op eco 1 Flashcards
1.From the national point of view which of the following indicates Micro Approach? (A) Per capita income in India (B) Study of sales of TISCO (C) Inflation of India (D) Educated Unemployment in India
(B) (SSC CGL Tier-I 2015) Exp: From economics point of view there are two approaches to study economics. (i) Micro Approach, (ii) Macro Approach Micro approach is study at the single point or individual level like study of human behaviour in relation to price change and its effect on demand and supply etc. Macro approach is study at population point or wholesome level like study of interest rates in relation to inflation and deflation etc.
2.The theory of distribution relates to which of the following? (A) The distribution of assests (B) The distribution of income (C) The distribution of factor payments (D) Equality in the distribution of the income and wealth
(D) (SSC Sec. officer 2001) Exp: Theory of distribution states the way by which distribution of income and output is done among individuals or among factors of production (like labour, land and capital etc) So theory of distribution relates to equality in distribution of income and wealth.
3.The problem of Economics arises from- (A) Plenty (B) Scarcity of goods (C) More wants and less goods (D) All of the above
(B) (SSC Combined Matric Level 2001) (MTS 2013) Exp: Economics problem is all about choosing alternative among finite resources available that means scarcity of resources.
4.Why is rent earned by land even in the long run? (A) Land has original and indestructible power (B) Land is a man made factor (C) Its supply is inelastic in the short run (D) Its supply is inelastic in the long run
(D) (SSC Combined Matric Level 2001) Exp: Rent supply is inelastic in the long run in sense that no human effort can increase or decrease their amount of supply in long run.
5.Who is called the father of Economics? (A) J.M. Keynes (B) Malthus (C) Ricardo (D) Adam Smith
“(D) (SSC Combined Matric Level 2001) (SSC CGL 2014) Exp: Adam smith is known as father of economics. He was pioneer in identifying market as a force i.e. self regulating force by giving idea of invisible hands in his first book ““The theory of moral sentiments””.”
6.The four factors of production are- (A) Land, labour, capital, organisation (B) Land, electricity, water labour (C) Labour, capital, land rainfall (D) Labour, climate, land, rainfall
(A) (SSC Combined Matric Level 2001) Exp: Factors of production are resources by which production is done or essential resources which are core for production. Examples are land, labour, capital and organisation.
7.Division of labour is the result of- (A) Complicated work (B) Excessive pressure (C) Excess supply of labour (D) Specialisation
(D) (SSC Combined Matric Level 2002) Exp: Division of labour principle work on specialisation of workers in a particular task so that work can be divided into stages. So production can be effecient and effective.
“8.Who said, ““Economics is the Science of Wealth””? (A) Robbins (B) J.S. Mill (C) Adam Smith (D) Keynes”
(C) (SSC Combined Matric Level 2008) Exp: Adam Smith and Ricardo and other classical economist defined economics as science of national wealth. The understanding of economics was that by studying economics we can know allocation and distribution of wealth.
9.Micro-economics is also called- (A) Income theory (B) Investment theory (C) Price theory (D) Expenditure theory
(C) (SSC MTS 2013) Exp: Price theory is associated with the micro economics which is basically concerned with determination of output and price for an individual firm or industry.
10.Quasi rent is a ____ phenomenon. (A) Medium term (B) Long term (C) Short term (D) No time
(C) (SSC MTS 2014) Exp: Quasi-rent is type of return to organization which is different from price rent. Quasi rent is additional income and is a temporary phenomenon for the short run.
11.Rent is a factor payment paid to- (A) Land (B) Restaurant (C) Building (D) Factory
(A) (SSC MTS 2014) Exp: Factor payments are payment done for factors of production like for land, labour, capital. The payment done will be called as rent, wage and interest respectively.
12.According to Modern Theory of Rent, rent accrues to- (A) Capital only (B) Any factor (C) Labour only (D) Land only
(B) (SSC CGL 2014) Exp: Rent is surplus earn by organization and it does not include rent as the payment of land but also other surplus earning by other factors.
13.Which of the following is not an economic problem? (A) Deciding between paid work and leisure (B) Deciding between expenditure on one good and the other (C) Deciding between alternative methods of personal savings (D) Deciding between different ways of spending lesisure time
(D) (SSC CHSL 2014) Exp: Economic problem is all about choosing alternative among finite resources available that means scarcity of resources.
14.Which among the following statements is not true when there is an increase in interest rate in an economy? (A) Increase in saving (B) Decrease in loan (C) Increase in production cost (D) Increase in capital return
(D) (SSC Sec. officer 1997) Exp: Increase of interest rate in economy leads to increase in saving, decrease in loan and increase in cost of product with decrease in capital return.
15.Investment is equal to- (A) Gross total of all types of physical capital assets (B) Gross total of all capital assets minus wear and tear (C) Stock of plants, machines (D) None of the above
(B) (SSC Combined Matric Level 2000) Exp: Investment is portion of amount that is used for capital formation and all the wear and tear are deducted to know actual amount of investment.
16.Investment and savings are kept equal through a change in the level of- (A) Consumption (B) Investment (C) Government expenditure (D) Income
(A) (SSC Sec. officer 2005) Exp: Investment is generally equal to savings. Savings are amount that is reserved for further investment keeping inflation in mind so Investment and savings are kept equal through a change in level of consumption.
17.Imputed gross rent of owner occupied buildings is a part of- (A) Capital formation (B) Final consumption (C) Intermediate consumption (D) Consumer durable
(D) (SSC Tax Asst. (Income & Centre Excise) 2007) Exp: Imputed gross rent is amount of rent that the owner of the house would like to pay to live in his own house. So imputed gross rent is final consumption for the owner of the house.
18.Wh ich one of the fol low ing wou ld not constitute an economic activity? (A) A teacher teching students in his class (B) A teacher students under Sarva Shiksha Abhiyan (C) A teacher teaching his own daughter at home (D) A techer providing consultancy services from his residence
(C) (SSC CPO SI 2009) Exp: An economic activity is defined as work done by individual with expectation of getting monetary rewards or it can also be understood by the activites which result in monetary production.
19.Trickle down theory ignores the impact of economic growth on- (A) Investment (B) Savings (C) Income distribution (D) Consumption
(C) Exp: Trickle down in economics is a term used to describe the belief that if high income earners gain an increase in salary, then everyone in economy will benefit as their increased income and wealth is filtering down to all sections in society.
20.From the national point of view, which of the following indicates micro approach? (A) Study of sales of mobile phones by BSNL (B) Unemployment among Women (C) Per capita income in India (D) Inflation in India
(A) Exp: Microeconomics is one of the branch of economics that deals with human behavior in relation to scarce resources at ‘Individual level. Like study of pricing, demand supply.
21.The concept of joint sector implies cooperation between (A) Public sector and private sector industries (B) State Government and Central Government (C) Domestic and Foreign Companies (D) None of these
(A) Exp: Concept of joint sector implies that public and private sector come together for establishment of new enterprise for a project.
22.A ‘Market Economy’ is one which- (A) Is controlled by the Government (B) Is free from the Government control (C) In influenced by international market forces (D) All of these
(B) Exp: Market economy is also called as open economy in which price is decided according to demand and supply in market. There is less or no government intervention.
23.Economics assumes that- (A) People have unlimited desires but limited resources (B) People have limited desires but unlimited resources (C) Allocation of resources of not centrally planned will cause inefficiency (D) People are emotional and make irrational decisions
(A) [SSC CHSL Exam 2017] Exp: Economics is the study of human behaviour in relation with human needs to scarce resource available to fullfill these needs.
