47. |
A consumer reaches equilibrium when |
| A. | marginal utility is equal to price |
| B. | marginal utility greater than price |
| C. | marginal utility less than price |
| D. | total utility is equal to price |
| Answer» A. marginal utility is equal to price | |
| 48. |
Marshalian cardinal utility analysis assumes |
| A. | marginal utility of money is zero |
| B. | marginal utility of money is decreasing |
| C. | marginal utility of money is increasing |
| D. | marginal utility of money is constant |
| Answer» D. marginal utility of money is constant | |
| 49. |
When individuals income rises (everything remain the same) his demand for a normal good |
| A. | rises |
| B. | falls |
| C. | remains the same |
| D. | negative |
| Answer» A. rises | |
| 50. |
When individuals income falls (everything remain the same) his demand for a normal good |
| A. | rises |
| B. | falls |
| C. | remains the same |
| D. | negative |
| Answer» B. falls | |
| 51. |
The concept of utility was introduced by |
| A. | marshall |
| B. | hicks and allen |
| C. | geremy bentham |
| D. | gossen |
| Answer» C. geremy bentham | |
| 52. |
Cardinal utility analysis to consumer equilibrium was developed by |
| A. | marshall |
| B. | hicks and allen |
| C. | geremy bentham |
| D. | gossen |
| Answer» A. marshall | |
| 53. |
MC at any level of output is given by |
| A. | slope of tc curve |
| B. | slope of tvc curve |
| C. | slope of either tc or tvc |
| D. | slope of tfc |
| Answer» C. slope of either tc or tvc | |
| 54. |
If a firm’s average cost is Rs.32 at 6 units of output and Rs.34 at 7 unit, which one among the following is the marginal cost of producing the 7th unit |
| A. | 46 |
| B. | 2 |
| C. | 36 |
| D. | 42 |
| Answer» A. 46 | |
| 55. |
The cost that cannot be recovered once spent |
| A. | accounting cost |
| B. | fixed cost |
| C. | implicit cost |
| D. | sunk cost |
| Answer» B. fixed cost | |
| 56. |
The saucer-type of modern Short run Average Variable Cost (SAVC) represents |
| A. | excess capacity |
| B. | managerial costs |
| C. | load factors |
| D. | reserve capacity |
| Answer» B. managerial costs | |
| 57. |
The Long run Average Cost curve (LAC) in modern cost theory is roughly |
| A. | u shaped |
| B. | saucer shaped |
| C. | l shaped |
| D. | rectangular hyperbola |
| Answer» D. rectangular hyperbola | |
| 58. |
Under increasing returns to scale, which of the following is the nature of the long run average cost curve? |
| A. | downward sloping |
| B. | upward rising |
| C. | parallel to output axis |
| D. | identical to short run average cost curve |
| Answer» D. identical to short run average cost curve | |
| 59. |
Which of the following has a U shape? |
| A. | average fixed cost curve |
| B. | total cost curve |
| C. | average variable cost curve |
| D. | total variable cost curve |
| Answer» C. average variable cost curve | |
| 60. |
AFC curve will always be |
| A. | rectangular hyperbola |
| B. | u shaped |
| C. | horizontal |
| D. | downward sloping |
| Answer» D. downward sloping | |
| 61. |
Implicit cost of a factor of production is determined by its |
| A. | sunk cost |
| B. | variable cost |
| C. | fixed cost |
| D. | opportunity cost |
| Answer» A. sunk cost | |
| 62. |
Economic cost include both |
| A. | explicit cost and implicit cost |
| B. | fixed cost and variable cost |
| C. | explicit cost and prime cost |
| D. | money cost and sunk cost |
| Answer» A. explicit cost and implicit cost | |
| 63. |
The U shape of MC curve reflects |
| A. | economies of scale |
| B. | law of increasing returns |
| C. | reserve capacity |
| D. | law of variable proportion |
| Answer» D. law of variable proportion | |
| 64. |
Envelope curve is |
| A. | long run marginal cost curve |
| B. | long run average cost curve |
| C. | total cost curve |
| D. | none of the above |
| Answer» D. none of the above | |
