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. 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.
42. What is subtracted from personal income to get personal disposable income?
[A] Indirect taxes
[B] Direct taxes
[C] subsidies
[D] None of the above
Show Answer
Correct Answer: B [Direct taxes]
Notes:
Personal Disposable Income(PDI) is obtained when personal direct taxes are subtracted from personal income.
PDI = Personal Income – Direct Taxes
PDI = Consumption + Saving
43. Which among the following is correct regarding gross capital formation(GCF)?
1. High GCF high savings in the economy
2. It includes capital formation in the public sector too
3. It is the Percentage of investment out of total GDP
Choose the correct option from the code given below:
[A] 1 only
[B] 1 and 2 only
[C] 2 only
[D] 1,2 and 3
Show Answer
Correct Answer: D [1,2 and 3]
Notes:
Gross capital formation (GCF) – The percentage of the investment made each year out of the total GDP is called Gross Capital Formation. High GCF denotes higher rate of savings in the economy which is required for high rate of production, capital formation, changes in production techniques.GCF includes capital formation in public sector, private sector, and also household sector.
44. What kind of the cost is emplying a lawyer to seek help in getting a contract drafted and enforced between two parties?
[A] opportunity cost
[B] implicit cost
[C] sunk cost
[D] transaction cost
Show Answer
Correct Answer: D [transaction cost]
Notes:
Transaction cost is the cost incurred when buying or selling goods or services. It represents the costs that do not have returns. The fee of lawyers come under this.
45. Which of the following is not a micro-economic variable?
[A] Demand of a commodity
[B] Supply of a commodity
[C] Price rise of a commodity
[D] Employment generated in a year in a country
Show Answer
Correct Answer: D [Employment generated in a year in a country]
Notes:
Examples of micro economic variables are: (i) Demand of a commodity (ii) Supply of a commodity, (iii) Price determination of a commodity etc.
46. 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”.
47. 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
Show Answer
Correct Answer: A [upward to the right]
Notes:
When the demand curve slopes downwards from left to right; higher prices reduce the quantity demanded.
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 a factor of production?
[A] Land
[B] Rent
[C] Profits
[D] Interest
Show Answer
Correct Answer: A [Land]
Notes:
The factor of production are Land, Labour, Capital , Entrepreneurship.The payments made to the factors of production (rents, wages, interest, and profits).
50. An increase in the consumer income leads to a decrease in demand of which type of good?
[A] normal good
[B] complementary good
[C] inferior good
[D] substitute good
Show Answer
Correct Answer: C [inferior good]
Notes:
An inferior good is a good whose demand decreases when consumer income rises, unlike normal goods, for which the opposite is observed. Normal goods are those goods for which the demand rises as consumer income rises.
