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.
31. Which among the following is best described as opportunity cost?
[A] Difference between the return on chosen option and the return on best forgone option
[B] Difference between two chosen options
[C] Difference between the return this year and the previous year
[D] None of the above
Show Answer
Correct Answer: A [Difference between the return on chosen option and the return on best forgone option]
Notes:
Opportunity costs represent the benefits an individual, investor or business misses out on when choosing one alternative over another. It is the “cost” incurred by not enjoying the benefit associated with the best alternative choice.
32. Which of the following is not an essential condition for perfect competition?
[A] Homogeneous products
[B] Many sellers and buyers
[C] Freedom of entry and exit
[D] None of the above
Show Answer
Correct Answer: D [None of the above]
Notes:
The essential conditions for perfect competition in a market are :
1. homogeneous products
2. many sellers and buyers
3. freedom of entry and exit
4. firms are price takers and not price makers
33. When does a monopoly by a specific business entity occur in the market?
[A] When there are numerous buyers and sellers
[B] When homogeneous products flood the market
[C] When a distinctive product is exclusively sold by a single seller
[D] When firms are merely price takers
Show Answer
Correct Answer: C [When a distinctive product is exclusively sold by a single seller]
Notes:
A monopoly exists when a specific entity is the sole supplier of a particular commodity. This market condition can only occur if the unique product is exclusively sold by one seller, eliminating any form of direct competition. It is regulated by certain laws to prevent marketplace inefficiency. However, a monopoly can lead to innovation as other companies strive to create an alternative or similar product.
34. What is Market equilibrium?
[A] Quantity demanded greater than quantity supplied
[B] Quantity demanded less than quantity supplied
[C] Quantity demanded equal to quantity supplied
[D] Quantity demanded is same as quantity produced
Show Answer
Correct Answer: C [Quantity demanded equal to quantity supplied]
Notes:
Market equilibrium is defined by equality between quantity demanded and quantity supplied in the market. The equilibrium price is the price of a good or service when the supply of it is equal to the demand for it in the market.
35. Who among the following receives subsidies from the government?
[A] Sellers
[B] Buyers
[C] Manufacturers
[D] All of the above
Show Answer
Correct Answer: D [All of the above]
Notes:
Subsidy a negative tax when the government gives money to reduce the price. A seller receives a subsidy to reduce the price for consumers. A manufacturer receives a subsidy for inputs incurred by them. A buyer sometimes receives a direct subsidy on important essentials like gas.
36. Which of the following correctly defines the Economic profit?
[A] Total revenue – Total cost
[B] Total cost – Total sold
[C] Total cost- Total revenue
[D] None of the above
Show Answer
Correct Answer: A [Total revenue – Total cost]
Notes:
Profit for any firm is the surplus of revenue over the total cost of production. It is the extra money generated over the cost of production.
Profit = Total Revenue – Total cost
37. Which among the following is not a part of factor of production?
[A] Land
[B] Labour
[C] Capital
[D] Wages
Show Answer
Correct Answer: D [Wages]
Notes:
The Factors of production are the inputs available to supply goods and services in an economy.
They are Land, Labour, Capital and Enterprise.
38. Which of the following are correct for Real GDP?
[A] Current year production valued at current prices
[B] Current year production valued at base year
[C] Current year production valued at last year prices
[D] Current year production valued at forecasted prices
Show Answer
Correct Answer: B [Current year production valued at base year]
Notes:
Real GDP refers to current year production of goods and services valued at base year prices. Real GDP is corrected for inflation. The current base year for calculation for GDP is 2011-12.
39. What is the aggregate of the gross balances of primary income of all resident institutional units knows as?
[A] Gross domestic Product
[B] Gross national product
[C] Gross National income
[D] Net national product
Show Answer
Correct Answer: C [Gross National income]
Notes:
Gross National Income is the aggregate value of the gross balances of the primary income of all resident institutional units.
40. Which of the following are part of National income?
[A] Value of all goods and services produced in a financial year
[B] An reused good sold in that financial year
[C] Service rendered by housewife
[D] None of the above
Show Answer
Correct Answer: A [Value of all goods and services produced in a financial year]
Notes:
In the calculation of national income, the value of goods and services produced in a year is added. While the value of old sold goods and the services of the housewife is not added.
