Practice Test set 8 - indian economy mcq Online Quiz (set-1) For All Competitive Exams
Q-1) If the change in demand for a commodity is at a faster rate than change in the price of the commodity, the demand is
(a)
(b)
(c)
(d)
If quantity demanded changes by a very large percentage as a result of a tiny percentage change in price, then the demand is said to be perfectly elastic.
It reflects the fact that the quantity demanded is extremely responsive to even a small change in price.
Technically, the elasticity in this extreme case would be undefined but it approaches negative infinity as demand becomes more elastic.
Q-2) The expenses on advertising is called
(a)
(b)
(c)
(d)
Selling cost is total cost of marketing, advertising, and selling a product. It differs from the production cost which is incurred to produce goods. Selling cost influences the commercial desire to purchase a commodity.
Q-3) Which one of the following pairs of goods is an example for Joint Supply ?
(a)
(b)
(c)
(d)
The production of two or more goods simultaneously from the same imputs is called Joint Supply. Wool and Mutton are an example for joint supply.
Q-4) Given the money wages, if the price level in an economy increases, then the real wages will
(a)
(b)
(c)
(d)
If workers receive a higher nominal wage and the price level does not change, then the real purchasing power of their wages is higher and they are inclined to increase the quantity of labour supplied.
If the workers receive the same nominal wage, but the price level increases, then the real purchasing power of their wages is lower and they are inclined to decrease the quantity of labour supplied.
Any combination of changes in nominal resource prices or the price level that changes the purchasing power of resource prices entices resource owners to change quantities supplied.
Q-5) Prime cost is equal to
(a)
(b)
(c)
(d)
Prime Cost refers to a business’s expenses for the materials and labour it uses in production. Prime cost is a way of measuring the total cost of the production inputs needed to create a given output.
By analyzing its prime costs, a company can determine how much it must charge for its finished product in order to make a profit.
Variable costs are expenses that change in proportion to the activity of a business. Variable cost is the sum of marginal costs over all units produced. It can also be considered normal costs. Fixed costs and variable costs make up the two components of the total cost.
Prime Cost = Direct Materials + Direct Labour+ Direct expenses.
This comes to Variable cost + Administrative cost. The administrative cost is the cost associated with the general management of the organization in accounting.
Q-6) Perfectly inelastic demand is equal to :
(a)
(b)
(c)
(d)
Price Elasticity of Demand is a measure of the relationship between a change in the quantity demanded of a particular good and a change in its price.
It measures the responsiveness of demand to changes in price for a particular good. If the price elasticity of demand is equal to 0, demand is perfectly inelastic (i.e., demand does not change when price changes).
Q-7) Micro-economics is also called :
(a)
(b)
(c)
(d)
Microeconomics is the branch of economics concerned with isolated parts of the economy, for example, individual people, firms or industries. It involves such topics as the theory of prices and of the firm.
Q-8) In Economics the ‘Utility’ and ‘Usefulness’ have
(a)
(b)
(c)
(d)
In economics, utility is a representation of preferences over some set of goods and services. Preferences have a utility representation so long as they are transitive, complete, and continuous.
Usefulness refers to which extent something is useful and the utility is the quality of that piece in practical use. Both are inter-related terms.
The utility is a factor of usefulness term. Usefulness means having the practical utility of a piece that is beneficial, pertinent and functional.
Q-9) Extension or contraction of quantity demanded of a commodity is a result of a change in the
(a)
(b)
(c)
(d)
Demand for a commodity refers to the quantity of the commodity that people are willing to purchase at a specific price per unit of time, other factors (such as the price of related goods, income, tastes and preferences, advertising, etc) being constant.
Demand includes the desire to buy the commodity accompanied by the willingness to buy it and sufficient purchasing power to purchase it. So changes in the unit price of a commodity lead to either extension or contraction in demand.
The law of demand states that there is an inverse relationship between the quantity demanded of a commodity and its price, other factors being constant. In other words, the higher the price, the lower the demand and vice versa, other things remaining constant.
Q-10) The term “market” in Economics means
(a)
(b)
(c)
(d)
The most important defining characteristic of a market in economics is that it allows buyers and sellers to exchange any type of goods, services and information.
According to Walter Christaller’s ‘Central Place Theory,’ a central place is a market centre for the exchange of goods and services by people attracted from the surrounding area.
The central place is so-called because it is centrally located to maximize accessibility from the surrounding region.