1000+ Basics of Economics MCQ for SSC CHSL [Solved]

1. The Latin term citeris paribus means:
A. Other things being equal
B. Because of this
C. Due to this
D. All the factors changes at the same rate
Answer : A

2. In the case where two commodities are good substitutes then cross elasticity will be:
A. Positive
B. Unitary
C. Negative
D. Infinite
Answer : A

3. The cournot model is a model of:
A. Instable equilibrium
B. Stable equilibrium
C. Constant equilibrium
D. Fluctuating equilibrium
Answer : B

4. The firm is at equilibrium where:
A. Output is maximum
B. Profit is maximum
C. Revenues are maximum
D. Profit is minimum
Answer : B

5. The elasticity of demand is equal to slope of demand function divided by:
A. Average demand function
B. Qualified demand function
C. Constructive demand function
D. Relative demand function
Answer : A

6. The cobweb model will convergent when the slope of:
A. Demand curve is more than supply curve
B. Supply curve is more than demand curve
C. Supply curve is equal to demand curve
D. None of the above
Answer : A

7. In real life firms:
A. Loss because of past
B. Learn from past
C. Destroy because of past
D. None of the above
Answer : B

8. If in the long run, output increases in the same proportion as increase in all the input in the given proportion, this is known as:
A. Increasing returns to scale
B. Decreasing returns to scale
C. Constant returns to scale
D. Variable returns to scale
Answer : C

9. The Cambridge School of Thought refers to the group of English economists who came under the influence of:
A. Alfred Marshal
B. J.M.Keynes
C. Paul A.Samuelson
D. A.C.Pigou
Answer : A

10. When at a given price, the quantity demanded of a commodity is more than the quantity supplied, there will be:
A. An upward pressure on price
B. A downward pressure on price
C. Price will remain unaffected
D. All of the above
Answer : A

11. The budget constraint equation of the firm is:
A.
B.
C.
D.
Answer : C

12. The advertisement and other selling activities:
A. Lessen the differentiation
B. Widen the differentiation
C. Does not effect the differentiation
D. All of the above
Answer : B

13. The equilibrium conditions, MC = MR = AR = AC, will happen:
A. In the short-run under perfect competition
B. In the long-run under perfect competition
C. In the short-run under monopolistic competition
D. In the long-run under monopolistic competition
Answer : B

14. Under perfect competition, a firm will be in equilibrium if:
A. MC = MR
B. MC cuts the MR from below
C. MC rises when it cuts the MR
D. All the above three conditions are fulfilled
Answer : D

15. The game theory is concerned with:
A. Perfect competition
B. Imperfect competition
C. Price discrimination
D. Duopoly and oligopoly
Answer : D

16. 4.The Law of Diminishing Returns according to the modern view, applies to:
A. Agriculture
B. All fields of production
C. Industry
D. Services
Answer : B

17. The income consumption curve (ICC) is the locus of points of consumer equilibrium resulting:
A. Only when the price of commodity X changes
B. Only when the price of commodity Y changes
C. Only when the consumers income is varied
D. None of the above
Answer : C

18. Income-elasticity of demand is expressed as:
A. % change in quantity demanded % change in income
B. % change in income % change in quantity demanded
C. Change in income Change in quantity demanded
D. None of the above
Answer : A

19. According to Marshal, the Law of Diminishing Marginal Utility:
A. Applies on both money and other commodities
B. Does not apply on money
C. Does not apply on bank money but applies on cash money
D. Applies on all the commodities except on money
Answer : A

20. Average cost curve contains in it:
A. Normal profits
B. No normal profits
C. Sometimes normal profits and sometimes no normal profits
D. Super normal profits
Answer : A

21. Law of Returns to Scale shows:
A. Technical relationship between input of a variable factor and the resultingoutput
B. Any economic relationship between input and output
C. An output maximizing relationship
D. A relationship with input changing and corresponding changes in output
Answer : A

22. The production function can convey to a firm:
A. The cost of producing any given output
B. The various combinations of input that could be employed in production of any given quantity of output
C. The various combinations of input that should be used in producing any given quantity of output in an efficient manner
D. The maximum profit level of output
Answer : B

23. A mixed economy is characterized by the coexistence of:
A. Modern and traditional industries
B. Public and private sectors
C. Foreign and domestic investments
D. Commercial and subsistence farming
Answer : B

24. Karl Marx:
A. Led the Russian Revolution
B. Provided the theoretical basis for socialism(communism)
C. Developed his theory in response to the Great Depression of the 1930s
D. None of the above
Answer : B