| 65. |
In long run, which factor of production is fixed? |
| A. | labour |
| B. | capital |
| C. | building |
| D. | none of the above |
| Answer» B. capital | |
| 66. |
The U shape of the average total cost curve reflects |
| A. | ldmu |
| B. | the law of variable proportions |
| C. | consumer’s surplus |
| D. | reserve capacity |
| Answer» A. ldmu | |
| 67. |
The total fixed cost is a |
| A. | horizontal straight line |
| B. | vertical |
| C. | hyperbola |
| D. | u shaped |
| Answer» A. horizontal straight line | |
| 68. |
When AC minimum in short run |
| A. | ac < mc |
| B. | ac > mc |
| C. | ac = mc |
| D. | any of above is possible |
| Answer» B. ac > mc | |
| 69. |
The shape of TVC and TC are |
| A. | rectangular hyperbola |
| B. | inverse ‘s’ shape |
| C. | horizontal straight line |
| D. | l shaped |
| Answer» A. rectangular hyperbola | |
| 70. |
The cost expressed not in terms of money but in terms of efforts of workers undergone for making the commodity |
| A. | opportunity cost |
| B. | real cost |
| C. | sacrifice cost |
| D. | implicit cost |
| Answer» C. sacrifice cost | |
| 71. |
The MC curve cuts the AC curve at |
| A. | the maximum point |
| B. | the initial point |
| C. | the minimum point |
| D. | any point |
| Answer» B. the initial point | |
| 72. |
The minimum point of ATC is at ...................position of the minimum point of AVC |
| A. | right |
| B. | left |
| C. | same |
| D. | all of above can be |
| Answer» B. left | |
| 73. |
If the long run cost curve shifts down wards it is an indication of |
| A. | technological progress |
| B. | lower factor prices |
| C. | both of these |
| D. | reserve capacity |
| Answer» C. both of these | |
| 74. |
The U shape of the LAC reflects |
| A. | law of variable proportions |
| B. | laws of returns to scale |
| C. | reserve capacity |
| D. | none of these |
| Answer» A. law of variable proportions | |
| 75. |
A production possibility curve is concave to the point of origin because of |
| A. | increasing marginal rate of transformation (mrt) |
| B. | increasing marginal opportunity cost (moc) |
| C. | both of the above |
| D. | decreasing marginal rate of transformation |
| Answer» C. both of the above | |
| 76. |
The deductive method is also called |
| A. | abstract |
| B. | analytical |
| C. | priori method |
| D. | all the above |
| Answer» D. all the above | |
| 77. |
An Essay on the Nature and Significance of Economic Science was written by |
| A. | adamsmith |
| B. | alfred marshall |
| C. | lord robbins |
| D. | samuelson |
| Answer» C. lord robbins | |
| 78. |
The word ‘Micro Economics and Macro Economics’ were first coined by |
| A. | adamsmith |
| B. | ragnar frisch |
| C. | alfred marshall |
| D. | lord robbins |
| Answer» B. ragnar frisch | |
| 79. |
Excess demand for money, according to Say’s law in the Economy: |
| A. | Is greater |
| B. | Is very less |
| C. | Is equal to zero |
| D. | There is no relationship between excess demand for money and Say’s Law |
| Answer» D. There is no relationship between excess demand for money and Say’s Law | |
| 80. |
Which of the following is not an assumption of classical theory? |
| A. | Price flexibility |
| B. | Unemployment |
| C. | Say’s law |
| D. | Neutrality of money |
| Answer» B. Unemployment | |
| 81. |
In classical theory the equality between saving and investment is brought about by: |
| A. | Rate of interest |
| B. | Income |
| C. | Consumption |
| D. | Multiplier |
| Answer» A. Rate of interest | |
| 82. |
The normal condition of a capitalist economy in classical theory is: |
| A. | Underemployment |
| B. | Full employment |
| C. | General unemployment |
| D. | Frictional unemployment |
| Answer» B. Full employment | |
| 83. |
The classical economists believed that the demand for labour is a function of: |
| A. | Total money wages |
| B. | Money wage rate |
