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. 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
42. Which of the following is included in market price?
[A] Indirect taxes
[B] Direct taxes
[C] Subsidies
[D] None of the above
Show Answer
Correct Answer: A [Indirect taxes]
Notes:
Market price(MP)refers to the actual transacted price and includes indirect taxes. The market price is the current price at which an asset or service can be bought or sold. The economic theory contends that the market price converges at a point where the forces of Supply and demand meet.
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. 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.
45. Which of these relates to 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 studies individual consumer choices, a core focus of micro-economics. Macro-economics deals with aggregates such as national income, GDP, and employment levels. Micro-economics analyzes how individual decisions impact supply, demand, and price formation within markets.
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. 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.
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.
