Economics Questions (MCQs) for Competitive Examinations

Notes:
Per capita income or average income measures the average income earned per person in a given area in a specified year. It is calculated by dividing the area’s total income by its total population.

Notes:
In the calculation of national income, the value of old goods sold is not included. National income accounting typically focuses on the value of goods and services produced within a specific period, usually a year. It includes the production of new goods and the provision of services. However, the resale of old goods does not contribute to the current production of goods and services and therefore is not counted. Additionally, non-market services such as the services of a housewife, which are not paid for in the market, are also not included in the national income calculations. This exclusion is due to the difficulty in accurately measuring the economic value of such non-market services.

Notes:
The work of computing the GDP is done by the Central Statistical Organization (CSO) which is under the Ministry of Statistical and Program Implementation. It is is responsible for macroeconomic data gathering and statistical record keeping.

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When the price of a commodity increases its quantity supplied also increases it is called the extension of supply. In opposite process, when the price of commodity decreases, the quantity supplied of it also decreases it is called the contraction of supply. It leads to the law of supply.

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A ubiquitous resource is a natural resource that is available just about anywhere you live. Air, wind, water are all ubiquitous resources. Localized resources are natural resources only found in certain places.

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Microeconomic variables are those patterns or elements that can be used to describe the behavior of a person or an individual economic unit, like a business. Eg. Consumer’s Equilibrium.

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An isoquant is a firm’s counterpart of the consumer’s indifference curve. An isoquant is a curve that shows all the combinations of inputs that yield the same level of output. ‘Iso’ means equal and ‘quant’ means quantity.

Notes:
Gresham’s law states that bad money drives out good. For example, if there are two forms of commodity money in circulation, which are accepted by law as having similar face value, the more valuable commodity will gradually disappear from circulation.
The law holds that bad money drives out good money in circulation. Bad money is then the currency that is considered to have equal or less value compared to its face value. Meanwhile, good money is currency that is believed to have greater value or more potential for greater value than its face value. Logically, consumers will choose to use bad money over good money because good money has the potential to be worth more than its face value.

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Micro Economics is that branch of economics which deals with the behaviour of individual economic units of the economy such as individual households, individual firms or industry. It revolves around the determination of prices of individual commodities and factors.

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Price Elasticity is the measure of the degree of responsiveness of demand for a commodity to change in its price. That means the low price elasticity is demand doesn’t change with the price. These are the necessary goods.