| C. | Total real wages |
| D. | Real wage rate |
| Answer» D. Real wage rate | |
| 84. |
In classical theory of employment, there is the possibility of: |
| A. | Voluntary unemployment |
| B. | No unemployment |
| C. | Involuntary unemployment |
| D. | Disguised unemployment |
| Answer» A. Voluntary unemployment | |
| 85. |
The idea that a general cut in wages will finally lead to a state of full employment was suggested by : |
| A. | Keynes |
| B. | Marshall |
| C. | J.B.Say |
| D. | A.C.Pigou |
| Answer» D. A.C.Pigou | |
| 86. |
The aggregate production function implied under classical theory is : |
| A. | Long run |
| B. | Short run |
| C. | No time element |
| D. | None of the above |
| Answer» A. Long run | |
| 87. |
In the Cambridge equation of M = kPR, the value of k is: |
| A. | M/V |
| B. | 1/V |
| C. | V in Fisher’s equation |
| D. | None of these |
| Answer» B. 1/V | |
| 88. |
As a result of an increase in capital, ceteris paribus, ------ the marginal productivity of labour: |
| A. | Remains constant |
| B. | Increase |
| C. | decreases |
| D. | none of these |
| Answer» B. Increase | |
| 89. |
In the classical theory, one of the following is an important assumption: |
| A. | Wages and prices are inflexible |
| B. | There is full employment |
| C. | Agents are price setters |
| D. | Adjustment is through quantity. |
| Answer» B. There is full employment | |
| 90. |
In the Fisher’s extended equation of exchange MI VI represents: |
| A. | Credit money |
| B. | Primary money |
| C. | Both primary and credit money |
| D. | General price level |
| Answer» A. Credit money | |
| 91. |
In Fisher’s transaction velocity model, one of the following is not an assumption: |
| A. | Velocity of circulation of money is constant |
| B. | The volume of transactions is constant |
| C. | Full employment |
| D. | P is considered as an active factor |
| Answer» D. P is considered as an active factor | |
| 92. |
The cash balance equation M = KPO was given by: |
| A. | Keynes |
| B. | Pigou |
| C. | Robertson |
| D. | Marshall |
| Answer» D. Marshall | |
| 93. |
“Supply creates its own demand “is a law of: |
| A. | Investment |
| B. | Inflation |
| C. | Consumption |
| D. | Market |
| Answer» D. Market | |
| 94. |
In the equation MV+ MI VI = PT, ‘M ‘denotes: |
| A. | Velocity of money |
| B. | Money in circulation |
| C. | Bank deposit |
| D. | None of these |
| Answer» B. Money in circulation | |
| 95. |
I classical demand for money, the relationship between money supply and price level is: |
| A. | Proportional |
| B. | Non-proportional |
| C. | Neither proportional nor non-proportional |
| D. | None of these |
| Answer» B. Non-proportional | |
| 96. |
As per classical theory saving is: |
| A. | An increasing function of rate of interest |
| B. | Decreasing function of rate of interest |
| C. | Decreasing function of level of income |
| D. | None of these |
| Answer» A. An increasing function of rate of interest | |
| 97. |
The Cambridge version of the quantity theory of money was developed by: |
| A. | Fisher |
| B. | Alfred Marshall |
| C. | Pigou |
| D. | Keynes |
| Answer» C. Pigou | |
| 98. |
In classical system which of the following keeps the economy at full employment: |
| A. | Level of saving |
| B. | Increase in money supply |
| C. | Adjustment in investment |
| D. | Adjustment in money wages |
| Answer» D. Adjustment in money wages | |
| 99. |
In Fisher’s equation of exchange MV=PT, the variation of which produces a proportional change in price: |
| A. | M |
| B. | V |
| C. | P |
| D. | T |
| Answer» A. M | |
| 100. |
According to classical economists, variations in savings are due to: |
| A. | Level of investment |
| B. | Rate of interest |
| C. | Level of employment |
| D. | None of the above |
| Answer» B. Rate of interest | |
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