24.Micro economics deals with- (A) The circular flow of income (B) The decision making of a single economic variable like demand (C) Understanding unemployment (D) Economic growth
(B) [SSC CHSL Exam 2017] Exp: Micro-economics is the branch of economics which study economics at individual level like demand, supply price (at singular level) etc.
25.Which of the following statements is incorrect, if resources were unlimited? (A) There would still be scarcity and opportunity costs (B) There would still be scarcity but no opportunity costs (C) There would be no scarcity, but there would be opportunity costs. (D) There would neither be scarcity nor opportunity costs
(C) [SSC CHSL Exam 2017] Exp: In the case of unlimited resources there will be no scarcity but choosing one resource will be loss to other alternative so there will be opportunity costs.
26.Which of the following statements deals with microeconomics? (A) Government spending will decrease unemployment (B) Increase in money supply will increase inflation. (C) Lower interest rates will increase investment (D) Higher fees at private schools will increase admissions at public schools
(D) [SSC CHSL Exam 2017] Exp: Microeconomics is one of the branch of economics that deals with human behavior in relation to scarce resources at ‘Individual level’, like study of pricing, demand and supply.
27.Socialism is successful in achieving because of- (A) Excess socialistic approach in society (B) To increase standard of living (C) Equal distribution of income (D) None of the above
(D) (SSC CGL 2012) Exp: Socialism theory says that state should work as the resource provider to protect marginalised or poor people for equality in society. Society welfare is core of this theory and due to this reason it is widely accepted and practiced almost everywhere.
28.The Production of a commodity mostly through the natural process is an activity of- (A) Primary Sector (B) Secondary Sector (C) Tertiary Sector (D) Technology Sector
(A) (SSC 10+2 2013) Exp: Primary sector includes all those economic activities where there is the direct use of natural resources like agriculture, forestry, fishing, fuels, metals etc.
29.Economics is a- (A) Computer Science (B) Physical Science (C) Social Science (D) Natural Science
(C) (SSC MTS 2013) Exp: Economics is study of human behaviour (i.e. social science) in relation to utilization of scarce resources available with maximum efficiency for producton and distribution of goods and services.
30.Price theory is also known as- (A) Macro Economics (B) Development Economics (C) Public Economics (D) Micro Economics
(D) (SSC CGL 2010) Exp: Price theory is associated with micro economics which is basically concerned with determination of output and price for individual firm or industry.
“31.”“Economics is what it ought to be”” This statement refers to- (A) Normative Economics (B) Positive Economics (C) Monetary Economics (D) Fiscal Economics”
(A) (SSC CGL 2010) Exp: Normative economics is economics that is opinion based neither any facts nor objective, so it cannot be actually proved or disaproved it is totally subjective or quality based.
- ‘Hire and Fire’ is the policy of- (A) Capitalism (B) Socialism (C) Mixed economy (D) Traditional economy
(A) (SSC MTS 2011) Exp: Capitalism is a theory which believes in profit maximization and regulation by demand and supply itself only. Therefore there is no regulation on what to hire and whom to fire.
32.The Economic development depends on- (A) Natural resources (B) Capital formation (C) Size of the market (D) All of these
(D) (SSC (10+2) 2011) Exp: Economic development refers to development by promoting standard of living and economic health by applying policies related to them and for economic development we need things like resources natural or artificial captial market and many more.
33.What are the main components of basic social infrastructure of an economy? (A) Education, Industry and Agriculture (B) Education, Health and Civil Amenities (C) Transport, Health and Banks (D) Industry, Trade and Transport
(B) (SSC SO 2003) Exp: Basic social infrastructure of economy constitutes the structures which helps society to grow as economy. Infrastructures like health facilities, education, public amnesty etc helps in social growth. Hence these are part of basic social infrastructure of economy.
34.A mixed economy works primarily through the- (A) Market mechanism (B) Central allocative machinery (C) Market mechanism regulated by government policy (D) Market mechanism guided by government participation and planning
(D) (SSC SO 2006) Exp: Mixed economy is an economy in which there is certain amount of freedom of operation to market but with government regulation on it. Hence, this market mechansim is guided by government participation and planning.
35.A closed economy is one which- (A) Does not trade with other countries (B) Does not possess any means of international transport (C) Does not have a coastal line (D) Is not a member of the UNO
(A) (SSC CPO 2006) Exp: Closed economies are those economy which survive on the supply from domestic market only with no foreign trade, (totally dependent on domestic resources to fullfill demands.)
36.India is called a mixed economy because of the existence of- 1. Public Sector 2. Private Sector 3. Joint Sector 4. Cooperative Sector Codes (A) 1 and 2 (B) 1 and 3 (C) 3 and 4 (D) 2 and 4
(A) (SSC T.A. 2009) Exp: Mixed economy is economy in which there is freedom of operations to market but with government regulation (i.e. existance of private sector as well as public sector respectively).
37.In an economy, the sectors are classified into public and private on the basis of- (A) Employment conditions (B) Nature of economic activities (C) Ownership of enterprises (D) Use of raw materials
(C) (SSC DEO 2009) Exp: Sectors which are owned by state are called as public sectors and sectors which are owned by private entity are called as private sectors.
38.Which of the following is a part of tertiary sector? (A) Power and Transportation (B) Animal Husbandry (C) Cotton Manufacturing (D) Cultivation of Crops.
(A) (SSC MTS 2010) Exp: Classification of economy on the basis of production can be done into three sectors Primary sectors- deals with production from natural resources Secondary sector-production from the produce of primary sector as raw material Tertiary sector- activites related with services i.e. intangible activites.
39.Which one of the following categories of workers is termed as cultivators? (A) Those who own land and cultivate (B) Those who lease in land and cultivate (C) Those who cultivate the land of others (D) Those who own land and lease in from others or institutions and cultivate
(C) (SSC Steno. 2010) Exp: Workers are classified on the basis of industrial category of workers in following four categories: (1) Cultivators (2) Agricultural labourers, (3) Household Industry workers (4) Other workers. According to census cultivator is the person who is engaged in cultivation of land owned by other person.
40.The study of individual markets of demand and supply in which the ‘players’, or the decision makers, were also individuals (buyers or sellers, even companies) who were seen as trying to maximize their profits (as producers or sellers) and their personal satisfaction or welfare levels (as consumers) is called- (A) Macroeconomics (B) Econometrics (C) Microeconomics (D) Heterodox Economics
(C) (SSC CGL 2017) Exp: Micro-economics is study at the single point or individual level like study of human behaviour in relation to price change and its effect on demand and supply etc.
- An economic system combining private and state enterprise is called as- (A) Market economy (B) Centrally planned economy (C) Private economy (D) Mixed economy
(D) (SSC CGL 2017) Exp: Mixed economy is an economy in which there is certain amount of freedom of operation to market but with government regulation on it. Here market mechanism is guided by government participation and planning.
43.In a centrally planned economy, the ____________ plans all the important activities in the economy. (A) Industrialists(B) Citizens (C) Government (D) Judiciary
(C) (SSC CGL 2017) Exp: Socialistic economy is that system of economy in which all the means of production are controlled or regulated by State. The ownership is confined to community. This type of economy is also called as centrally planned economy. So, here government plans all important activities in the economy.
44.The closest example of a centrally planned economy is the __________ for the major part of the 20th Century. (A) USA (B) India (C) Soviet Union (D) Japan
(C) (SSC CGL 2017) Exp: Centrally planned economy is other name of socialistic economic system where all the means of production are controlled by the state. A closest example of centrally planned economy is the Soviet Union for the major part of the 20th century.
