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. 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. 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.
44. 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.
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. 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 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.
49. 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.
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.
