Practice Quiz set 3 - indian economy mcq Online Quiz (set-1) For All Competitive Exams

Q-1)   Who propounded Dynamic Theory of profit ?

(a)

(b)

(c)

(d)

Explanation:

Dynamic Theory of Profit is associated with the name of an American Economist J. B. Clark. In the world of reality, according to J. B. Clark profit arises only in a dynamic economy.


Q-2)   Kinked demand curve is a feature of

(a)

(b)

(c)

(d)

Explanation:

The kinked demand curve theory is an economic theory regarding oligopoly and monopolistic competition. Kinked demand was an initial attempt to explain sticky prices.


Q-3)   The value of a commodity expressed in terms of money is known as

(a)

(b)

(c)

(d)

Explanation:

The exchange value of every commodity can be expressed in terms of money. This possibility has enabled money to become a medium for expressing values when the growing elaboration of the scale of values which resulted from the development of exchange necessitated a revision of the technique of valuation.

When the value is expressed in terms of money, it is called price. Thus, the price can be defined as the exchange value of a commodity expressed in terms of money.


Q-4)   The father of Economics is

(a)

(b)

(c)

(d)

Explanation:

Adam Smith is known as ‘Father of Modern Economics.’ He is best known for two classic works: The Theory of Moral Sentiments (1759), and An Inquiry into the Nature and Causes of the Wealth of Nations (1776).


Q-5)   Plant and machinery are

(a)

(b)

(c)

(d)

Explanation:

Plant and machinery are Producers’ goods. Together with stocks and work in progress, these goods are collectively termed ‘Capital’.


Q-6)   Which of the following is an inverted ‘U’ shaped curve ?

(a)

(b)

(c)

(d)

Explanation:

In economics, a cost curve is a graph of the costs of production as a function of the total quantity produced. Both the Short-run average total cost curve (SRAC) and Long-run average cost curve (LRAC) curves are typically expressed as U-shaped.

However, the shapes of the curves are not due to the same factors.


Q-7)   Monopoly means

(a)

(b)

(c)

(d)

Explanation:

A Monopoly exists when a specific person or enterprise is the only supplier of a particular commodity, This contrasts with a monopsony which relates to a single entity's control of a market to purchase a good or service, and with an oligopoly which consists of a few entities dominating an industry.

Monopolies are thus characterized by a lack of economic competition to produce the good or service and a lack of viable substitute goods


Q-8)   The income elasticity of demand being greater than one, the commodity must be

(a)

(b)

(c)

(d)

Explanation:

In economics, income elasticity of demand measures the responsiveness of the demand for a good to a change in the income of the people demanding the good, ceteris paribus.

It is calculated as the ratio of the percentage change in demand to the percentage change in income.

For example, if, in response to a 10% increase in income, the demand for a good increased by 20%, the income elasticity of demand would be ${20%}/{10%} = 2$.

Positive income elasticity of demand is associated with normal goods; an increase in income will lead to a rise in demand.

If the income elasticity of demand of a commodity is less than 1, it is a necessity good. If the elasticity of demand is greater than 1, it is a luxury good or a superior good.


Q-9)   Price theory is also known as

(a)

(b)

(c)

(d)

Explanation:

Price theory is also known as microeconomics and is concerned with the economic behaviour of individual consumers, producers and resource owners. Prof. Leftwich defines Price Theory as “it is concerned with the flow of goods and services from business firms to consumers, the composition of flow and the evaluation of pricing of the component parts of the flow.

It is concerned too with the flow of productive resources (or their services) from resource owners to business firms with their evaluation and with their allocation among alternative uses.”


Q-10)   The problem of Economics arises from

(a)

(b)

(c)

(d)

Explanation:

The theory of Economic problems states that there is scarcity, or that the finite resources available are insufficient to satisfy all human wants and needs.

The problem then becomes how to determine what is to be produced and how the factors of production (such as capital and labour) are to be allocated.

In short, the economic problem is the choice one must make, arising out of limited means and unlimited wants.