45.What is the meaning of ‘Laissez Faire Policy’? (A) Fair legislation (B) Control over trade (C) Withdrawal of ‘some restrictions’ (D) None of these
(C) (SSC CPO 2017) Exp: ‘Laissez faire’ means no restrictions by government. So laissez faire policy is withdrawal of restrictions laid by the government on economy.
46.In which economic system the goods produced are distributed among people not on the basis of what people need but on the basis of Purchasing Power? (A) Socialist (B) Mixed (C) Capitalist (D) Marxist
(C) (SSC CPO 2017) Exp: Capitalist economy is an economy in which market is regulated by demand and supply itself with the objective of profit maximization allowing private property.
1.Equilibrium is a condition that can- (A) Never change (B) Change only if some outside factor changes (C) Change only if some internal factor changes (D) Change only if government policies change
(C) (SSC Sec. officer 2003) Exp: Equilibrium is state where quantity demanded equals quantity supplied. So in case of change, change will be either in demand or in supply and these changes are internal change.
2.A firm is in equilibrium when its- (A) Marginal cost equals the marginal revnue (B) Total cost is minimum (C) Total revenue is maximum (D) Average revenue and marginal revenue are equal
(A) (SSC Tax Assistant (Income Tax & Central Excise 2006) Exp: A firm’s equilibrium is a point when it has no inclination in changing its production or in short run marginal revenue equals marginal cost.
3.Which of the following does not determine supply of labour? (A) Size and age-structure of population (B) Nature of work (C) Marginal productivity of labour (D) Work-leisure ratio
(C) (SSC Sec. officer 2006) Exp: Marginal productivity of labour is change in output resulting from employing one more unit of labour. It does not play any role in supply of labour.
4.Extension or contraction of quantity demanded of a commodity is a result of a change in the- (A) Unit price of the commodity (B) Income of the consumer (C) Tastes of the consumer (D) Climate of the region
(A) (SSC Tax Assistant (Income & Tax & Centre Excise 2008) Exp: Law of demand represents inverse relationship between demand and price. So change in unit price of commodity will result change in demand i.e extension and contration of quantity demanded.
5.Cross elasticity of demand between petrol and car is- (A) Infinite (B) Positve (C) Zero (D) Negative
(D) (SSC Tax Asst. 2008) (SSC CPO SI 2009) Exp: Cross-price elasticity is responsiveness of demand of goods due to change in price of other goods. Complementary goods are goods which are consumed together like tea and sugar etc. Here cross price elasticity will be negative.
6.’Law of demand’ implies that when there is excess demand for a commodity, then - (A) Price of the commodity falls (B) Price of the commodity remains same (C) Price of the commodity rises (D) Puantity demanded of the commodity falls
(C) (SSC (South Zone) Investigator 2010) Exp: Law of demand states that with increase and decrease in price of good its quantity demanded decrease and increase respectively, and when there is excess demand, price of goods increases until it reach equilibrium.
7.The demand curve shows that price and quantity demanded are- (A) Directly related only (B) Directly proportional and also directly related (C) Inversely proportional and also inversely related (D) Inversely related only
(C) (SSC Combined Matric Level 2000) Exp: Law of demand states that with increase and decrease in price of goods, their demand decreases and increases respectively. So, price and quantity demanded are inversely related.
8.Economic rent does not arise when the supply of a factor unit is- (A) Perfectly inelastic (B) Perfectly elastic (C) Relatively elastic (D) Relatively inelastic
(B) (SSC Combined Matric Level 2002) Exp: Economic rent is excess amount earned on capital, higher than actual amount entrepreneur was expecting. In case of perfect elasticity, the enterpreneur would have choice to move over other factor units. So, in this case economic rent does not arise.
9.A horizontal demand curve is- (A) Relatively elastic (B) Perfectly elastic (C) Relatively elastic (D) Relatively inelastic
(B) (SSC Combined Matric Level 2002) Exp: Horizontal demand curve’s elasticity is perfectly elastic. In other sense when the price of these goods changes from the market price, quantity demanded falls to zero.
10.Under increasing returns the supply curve is- (A) positiviely sloped from left to right (B) negatively sloped from left to right (C) parallel to the quantity axis (D) parallel to the price axis
(A)Exp: Under increasing return the supply will also have to increase. Hence, positively sloped from left to right.
11.Elasticity of demand measures the responsiveness of the quantity demanded of a goods to a- (A) change in the price of the goods (B) change in the price of substitutes (C) change in the price of the complements (D) change in the price of joint products
(A) (SSC (10+2) Level DEO & LDC 2011) Exp: Elasticity of demand measures the responsiveness or change in quantity demand due to change in price of goods.
12.Which one of the following is having elastic demand? (A) Electricity (B) Medicines (C) Rice (D) Match boxes
(A) (SSC (10+2) Level DEO & LCD 2011) Exp: Electricity have elastic demand means there is change in quantity demand due to change in price of goods. The other goods mention here will be non-elastic because these goods are essential goods.
13.Name the curve which shows the quantity of products as seller wishes to sell at a given price level- (A) Demand curve (B) Cost curve (C) Supply curve (D) None of these
(C) (SSC Const. (GD) & Rifleman 2012) Exp: Supply curve is the graphical representation of relationship between quantity supplied and its price with quantity. So, it shows the price at which seller is ready to sell with a particular quantity.
14.The supply of labour in the economy depends on- (A) Population (B) National income (C) Per capita income (D) Natural resources
(A) (SSC Const. (GD) & Rifleman 2012) Exp: Supply of labour means availbility of persons working hours. Supply of labour depends on several factors like population, working age, working hour, income etc.
15.Which one of the following pairs of goods is an example for Joint Supply? (A) Coffee and Tea (B) Ink and Pen (C) Tooth brush and Paste (D) Wool and Mutton
(D) (SSC (10+2) Level DEO & LDC 2012) Exp: Joint supply is the production of more than one produce from single resource. In given example, wool and mutton are goods produced by single object i.e. sheep.
16.Demand in Economics means: (A) Aggregate demand (B) Market demand (C) Individual demand (D) Demand backed by purchasing power
(D) (SSC MTS 2013) Exp: Need is a state of mind in which someone felt deprived of something. To fulfill need the individual will have to have purchasing power and willingness to buy them, this need will convert into demand.
17.When percentage change in demand for a commodity is less than percentage change in its price, then demand is said to be- (A) Highly elastic (B) Inelastic (C) Relatively elastic (D) Perfect inelastic
(B) (SSC MTS 2013) Exp: Elasticity is responsivness of demand due to change in its price. An inelasticity is situation when there is responsiveness in demand due to change in price is very less.
18.The demand for necessities is- (A) Elastic (B) Perfectly inelastic (C) Inelastic (D) Perfectly elastic
(B) (SSC CGL Tier-I 2013) Exp: Necessities are essential goods and services. Essential in nature can not be changed. So necessities will be perfectly inelastic i.e. change in demand will be neutral in response to change in price.
19.If a good has negative income elasticity and positive price elasticity of demand, it is a- (A) Giffen good (B) Normal good (C) Superior good (D) An inferior good
(A) (SSC CGL Tier-I 2013) Exp: Giffen goods are those good which are close to luxury goods. The demand for the giffen goods increases as the price of these goods are high representing social status and as the consumer earn less, he tend not to buy giffen goods.
20.Cross demand expresses the functional relationship between- (A) Demand and prices of related commodities (B) Demand and income (C)Demand and prices (D) Demand and supply
(A) (SSC (10+2) Level DEO & LDC 2013) Exp: Cross demand is change in quantity demanded due to change in price or demand of other related goods.
