demand & supply, profit loss, inflation & price index section 2 MCQ Questions & Answers Detailed Explanation

Question : 1

In India, inflation is measured by the

a) Producer Price Index

b) National Income deflation

c) Wholesale Price Index number

d) Consumers Price Index

Question : 2

What is meant by ‘Public Good’?

a) A commodity whose benefits are indivisibly spread among the entire community

b) A Government scheme that benefits the poor households

c) A commodity produced by the Government

d) Any commodity that is very popular among general public

Question : 3

Which one among the following is a fixed cost to a manufacturing firm in the short run?

a) Overtime payment to worker

b) Cost of energy

c) Insurance on buildings

d) Cost of raw materials

Question : 4

Which of the following statements (s) are true with respect to the concept of “efficiency” as used in mainstream economics?

1. Efficiency occurs when no possible re-organisation of production can make anyone better off without making someone else worse off
2. An economy is clearly inefficient if it is inside the Production Possibility Frontier (PPF)
3. At a minimum, an efficient economy is on its Production Possibility Frontier (PPF)
4. The terms such as ‘ Pareto Efficiency’, ‘Pareto Optimality’ and ‘Allocative Efficiency’ are all essentially one and same which denote ‘efficiency in resource allocation’

a) 2 and 3 only

b) 1 and 4 only

c) 1 and 3 only

d) 1, 2, 3 and 4

Question : 5

Which is incorrect about inflation?

a) For some commodities retail prices are also considered for measurement of inflation

b) Inflation rate going down does not mean prices are declining

c) Inflation indicated the rise in the price of basket of commodities on a point-topoint basis

d) The inflation rate in India is calculated on the basis of the wholesale price index

Question : 6

The process of curing inflation by reducing money supply is called

a) Disinflation

b) Cost-push inflation

c) Down–pull inflation/Demand pull inflation

d) Reflation