Practice Quiz set 5 - indian economy mcq Online Quiz (set-1) For All Competitive Exams
Q-1) Number of sellers in the monopoly market structure is
(a)
(b)
(c)
(d)
Monopoly refers to a market in which there is only one supplier and no other firms are able to enter.
Q-2) The relationship between the value of money and the price level in an economy is
(a)
(b)
(c)
(d)
The basic causal relationship between the price level and the value of money is that as the price level goes up, the value of money goes down.
The "value of money" refers to what a unit of money can buy whereas the "price level" refers to the average of all of the prices of goods and services in a given economy.
Q-3) In the case of an inferior good, the income elasticity of demand is :
(a)
(b)
(c)
(d)
Negative income elasticity of demand is associated with inferior goods; an increase in income will lead to a fall in the demand and may lead to changes to more luxurious substitutes.
Positive income elasticity of demand is associated with normal goods; an increase in income will lead to a rise in demand.
Q-4) Product differentiation is the most important feature of
(a)
(b)
(c)
(d)
There are six characteristics of monopolistic competition (MC):
- Product differentiation;
- many firms;
- Free entry and exit in the long run;
- Independent decision making;
- market power; and
- Buyers and Sellers do not have perfect information.
Q-5) According to Modern Theory of Rent, rent accrues to
(a)
(b)
(c)
(d)
The modern theory of rent does not confine itself to the reward of the only land as a factor of production as was the case in the classical Ricardian theory of rent.
Rent in the modern sense can arise in respect of any other factor of production, i.e., labour, capital and entrepreneurship.
Q-6) Wage fund theory was propounded by
(a)
(b)
(c)
(d)
J.S. Mill developed the wages-fund theory. This theory of wage was an attempt to show that in certain circumstances wages could rise above subsistence level.
According to this theory, a fund of capital has to be accumulated in advance before wages could be paid. This fund of capital is called wages-fund out of which wages are paid to labourers.
Q-7) Division of labour is limited by
(a)
(b)
(c)
(d)
Division of labour is a process whereby the production process is broken down into a sequence of stages and workers are assigned to particular stages.
As it is the power of exchanging that gives occasion to the division of labour, so the extent of this division must always be limited by the extent of that power, or, in other words, by the extent of the market. When the market is very small, no person can have any encouragement to dedicate himself entirely to one employment.
Q-8) Demand of commodity mainly depends upon–
(a)
(b)
(c)
(d)
The demand of commodity mainly stems from the consumption capacity of the buyer. Demand is equal to desire plus ability to pay plus will to spend. Demand for a commodity depends upon a number of factors called Determinants.
The demand function can be symbolically expressed as:
QdN = f (PN, PR, I, T, E, O)
Where QdN = Quantity demanded the commodity;
PN = Price of the commodity;
PR = Price of the related commodity;
I = Income of consumers;
T = Taste & Preferences of the consumers;
E = Expectations about the future prices; and O= other factors.
Q-9) It is prudent to determine the size of the output when the industry is operating in the stage of
(a)
(b)
(c)
(d)
In economics, diminishing returns (also called diminishing marginal returns) is the decrease in the marginal (per-unit) output of a production process as the amount of a single factor of production is increased, while the amounts of all other factors of production stay constant.
This law plays a central role in production theory.
Q-10) If a good has negative income elasticity and positive price elasticity of demand, it is a
(a)
(b)
(c)
(d)
Negative income elasticity of demand is associated with inferior goods. The Giffen good is an unusual type of inferior good which has a positive price elasticity of demand.
It is a good which people paradoxically consume more of as the price rises, violating the law of demand.
When the price goes up, the quantity demanded also goes up.