21.The law of Demand is based on- (A) Manufacturer’s preference (B) Seller’s returns (C) Constant returns (D) Increasing returns
(D) (SSC (10+2) Level DeO & LDC 2013) Exp: Law of demand is inverse relationship between demand and price and it is based on increasing returns i.e. with increase in demand price will increase upto only equilibrium stage only.
22.A supply function expresses the relationship between- (A) Price and output (B) Price and selling cost (C) Price and consumption (D) Price and consumption
(A)Exp: Supply function expresses the relationship between producers and sellers in market hence price and output of goods.
23.Any factor of production can earn economicrent, when its supply will be- (A) Perfectly elastic (B) Relatively elastic (C) Perfectly inelastic (D) All of the above
(A) (SSC CAPFs SI, CISF ASI & Delhi 2014) Exp: Econmic rent is excess amount earn on capital, higher than actual amount entrepreneur was expecting. In case of perfect elasticity the entrepreneur would have choice to move over other factor units. So in this case economic rent does not rise.
24.The demand of a factor of producton is- (A) Direct (B) Derived (C) Neutral (D) Discretion of the producer
(B) (SSC CGL Tier-2014) Exp: Demand for factors of production is created when there is demand for production of goods, so the demand created for factors will be derived demand.
25.A unit price elastic demand curve will touch- (A) Both price and quantity axis (B) Neither price axis, nor quantity axis (C) Only price axis (D) Only quantity axis
(B) (SSC CGL Tier-I 2014) Exp: Unit elasticity is when there is change in price (big or small) leads to exactly the same percentage change in quantity each time. Also unit price elastic demand curve do not touch either price axis or quantity axis.
26.Other things being equal, a decrease in quantity demanded of a commodity can be caused by- (A) A rise in the price of the commodity (B) A rise in the income of the consumer (C) A fall in the price of a commodity (D) A fall in the income of the consumer
(A) (SSC CHSL (10+2) DEO & LDC 2014) Exp: Law of demand shows inverse relationship between price and demand of commodities in light of assumption that other things are kept same.
27.A demand curve will not shift- (A) When only income changes (B) When only prices of substitute products change (C) When there is a change in advertisment expenditure (D) When only price of the commodity changes
(C) (SSC CHSL (10+2) DEO & LDC 2015) Exp: Demand Curve is graphical representation of price and quantity relationship with demand. A change in advertisement expenditure do not change demand curve.
28.Perfectly inelastic demand is equal to- (A) One (B) Infinite (C) Zero (D) Greater than one
(C) (SSC CHSL (10+2) DEO & LDC 2015) Exp: Price elasticity of demand is the relationship between a change in quantity demanded of goods and change in price. If price elasticity of demand is equal to zero, demand does not change when price changes.
29.A demand curve, which is parallel to the horizontal axis, showing quantity, has the price elasticity equal to- (A) Zero (B) One (C) Less than one (D) Infinity
(D) (SSC CHSL (10+2) DEO & LDC 2015) Exp: A demand curve when parallel to horizontal axis that means perfect elasticity. Here the coefficient price elasticity of demand is infinity.
30.The demand curve facing a perfect ly competitive firm is- (A) Downward sloping (B) Perfectly inelastic (C) A concave curve (D) Perfectly elastic
(D) (SSC CHSL (10+2) Tier-I 2017) Exp: Demand curve in perfectly competitive firm environment is a situation where large number of producers are selling identical goods, here responsiveness of demand in relation to prices will be perfectly elastic i.e. infinity.
31.Personal disposable income is- (A) Always equal to personal income (B) Always more than personal income (C) Equal to personal income minus direct taxes paid by household (D) Equal to personal income minus indirect taxes
(C) (SSC CGL Tier-I 1999) Exp: Personal disposable income is income disposable so it will be amount available to the person after paying direct taxes.
“32.Who said ‘Supply creates its own demand””? (A) Adam Smith (B) J.B. Say (C) Marshall (D) Ricardo”
“(B) (SSC CGL Tier-I 1999) Exp: Say’s law propouned by JB Say, according to which in a market, ““supply creates its own demand.”””
33.Speculative demand for cash is determined by- (A) The rate of interest (B) The level of income (C) The general price level (D) The market conditions
(A) (SSC Combined Matric Level 2002) Exp: The rate of interest is one of the main deciding factors of supply of cash, so speculative demand can be determined by rate of interest
.34. What is needed for creating demand? (A) Production (B) Price (C) Income (D) Import
(C) (SSC Combined Matric Level 2008) Exp: Demand is quantity of goods desired by buyers. The quantity demanded is supported by several other factors like purchasing power of buyer, willingness of buyer, product as per desire of buyers etc.
34.Effective demand depends on- (A) Capital output ratio (B) Output capital ratio (C) Total expenditure (D) Supply price
(D) (SSC CHSL Data Entry Operator & LDC 2010) Exp: Effective demand is actual demand i.e. demand supported by purchasing power and willingness to buy i.e. demand of product supported by price effects. If product price is low, people will buy more, but if price goes up then the quantity demanded of product goes down.
35.The supply-side economics lays greater emphasis on- (A) Producer (B) Global economy (C) Consumer (D) Middle Man
(A) (SSC CGL Tier-I 2015) Exp: Supply side economics is also known as Reaganomics which emphasizes that growth can be achieved by tax and fiscal policy that will create incentives to producer for producing more goods & services.
36.When price of a substitute of commodity ‘x’ falls, the demand for ‘x’- (A) Falls (B) Remains unchanged (C) Increases at increasing rate (D) Rises
(A) (SSC (CHSL (10+2) LDC, DEO & PA/SA 2015) Exp: When price of substitute goods falls, it directly effect demand of goods by decreasing it. In simple words when price of substitute goods fall people will tend to buy that particular good more, so demand for related product will automatically falls.
37.J.B Say’s Law of Market was not accepted by: (A) Adam Smith (B) Marshall (C) Malthus (D) David Ricardo
“(C) (SSC CHSL (10+2) LDC, DEO & PA/SA 2015) Exp: J.B. say’s law of market is ““supply creates its own demand””. Malthus opposed this very idea and state that demand of consumer is effected by other factors like tastes and habits. If supply increases, demand would not necessarily match supply.”
38.The time element in price analysis was introduced by- (A) J.M. Keynes (B) Alfred Marshall (C) J.S. Mill (D) J.R. Hicks
(B) (SSC CHSL (10+2) LDC, DEO & PA/SA 2015) Exp: Alfred Marshall propounded the theory that price is determined by demand & supply both, he introduced time period analysis into pricing process i.e. longer the time more important will be influence of cost of production on value.
39.When the demand for a good increases with an increase in income, such a good is called _________ . (A) Superior good (B) Giffen good (C) Inferior good (D) Normal good
(A) Exp: Superior goods are those goods in which their demand increases with increase in income like unique antique goods or goods with scarcity of them in market.
40.If demand curve for camping tents is D = 100000 - 17P and supply curve is S = 50000 + 8P, find the equilibrium Price? (A) Rs. 1000 (B) Rs. 2000 (C) Rs. 4000 (D) Rs. 500
(B) (SSC CHSL 2017) Exp: Equilibrium price Quantity demand = Quantity Supply. If we put the values, answer will be 2000.
