Economics Questions (MCQs) for Competitive Examinations
Economics Multiple Choice Questions (MCQs) for General Studies and GK preparation of SSC, NDA, CDS, UPSC, UPPSC and State PSC Examinations.
41. Real National income increases in which of the following circumstances?
[A] When Prices of goods increases
[B] When saving of people increases
[C] When Inflation increases prices and taxes
[D] When the production of goods and services increases
Show Answer
Correct Answer: D [When the production of goods and services increases]
Notes:
As the calculation of national income is the total value of all goods and services in an economy the real increase happens when the output production increases. The rate change won’t affect because while calculating real national income we take into account the prices of base year. So even the inflation effect is also removed.
42. What does a good with positive externalities known as?
[A] Giffen goods
[B] Public goods
[C] Merit goods
[D] Snob good
Show Answer
Correct Answer: C [Merit goods]
Notes:
Merit goods are the goods that are provided generally by the government to certain sections of society. Unlike in the case of pure public goods, merit goods are not provided to the entire society; rather they are given to certain targeted people. They Have positive externalities Ex: health, education
43. In terms of micro-economics, comparative advantage is based on which of the following?
[A] dollar price
[B] labor cost
[C] opportunity cost
[D] capital cost
Show Answer
Correct Answer: C [opportunity cost]
Notes:
Opportunity cost is the potential benefits that an investor, individual ora business misses due to choosing an alternate option. It is the forgone benefit.
44. Which of the following is a subject matter of micro-economics?
[A] National Income
[B] Gross Domestic Product
[C] Level of Employment
[D] Consumer Equilibrium
Show Answer
Correct Answer: D [Consumer Equilibrium]
Notes:
Consumer equilibrium is a subject matter of micro economics because it is a study of individual behaviour.
45. Which if the following is subject matter of microeconomic study?
[A] Study of Cotton Textile Industry
[B] General Price level of commodities
[C] Problem of unemployment
[D] Aggregate demand of the commodities
Show Answer
Correct Answer: A [Study of Cotton Textile Industry]
Notes:
Price determination of a commodity is a subject matter of microeconomics. The study’of cotton textile industry is also a micro economic study. Study of general price level is a macro economic study. The study of the problem of the unemployment is considered a macro economic study because this problem is concerned with the Indian economy in totality.
46. Which term is used to describe the want satisfying power of a commodity or a service?
[A] Demand
[B] Want
[C] Utility
[D] Consumption
Show Answer
Correct Answer: C [Utility]
Notes:
Utility is the want satisfying power of a commodity or a service. Law of diminishing marginal utility states that as a consumer consumes more and more units of a commodity, marginal utility derived from successive units goes on fa lling.
47. Which of the following factors don’t affect the demand for a commodity?
[A] Price of commodity
[B] Income of individual consumer
[C] Want of the consumer
[D] Price of related good
Show Answer
Correct Answer: C [Want of the consumer]
Notes:
Demand for a commodity is the quantity of that commodity which an individual (or buyer) is willing to purchase at different prices within a given period of time. Market demand means the total quantity of a commodity that all its buyers are willing to purchase at different prices over a given period of time. Demand for a commodity depends on a number of factors. The important factors that affect an individual demand for a commodity are: (i) price of the commodity, (ii) income of the individual consumer, (iii) price of related goods and (iv) tastes and preferences of the individual.
48. When the price of a substitute of a commodity X falls, then the demand for X will?
[A] Increase
[B] Decrease
[C] Increase, then decrease
[D] Decrease, then increase
Show Answer
Correct Answer: B [Decrease]
Notes:
Substitute goods are two alternative goods which could be used for same purpose . It is a product or service that consumer sees as the same or similar to another product . For example , tea and coffee are substitute goods . an increase in price of tea will in demand of coffee . Reason being people take tea and coffee as substitute goods . If the price of tea increases people will prefer coffee as it is cheaper and can be taken as a substitute of tea .Hence if the price of tea falls the demand of tea also falls.
49. What is the income elasticity of demand for inferior goods?
[A] equal to 1
[B] greater than 1
[C] less than 0
[D] greater than 0
Show Answer
Correct Answer: C [less than 0 ]
Notes:
Inferior goods have a negative(less than 0) income elasticity of demand meaning that demand falls as income rises. Inferior goods demand drops when the income of people drops.
50. Which among the following is complementary good?
[A] Petrol and Car
[B] Iphone and Android Phone
[C] Milk and Sweet
[D] Shoes and Sandals
Show Answer
Correct Answer: A [Petrol and Car]
Notes:
Complementary goods are those pair of goods where the quantity demanded of one increases when the price of a related good decrease.
