Multiple Choice Questions

The Highlighted Answers are correct

The shape of the Market Supply Curve in Long run is:

A.      Vertical           B. Horizontal              C.  Flatter                    Steeper          

During  a particular year the monsoon failed and there was shortage of water. What will be the position of Supply curve

A.    Shift towards right

B.   Shift towards left

C.    Supply curve remains unchanged

D.   None of these

When supply of a commodity changes without any change in Price

A.    Expansion in supply

B.     Increase in supply

C.     Contraction in supply

D.    Fall in supply

A firm is supplying wheat flour 500 bags at a price of Rs 30 per kg. The supply has decreased to 450 bags at price 2o/- per. What do you conclude the supply of wheat flour is:

A.    Supply is perfectly elastic

B.     Perfectly inelastic

C.     Less elastic

D.    More elastic

What best explains the shift in supply curve:

1.      Price falls due to better production

2.      New Tax is imposed making it costlier

3.      New Technology is introduced in production

4.      Advertising campaign increases sales

Economic Problems arises because:

1.      Wants are unlimited

2.      Resources are Scarce

3.      Scarce resources have alternative uses

4.      All of these

Which is not an essential condition for an economic problem to arise?

1.      Unlimited Wants

2.      Scarcity of Resources   

3.      Alternative uses of scarce resources   

4.      Use of Money

Which is not a central Problem of an economy

1.      What to produce

2.      How to produce

3.      For whom to produce

4.      How to maximise Revenue

Who defined Economics as a “Science which studies human behaviour as a relationship between ends and means which have alternative uses”?

1.      Lionel Robbins

2.      Joan Robinson

3.      Alfred Marshall

4.      Paul A. Samuelson

Indian economy is called a mixed economy because

1.      We have agriculture and industry

2.      We have a policy of coexistence of public and private sectors

3.      We have foreign Investment and domestic investment both

4.      We have agriculture, industry, service sectors existing togather

Which is essential feature of a capitalistic economy?

1.      Social ownership of the means of Production

2.      Centralised Planning

3.      Freedom of enterprise

4.      Government control over resources

Which of the following statement is incorrect?

1.      A function shows the mathematical relationship between two or more variables

2.      A market necessarily refers to a meeting place between buyers and sellers

3.      Normative Economics studies how the economic problems should be solved

4.      Equilibrium refers Ta position once achieved tends to be stable

Demand for a commodity refers to a:

1.      Desire for a commodity

2.      Quantity demanded

3.      Need for a commodity

4.      Quantity of the commodity demanded at a certain price during any particular period of time.

Contraction of demand refers to

1.      Decrease in number of consumers

2.      Increase in the price of the commodity concerned

3.      Increase in the prices of other goods

4.      Decrease in the income of purchasers

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?

1.      The preferences of the individual

2.      His monetary income

3.      The price of the commodity under consideration

4.      The prices of other goods

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

1.      Tea and sugar

2.      Tea and coffee

3.      Pen and ink

4.      Shirt and trousers

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:

1.      0

2.      1

3.      1.5

4.      2

The Law of Demand, assuming other things to remain constant, establishes the relationship between:

1.      Income of the consumer and the quantity of a commodity demanded by him

2.      Price of a commodity and the quantity demanded

3.      Price of a commodity and the demand for its substitute

4.      Quantity demanded of a commodity and the relative prices of its complementary goods

Identify the factor which generally keeps the price-elasticity of demand for a commodity now:

1.      Variety of uses for that commodity

2.      Its low price

3.      Close substitutes for that commodity

4.      High proportion of the consumer's income spent on it

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

1.      Equal to one

2.      Greater than one

3.      Small than one

4.      Zero

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

1.      Positive

2.      Zero

3.      Negative

4.      Infinites

Total Utility is maximum when

1.      Marginal utility is zero

2.      Marginal utility is at its highest point

3.      Marginal utility is equal to average

4.      Average utility is maximum

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

1.      Remain the same

2.      Increase

3.      Decrease

4.      None of these

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

1.      Horizontal

2.      Vertical

3.      Positively sloped

4.      Negatively sloped

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

1.      Horizontal

2.      Downward-sloping to the right

3.      Backward falling to the left

4.      Backward falling to the left