41.If price of an article decreases from P1 to Rs 25, quantity demanded increases from 900 units to 1200 units. If point elasticity of demand is 2 find P1? (A) Rs. 20 (B) Rs. 30 (C) Rs. 35 (D) Rs. 15
(B) (SSC CHSL 2017) Exp: Point Elasticity = % ΔQ % ΔP i.e. P Q × ΔQ ΔP by putting values to formula we will get Rs. 30
42.A company faces a -2.5 price elasticity of demand for its product. It is presently selling 10,000 units/month. If it wants to increase quantity sold by 6%, itmust lower its price by- (A) 3.50% (B) 15% (C) 2.50% (D) 2.40%
(D) (SSC CHSL 2017) Exp: Elasticity of demand =% change in Quantity demanded % change in price by following the formula the answer will be 2.40%.
43.If price of an article decreases from Rs. 12 to Rs. 10, quantity demanded increases from 1000 units to 1400 units. Find point elasticity of demand? (A) 2.4 (B) -2 (C) -2.4 (D) 2
(A) (SSC CHSL 2017) Exp: Point elasticity is finding elasticity at any point on demand curve. Point Elasticity = % ΔQ % ΔP i.e. P Q × ΔQ ΔP by following the formula answer will be 2.4.
44.A manufacturer faces price elasticity of demand of a - 2 for its product. If it lowers it price by 5%, the increase in quantity sold will be- (A) 3% (B) 10% (C) 2.50% (D) 7%
(B) (SSC CHSL 2017) Exp: Elasticity of demand =% change in Quantity demanded % change in price by putting values to the formula we will get answer 10%.
45.If demand curve for a fishing rod is D = 37000 - 11P and supply curve is S = 12000 + 9P, find the equilibrium quantity? (A) 1250 units (B) 23250 units (C) 52350 units (D) 2500 units
(B) (SSC CHSL 2017) Exp: By following Equilibrium price theory that propogate Quantity demanded = Quantity supplied Solving the equation answer will be 23250 units.
46.If price of an article decreases from Rs. 25 to quantity demanded increases from Q1 untis to 1500 units. If point elasticity of demand is - 1.25, find Q1? (A) 900 units (B) 1200 units (C) 2000 units (D) 1800 units
(B) (SSC CHSL 2017) Exp: Point Elasticity = %ΔinQ %ΔinP i.e. P ΔQ Q ΔP by putting values to the formula the answer recieved will be 1200 units.
47.Calculate a country’s GDP if for the year consumer spending is $400 mi ll ion, government spending is $150 investment by businesses is $80 million, exports are $35 million and imports are $40 million. (A) $625 million (B) $465 million (C) $475 million (D) $635 million
(A) (SSC CHSL 2017) Exp: GDP calculation by expenditure method = private consumption + Investment + Government Expenses + foreign expenditure (Import-Export) So, Answer will be $625 million.
48.If price of an article decreases from Rs P1 to Rs 75, quantity demanded increases from 1000 units to 1200 units. If point elasticity of demand is 3.2 find P1? (A) Rs 85 (B) Rs 80 (C) Rs 90 (D) Rs 95
(B) [SSC CHSL 2017] Exp: Point Elasticity =% Δ inQuantity % Δ in price i.e. P Q × ΔQ ΔP by putting values to formula answer can be derived and i.e. Rs. 80.
49.Suppose the equilibrium price for sugar is Rs 50/kg. If the government sets a price floor of Rs 70/kg then____. (A) Quanity fo sugar demanded will be greater than the quantity demanded at equilbrium price (B) There will be a shortage of sugar in the market (C) There will be a surplus of sugar in the market. (D) Quantity of sugar supplied will be less than what was supplied at the equilibrium price
(C) [SSC CHSL 2017] Exp: Equilibrium price is at which quantity demanded is equal to quantity supplied. So when floor price is more then there will be more production to access profits
50.If demand curve for trekking boots is D=11000- 30P and supply is 5=4000+40P,What is the euilibrium Price? (A) 50 (B) 100 (C) 150 (D) 200
(B) [SSC CHSL 2017] Exp: Equilibrium price is when quantity demanded equal to quantity supplied Equilibrium demand = supply. By putting values to formula, 100 will be the answer.
51.If demand curve for racing cycles is D = 59600 - 6P and supply curve is S = 29600 + 4P, find the equilibrium Quantity? (A) 118000 (B) 300 (C) 41600 (D) 6000
(C) [SSC CHSL 2017] Exp: Equilibrium quantity is equal to equilibrium demand so by putting D = S, answer can be arrived at 41,600
52.If demand curve for racing cycles is D = 80200 13P and supply curve is S = 6200 + 12P, What is the equilibrium Quantity? (A) 2960 units (B) 31220 units (C) 8750 units (D) 41720 units
(D) [SSC CHSL 2017] Exp: Equilibrium is situation where quantity demanded equals to quantity supplied i.e. D = S. By putting value to formula answer of 41720 units.
53.A manufacturer faces a -1.2 price elasticity of demand for its product. It is presently selling 7,500 units/day. If it wants to increase quantity sold by 9%, it must lower its price by (A) 7.5 percent (B) 7.8 percent (C) 10.2 percent (D) 10 percent
(A) [SSC CHSL 2017] Exp: Elasticity of demand = % ΔQ % ΔP Q = quantity P = price put the values to formula and answer will be 7.5%.
54.If demand curve for trekking boots is D = 67500 - 18P and supply curve is S = 22500 + 12P, find the equilibrium Price? (A) 1500 (B) 750 (C) 2250 (D) 500
(A) [SSC CHSL 2017] Exp: Equilibrium is situation where quantity demand equals to quantity supplied. S = D. Putting the values we will receive the answer i.e. 1500
55.A manufacturer faces price elasticity of demand of a 1.25 for its product. If it lowers its price by 6.4%, the increase in quantity sold will be _____. (A) 5.15 percent (B) 7.65 percent (C) 8 percent (D) 5.12 percent
(C) [SSC CHSL 2017] Exp: Elasticity of demand = Change in Quantity demand Change in price %% by putting values to formula we can reach to answer 8%.
56.If quantity of good X demanded increases from 4000 units to 5000 units when price of good Y increases from Rs 75 to Rs 90, find Arc Cross elasticity of demand? (A) 0.55 (B) 1.66 (C) 0.25 (D) 1.22
(D) [SSC CHSL 2017] Exp: Cross elasticity of demand is response on a demand of product due to change in price of another product. Cross elasticity = % change in qu antity % rise in price Using this formula will get us to 1.22
57.Find arc elasticity of demand,if quantity demanded falls from 750 unit to 650 unit when price of the item is increased from Rs 15 to Rs 20? (A) 0.5 (B) -0.5 (C) -2 (B) 2
(A) [SSC CHSL 2017] Exp: Arc elasticity of demand = 1 2 1 2 q -q q +q × 1 2 1 2 p +p p -p. Answer will be 0.5.
58.In Which stage of the business cycle the inventory stock will be the highest? (A) Boom (B) Depression (C) Recession (D) Recovery
(B) [SSC CHSL 2017] Exp: Business cycle is increase or decrease in economic activity in long term having stages like expansion, peak and contraction that can be given economic name as growth, maturity & recession respectively. In depression there will be loss in economic activity so inventory will not be sold.
59.If price of an article decreases from Rs 800 to Rs 700, quantity demanded increases from Q1 units to 70 units. If point elasticity of demand is -1.333 find Q1? (A) 80 units (B) 90 units (C) 60 units (D) 50 units
(C) [SSC CHSL 2017] Exp: Point elasticity is finding elasticity at a point on demand curve. P. Elasticity = % Q % P Solving above formula will result in 60 units.
