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. 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.
42. In which of the following conditions, the domestic price a product will be equal to the world price in a country?
[A] trade restrictions are imposed on the product in that country
[B] the country chooses to import, but not export, the product
[C] the country chooses to export, but not import, the product
[D] the country allows free trade
Show Answer
Correct Answer: D [the country allows free trade]
Notes:
When a country allows free trade then the domestic price will be equal to the price elsewhere in the world. This is called a trade regime with no restrictions. In rest of the places, the prices will not be equal.
43. 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.
44. Which term is used to describe the want satisfying power of a commodity or a service?
[A] Demand
[B] Want
[C] Utility
[D] Consumption
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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.
45. 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.
46. 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.
47. What is the total output changes due to changes in all inputs in the same proportion is called as?
[A] Law of Diminishing marginal returns
[B] Law of Increasing output
[C] Law of Returns of Scale
[D] Law of constant returns
Show Answer
Correct Answer: C [Law of Returns of Scale]
Notes:
The way total output changes due to change in all inputs in the same proportion is known as “law of return to scale”.
48. Which among the following is an exception to the demand curve?
[A] upward to the right
[B] downward to the right
[C] upward to the left
[D] downward to the left
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Correct Answer: A [upward to the right]
Notes:
When the demand curve slopes downwards from left to right; higher prices reduce the quantity demanded.
49. 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.
50. Which of the following is a fixed cost to a manufacturing firm in short-run?
[A] Insurance on buildings
[B] Overtime payment to worker
[C] Cost of energy
[D] Cost of Raw Material
Show Answer
Correct Answer: A [Insurance on buildings]
Notes:
In the short run insurance premium are fixed costs because they are independent of the level of production.