60.Increase in the demand for a good will cause the equilibrium price of the good to ________ and the equilibrium quantity to _________. (A) Increase~ increase (B) Decrease~ decrease (C) Increase~ decrease (D) Decrease~ increase
(A) [SSC CHSL 2017] Exp:.Equilibrium is situation where demand equals supply fixing quantity and Price. If there is increase in demand, demand curve will shift to the right and with supply meeting it, price and quantity both will increase respectively.
61.If quantity of a good demanded increases from 200 to 250 then the average income of the population increases from Rs 20,000 to Rs 30,000, find Arc Income elasticity of demand? (A) 1.45 (B) 0.55 (C) 2 (D) 1.25
(B) [SSC CHSL 2017] Exp: Arc Income elasticity of demand = 1 2 1 2 q -q q +q × 1 2 1 2 y +y y -y by following the formula answer realized will be 0.55
62.If demand curve for an electric tooth brush is D = 25000 - 7P and supply curve is S = 10000 + 8P, find the equilibrium Price? (A) Rs 150 (B) Rs 1000 (C) Rs 400 (D) Rs 50
(B) [SSC CHSL 2017] Exp: Equilibrium is situation where demand matches supply equally. Formula Equilibrium demand = supply By putting values to formula answer will be 1000
63.If demand curve for radial car tyres is D = 220000 - 19P and supply curve is S = 180000 + 6P, find the equilibrium Quantity? (A) 19200 units (B) 291000 units (C) 29100 units (D) 192000 units
(D) [SSC CHSL 2017] Exp: Equilibrium is situation where demand matches supply equally. Formula: Equilibrium demand = supply By putting values to formula answer will be 192,000 units.
64.If demand curve for renting a car is D = 90000 - 23P and supply curve is S = 9000 + 7P, find the equilibrium Price? (A) Rs 1800 (B) Rs 900 (C) Rs 3600 (D) Rs 2700
(D)Exp: Equilibrium is situation where demand match supply equally. E demand = Supply by putting values to formula answer will be Rs. 2700.
65.If price of an article decreases from Rs 80 to Rs 60, quantity demanded increases from 600 units to 750 units. Find point elasticity of demand? (A) -1 (B) 1 (C) -1.25 (D) 1.25
(B) [SSC CHSL 2017] Exp: Point Elasticity is finding elasticity at a point on demand curve. Formula = P. Elasticity = % Quantity % in price By putting values to formula answer will be 1.
66.If price of a article decreases from Rs P1 to Rs 1000 units. If point elasicity of dmand is - 1, then find P1? (A) 100 (B) 250 (C) 200 (B) 225
(C) [SSC CHSL 2017] Exp: Point Elasticity is finding elasticity at a point on demand curve. P. Elasticity = % inQuantity % in price By putting value to formula answer will be 200.
67.If price of an article decreases from Rs 800 to Rs 750, when quantity demanded increases from Q1 units to 2250 units, and If point elasticity of demand is -2 find Q1? (A) 2400 units (B) 2000 units (C) 1800 units (D) 1500 units
(B) [SSC CHSL 2017] Exp: Point elasticity is finding elasticity at a point on demand curve. P. Elasticity = % inQuantity % in price By putting values to the formula we will receive 2000 units.
68.If demand curve for house cleaning services is D = 45000 - 21P and supply curve is S = 15000 + 9P, find the equilibrium Quantity? (A) 12000 units (B) 6000 units (C) 24000 units (D) 30000 units
(C) [SSC CHSL 2017] Exp: Equilibrium is situation where demand matches supply equally. Equilibrium demand = supply by putting value to formula answer will be 24,000 units.
69.If demand curve for alphonso mangoes is D = 25000 - 70P and supply curve is S = 10000 + 80P, find the equilibrium quantity? (A) 18,000 units (B) 2,000 units (C) 1,800 units (D) 200 units
(A) [SSC CHSL 2017] Exp: Equilibrium is situation where demand match supply equally. Equilibrium demand = supply By putting values to formula answer will be 18,000 units.
70.If price of an article decreases from Rs 240 to Rs 220, when quantity demanded increases from 200 units to 210 units. Find point elasticity of demand? (A) 0.6 (B) -1.8 (C) -0.6 (D) 1.8
(C) [SSC CHSL 2017] Exp: Point Elasticity of demand: Finding Elasticity at point on demand curve. P Elasticity = % in Quantity % in price by putting the formula the answer received will be -0.6
71.If demand curve for roller skates is D = 23000 - 19P and supply curve is S = 18000 + 6P, find the equilibrium Price? (A) Rs 100 (B) Rs 400 (C) Rs 50 (D) Rs 200
(D) [SSC CHSL 2017] Exp: Equilibrium is a situation where demand matches supply. Equilibrium demand = supply By putting values to formula we will receive Rs. 200
72.If price of an article decreases from Rs P1 to Rs 190, when quantity demanded increases from 5000 units to 5200 units, and if point elasticity of demand is -0.8 find P1? (A) Rs 220 (B) Rs 240 (C) Rs 200 (D) Rs 250
(D) [SSC CHSL 2017] Exp: Point Elasticity is finding elasticity at point on demand curve. P. Elasticity = % Quantity % in price So by above formula, we will get value i.e. Rs 250
73.The Law of Demand is based on the concept that people _______. (A) Buy more of a good as their income increases. (B) Buy more of a good as the price of the good falls. (C) Will spend all of their money on something. (D) Want more of everything even if they have no money to buy anything.
(B) [SSC CHSL 2017] Exp: Law of demand states that the ultimate aim of human is to maximize profit so when price of any good is increased demand will decrease and when price is decreased, demand for that product will increase.
74.If price of an article decreases from Rs 100 to Rs 80, when quantily demanded increases from Q1 units to 4600 units, and if point elasticity of demand is -0.75. Q1 =?(A) 5000 units (B) 4000 units (C) 3000 units (D) 2000 units
(B) [SSC CHSL 2017] Exp: Point Elasticity is finding elasticity at point on demand curve. P. Elasticity = % Quantity % in price By putting value we will receive 4000 units as answer.
75.For a goods ————negative income elasticity and positive price elasticity of demand, then the good is- (A) An inferior goods (B) Normal goods (C) Superior goods (D) Giffen goods
(D) (SSC (CGL) 2013) Exp: Giffen goods are those goods whose consumption increases as the price rises.
76.The Goods which are either for consumption or for investment are called- (A) Intermediate goods (B) Final goods (C) Giffen goods (D) Inferior goods
(B) (SSC (10+2) 2013) Exp: Goods purchased by consumer are goods for final consumption. Good purchased by someone to use it for furthur investment is also for final consumption. So in both situation these goods will be final goods.
77.The Price discrimination is helpful when. (A) Demand elasticity for two market is different (B) Demand elasticity for two market is same (C) Supply elasticity for two market is different (D) Supply elasticity for two market is same.
(A) (SSC (LDC) 2005) Exp: Price discrimination is pricing strategy in which identical or similar goods are priced differently, according to different markets. In this, producer tries to get as much as price that consumer is willing to pay. So when the demand elasticity for two market is different then the price discrimination works.
78.Discuss about giffen and inferior good. (A) Inferior goods are also giffen (B) Giffen goods are also inferior goods (C) Inferior good should not be giffen (D) Giffen good should not be inferior.
(B) (SSC MTS 2006) Exp: Giffen goods and Inferior goods are sort of simillar to each other specially in case of relationship of demand and income. Giffen goods are those goods for which demand will decrease if the price of goods are reduced and people will tend to move towards alternative goods.
79.The Price elasticity of demand is - (A) Elasticity = %change in demand ÷ %change in price (B) Elasticity = %change in price ÷ %change in demand (C) Elasticity = %change in demand ÷ %change in supply (D) Elasticity = %change in supply ÷ %change in Price.
(A) (SSC (10+2) 2013) Exp: Price elasticity of demand is responsiveness of the demand in relation to change in price of product.
80.Elasticity expressed by formula 1>e>o is - (A) Perfectly elastic (B) Relatively elastic (C) Perfectly inelastic (D) Relatively inelastic
(D) (SSC MTS 2013) Exp: Formula 1>e>o is expressing that there is change in price but quantity is relatively less responsive to the change. In other words it can be understood as not very responsive to price so Relatively inelastic.
81.When percent change in demand for a commodity is less than percentage change in its price, then demand is said to be- (A) Highly elastic (B) Inelastic (C) Relatively elastic (D) Perfectly inelastic.
(B) (SSC MTS 2013) Exp: When percentage change in quantity is less than percentage change is price, this particular situation will be inelastic.
82.When there is no change in demand, with large change in price then such type of demands are called- (A) Elastic (B) Inelastic (C) Perfectly inelastic (D) Relatively elastic
(C) (SSC MTS 2008) Exp: When there is large change in price of article but it is not effecting demand of that product that it will be called as perfectly inelastic.
83.With other factor Constant, the demand of any product is decreased by- (A) Increase in price of that product (B) Increase in income of customer (C) Decrease in price of that product (D) Decrease in income of customer
(A) (SSC (10+2) 2014) Exp: Law of demand says that if there is increase or decrease in price of goods then there will be decrease or increase in demand respectively.
84.There will be increase in price of tomato in domestic market, if- (A) There is enormous production of tomato (B) Export of fresh tomatoes to other countries (C) Production cost of tomato is less (D) All of the above
(B) (SSC MTS 2006) Exp: If there is increase in price of tomato it can be due to supply constraints, and situation here suits the condition where export of fresh tomatoes to other countries is done here resulting into less supply and increase in price.
85.Which of the following is not the direct deciding factor of demand? (A) Saving (B) Income (C) Price (D) Taste
(A) (SSC 10+2 2012) Exp: Law of demand holds true when keeping other things same, that means factors other than price like taste, preferences, income, price of related goods should be constant.
86.Which of the following goods has elastic demand? (A) Electricity (B) Medicines (C) Rice (D) Match box
(C) (SSC 10+2 2011) Exp: Elasticity of essential goods like electricty, medicines, match box, milk etc is inelastic but the goods, if a consumer can subsititute them like other normal goods rice will be very elastic.
87.Which of the following statement is true? (A) Price of any good depends upon its cost. (B) Any good has valuable price in anyone which has desire to buy it. (C) Price of any good depend upon place value. (D) Any good has its price if its supply is equal to demand.
(D) (SSC CPO 2012) Exp: In market, generally price is decided by supply and demand in a market. Any good has its price if its supply is equal to its demand.
88.Which of the following is an Example of derived demand? (A) Rice (B) Cloths (C) Beauty Products (D) Cement
(D) (SSC CPO 2012) Exp: Derived demand refers to the demand rise as a result of rise in demand of other related product. Best example for Derived demand is rising demand of factors of production when there is demand of finished product.
89.Demand of Labour is called- (A) Derived demand (B) Factory demand (C) Market demand (D) Direct demand
(A) (SSC CGL 2013) Exp: Demand of Labour is derived demand beacause demand of labours depends upon demand of the produce that workers will be producing.
90.Perfectly inelastic demand is equal to- (A) Unity (B) Zero (C) Infinity (D) Greater than unity
(B) (SSC (10+2) 2015) Exp: Perfectly inelastic demand means no responsiveness of demand in relation to price, so it will be equal to zero.
91.Wh ich among the fol lowing are c lose substitutes? (A) Milk and Sugar (B) Sugar and Tea (C) Tea and Coffee (D) Coffee and Biscuits
(C) Exp: Substitute goods are those which are replacable in consumption with each other, In other words people can switch to other products and can derive same utility. Eg:- Tea & Coffee, Rice & Wheat etc.
92.If there is decrease in price of X, then demand of Y is also decreased, then X & Y are- (A) Substitute goods (B) Complementary goods (C) X is inferior to Y (D) Y is inferior to X
(A) (SSC LDC 2005) Exp: In Substitute goods if price of one good is increased or decreased, it will decrease or increase demand of other related goods respectively.
93.For Successful Price discrimination between two market, demand elasticity of production should be- (A) Same (B) Different (C) Constant (D) Zero
(B) (SSC T.A. 2008) Exp: Price discrimination is pricing strategy in which identical or similar goods are priced differently according to different markets. In this producer tries to get as much as price that consumer is willing to pay. So when the demand elasticity for two market is different then the price discrimination works.
94.Other things being equal, a decrease in quantity demanded of a commodity can be caused by- (A) A rise in the price of the commodity (B) A rise in the income of the consumer (C) A fall in the price of a commodity (D) A fall in the income of the consumer
(A) (SSC (10+2) 2014) Exp: Law of demand says that if there is increase or decrease in price of goods, then there will be decrease or increase in demand respectively
95.Which of the following are consumer semidurable goods? (A) Cars and Television sets (B) Milk and Milk products (C) Foodgrains and other food products (D) Electrical appliance like fans and electric irons
(C) (SSC (10+2) 2014) Exp: Semi-durable goods are those goods which are neither durable nor perishable like cloths, preserved foods, foods grains etc.
96.A supply function expresses the relationship between- (A) Price and demand (B) Price and consumption (C) Price and output (D) Price and selling cost
(C) (SSC (10+2) 2013) Exp: Supply function is expression of relationship between supply and factor that affect the producer like Price, factor inputs technology,taxes subsidies, output etc.
97.Demand for complementary goods is known as- (A) Joint demand (B) Derived demand (C) Direct demand (D) Cross demand
(A) (SSC (10+2) 2012) Exp: Complementary goods are those goods which are actively indulge in each other and makes final goods to consume. The demand here for one factor will have same effect on other related goods, so it is called as joint demand.
98.Which one of the following pairs of goods is an Example for joint supply? (A) Coffee and Tea (B) Ink and Pen (C) Tooth brush and Paste (D) Wool and Mutton
(D) (SSC (10+2) 2011) Exp: Joint supply is when a product that yield more than one output. Best suitable example for this is livestock industry like sheep giving meat as well as wool.
99.For an inferior good, demand falls when- (A) Price rises (B) Income rise (C) Price falls (D) Income falls
(B) (SSC (10+2) 2011) Exp: Inferior goods are those goods which have a negative income effect (or negative relation with income) and when the income rises, demand for inferior goods falls.
100.A ‘want’ becomes a demand only when it is backed by the- (A) Ability to purchase (B) Ncessity to buy (C) Desire to buy (D) Utility of the product
(A) (SSC CGL 20101) Exp: Need is state of feeling deprived of something and when the deprivation for particular goods is indentified it is called as want. Want when backed by ability to purchase or willingness to pay it is called as demand.
101.An exceptional demand curve is one that moves- (A) Upward to the right (B) Downward to the right (C) Horizontally (D) Vertically
(A) (SSC T.A. 2009) Exp: Exceptional demand curve :- Normally demand carve is downward slopping i,e inverse relationship between demand and price but something it shows upward movement with increase in price this generally occurs when people fear that product shortage can happen soon.
102.A fall in demand or rise in supply of a commodity- (A) increases the price of that commodity (B) decreases the price of that commodity (C) neutralises the changes in the price (D) determines the price elasticity
(B) (SSC DEO 2008) Exp: Fall in demand and rise in supply of commodity will create excessive ‘Buffer stock. So to sell the product there will be decrease in the price of that commodity so that sell could occur.
103.The Law of Demand expresses- (A) Effect of change in price of a commodity on its demand (B) Effect of change in demand of a commodity on its price (C) Effect of change in demand of a commodity over the supply of its substitute (D) None of the above
(A) (SSC TA 2008) Exp: Law of demand says that if there increase or decrease in price of goods then there will be decrease or increase in demand respectively
104.The demand curve for a Giffen good is- (A) Upward rising (B) Downward falling (C) Parallel to the quantity axis (D) Parallel to the price axis
(A) (SSC CGL 2007) Exp: Giffen goods have unique responsiveness instead of Law of demand. Basically when price rises, quantity demanded will increase and vice-versa, so demand curve for a Giffen good is upward rising instead of general demand curve i.e downard sloping.
105.The supply of agr icu ltural products is generally- (A) Elastic (B) Inelastic (C) Perfectly elastic (D) Perfectly inelastic
(B) (SSC TA 2007) Exp: Supply of agricultural products is generally inelastic in short term because when a crop is sown suddenly farmers can’t raise supply by growing more crop. because time is required for the yield to take place.
106.All of the goods which are scarce and limited in supply are called- (A) Luxury goods (B) Expensive goods (C) Capital goods (D) Economic goods
(A) (SSC SO 2007) Exp: Luxury goods are those goods whose demand increases in more proportion than increase in income. Luxury goods are also goods with uniqueness and limited supply.
107.Engel’s Law states the relationship between- (A) Quantity demanded and price of a commodity (B) Quantity demanded and price of substitutes (C) Quantity demanded and tastes of the consumers (D) Quantity demanded and income of the consumers
(D) (SSC CGL 2007) Exp: Engel’s law state that as the income rises the proportionate, expenditure from income on food products decreases.
108.Seawater, fresh air etc are regarded in economics as- (A) Giffen goods (B) Inferior goods (C) Free goods (D) Normal goods
(C) (SSC CPO 2006) Exp: Free goods are those goods which are not scarce and can be available by just the virtue of living organisms. Examples are air, sea water, sun light etc.
109.If the price of tea falls, demand for coffee will- (A) Increase (B) Decrease (C) Remain same (D) None of these
(B) (SSC SO 2006) Exp: When the price of tea fall the demand for coffee will also fall due to substitution effect.
110.If the main objective of the government is to raise revenue, it should tax commodities with- (A) High elasticity of demand (B) Low elasticity of supply (C) Low elasticity of demand (D) High income elasticity of demand
(C) (SSC MTS 2006) Exp: Low elasticity of demand because it will generate income for the government and due to low elasticity, consumer will consume in any way the goods which are essential in nature.
111.Bread and butter, car and petrol are Examples of goods which have- (A) Composite demand (B) Joint demand (C) Derived demand (D) Autonomous demand
(B) (SSC MTS 2006) Exp: Joint demand is demand for the goods which are usually complementary so they will be demanded jointly and in a fixed proportion.
“112.In the law of demand, the statement ““Other things remain constant”” means- (A) Income of consumer should not change (B) Price of other goods should not change (C) Taste of consumer should not change (D) All of the above”
(D) (SSC CPO 2006) Exp: Law of demand holds true when keeping other things same, that means factors other than price like taste, preferences, Income, price of related goods should be constant.
113.The functional relationship between income and consumption expenditure is explained by- (A) Consumer surplus (B) Law of demand (C) Law of supply (D) Keynes’s psychological law of consumption
(D) (SSC MTS Exam, 2006) Exp: Keynesian psychological law of consumption state that as income rises the expenditure also increases but not in same proportions, having saving from income as new share from raised income.
114.According to Keynesian theory of income determination, at full employment a fall in aggregate demand causes- (A) A fall in prices of output and resources (B) A fall in real gross National product and employment (C) A rise in real gross National product and investment (D) A rise in prices of output and resources
(A) (SSC CPO 2004) Exp: According to Keynesian theory of income determination, at full employment there is a fall in aggregate demand causing a fall in price of output and resources because theory says that income depends on employment which depends on effective demand and also depends on consumption expenditure and investment expenditure.
115.If the price of an inferior good falls its demand- (A) Rises (B) Falls (C) Remains constant (D) Can be any of the above
(A) (SSC CPO 2003) Exp: Inferior goods are those goods whose demand decreases as increase in income of consumer and vice-versa.
116.Demand of commodity mainly depends upon- (A) Purchasing will (B) Purchasing power (C) Tax policy (D) Advertisement
(B) (SSC SO 2003) Exp: Demand is a want backed by ability to purchase and willingness to buy.
117.When there is a change in demand leading to a shift of the demand curve to the right at the same price as before, the quantity demanded will- (A) Decrease (B) Increase (C) Remain the same (D) Contract
(B) (SSC SO 2001) Exp: When there is change in demand leading to shifting of demand curve to right keeping price at same, quantity demanded will increase.
118.Movement along the same demand curve is known as- (A) Extension and contraction of demand (B) Increase and decrease of demand (C) Contraction of supply (D) Increase of supply
(A) (SSC SO 2001) Exp: Movement along the same demand curve is caused by change in price of the commodity it self and this is referred as increase (extension) and decrease (contraction) of demand.
119.The income elasticity of demand being greater than one, the commodity must be- (A) A necessity (B) A luxury (C) An inferior good (D) None of the above
(B) (SSC SO 2001) Exp: Luxury goods demand increases in more proportion to increase in income. Thus responsiveness of demand is more, so elasticity of demand here will be greater than one.
120.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) Perfectly inelastic (B) Elastic (C) Perfectly elastic (D) Inelastic
(B) (SSC MTS 2001) Exp: Elasticity is responsiveness to the change in demand of commodity due to change in its price.
121.The demand for which of the following commodity will not rise in spite of a fall in its price? (A) Television (B) Refrigerator (C) Salt (D) Meat
(C) (SSC MTS 2000) Exp: Necessity goods are those goods which are very essential so their demand is very less or zero responsive to change in price like salt, medicines etc.
122.If the price of Pepsi decreases relative to the price of Coke and 7-Up, the demand for- (A) Coke will decrease (B) 7-Up will decrease (C) Coke and 7-Up will increase (D) Coke and 7-Up will decrease
(D) (SSC MTS 2000) Exp: Pepsi, Coke 7up, they all are coldrinks, homogenous so substitute goods. If price of Pepsi decreases the demand for its substitutes like Coke and 7up will decrease.
123.Which one of the following is an Example of joint supply? (A) Petrol and Bus (B) Ink and Fountain pen (C) Sugar and Coffee (D) Wool and Cotton
(B) (SSC Steno. 2014) Exp: Ink and fountain Pen is example of joint supply beacause usually are produced by a single producer.
124.A refrigerator operating in a chemist’s shop is an Example of- (A) Free good (B) Final good (C) Producer’s good (D) Consumer’s good
(B) (SSC CPO 2008) Exp: Final goods are goods that are consumed rather than used in furthur production.
125.Which among of the following is necessary for demand. (A) Production (B) Cost (C) Income (D) Import
Ans (C) (SSC MTS 2008) Exp: Income is necessary for demand. Its a major factor in demand because with change in income demand also changes.
126.In which of the following case, law of demand fails? (A) Giffen goods (B) Normal goods (C) Inferior goods (D) Both Giffen and Inferior goods
(A) (SSC CGL 2017) Exp: There are some exceptions to law of demand:- 1. Conspicuous goods 2. Giffen goods 3. Conspicuous necessities 4. Demand for necessities 5. Speculative goods