25. We can write ordinal utility function as:
A. U = x1 x2
B. U = x1 + x2
C. U = y1 +x1
D. U = x1.x2
Answer : D

26. According to M.Kalecki, the true measure of the degree of monopoly power is the:
A. Ratio between price and marginal cost
B. Extent of monopolistic profit enjoyed by him
C. Cross-elasticity of demand for the product of the monopolist
D. Price charged by the monopolist minus marginal cost of production
Answer : A

27. Duopoly is a market where there are:
A. Two sellers
B. A few sellers
C. Five sellers
D. Many sellers
Answer : A

28. Short run cost curves are influenced by:
A. Principle of returns to scale
B. Law of variable proportions
C. External and internal economies and diseconomies
D. None of the above
Answer : B

29. Marginal utility means:
A. Utility derived from the last unit of production
B. Utility derived from the last unit of a commodity which is being consumed
C. Total utility- Average utility
D. None of the above
Answer : B

30. Price leadership is associated with:
A. Collusive oligopoly
B. Non-collusive oligopoly
C. Cartel
D. Perfect competition
Answer : A

31. If the commodity is inferior then:
A. Income effect is positive but substitution effect is negative
B. Income effect is negative but substitution effect is positive
C. Both income effect and substitution effect are negative
D. Both income effect and substitution effect are positive
Answer : C

32. Cournot equilibrium is attained where two reaction curves:
A. Repel each other
B. Represent each other
C. Intersect each other
D. None of the above
Answer : C

33. Cross-demand curve shows:
A. The effect of a change in price of X on its demand
B. The effect of a change in price of X on the demand for Y
C. The effect of a change in price of Y on its demand
D. None of the above
Answer : B

34. Who first used the term Quasi-Rent?
A. David Ricardo
B. Alfred Marshal
C. J.S.Mill
D. Karl Marx
Answer : B

35. Which one of the following is also known as Plant Curves:
A. Long-run average cost (LAC) curves
B. Short-run average cost (SAC) curves
C. Average variable cost (AVC) curves
D. Average total cost (ATC) curves
Answer : B

36. Plumbing and pipe-fitting require many of the same skills. If the wage paid to pipe-fitters increased then the effect on the market for plumbers would probably be:
A. An increase in demand
B. A decrease in demand
C. An increase in supply
D. A decrease in supply
Answer : D

37. An indifference curve shows the bundles of two goods among which a consumer remains:
A. Indifferent
B. Different
C. In equilibrium
D. Dominant
Answer : A

38. The price under perfect competition is settled by:
A. Producers
B. Sellers
C. Buyers
D. Sellers and buyers
Answer : D

39. 7.In an economy based on the price system the decision on what shall be produced is made by:
A. Government
B. Consumer
C. Producer
D. Stock holder
Answer : B

40. Under competitive conditions, the industry will be in equilibrium:
A. When each firm is in equilibrium equating MC with MR
B. When all the firms are earning only normal profits
C. When firms outside have no tendency to enter the industry and those within, have no tendency to leave the industry
D. All of the above
Answer : B

41. The greater the percentage of income spent on a commodity:
A. The greater its elasticity is likely to be
B. The weaker its elasticity is likely to be
C. The unchanged its elasticity is likely to be
D. None of the above
Answer : A

42. If the commodity is inferior then the Income Effect (I.E) and th Substitution Effect (S.E):
A. Both move together and reinforce each other
B. One moves and the other remains constant
C. Move in the opposite direction and neutralize each other
D. Both remain constant
Answer : C

43. A firm under perfect competition has:
A. An AR curve which is a horizontal straight line
B. An AR curve which slopes downward
C. An AR curve which has a kink
D. An AR curve shape of which cannot be predicted
Answer : A

44. In constant sum game (zero sum game), if there are two parties then:
A. Both parties make better-off
B. Both parties make worse-off
C. Both parties become Neutral
D. One party can become better off only if another is made worse off
Answer : D

45. By reducing the prices of its products below those of its competitors, a perfectly competitive seller:
A. Reduces its revenues
B. Increases its revenues
C. Can sell nothing
D. None of the above
Answer : A

46. When total product falls:
A. MP is positive
B. MP is negative
C. MP is falling
D. MP is rising
Answer : B

47. Cross-elasticity of demand or cross-price elasticity between two substitutes will be:
A. Negative
B. Positive
C. Infinite
D. Zero
Answer : B

48. In the real world, some competitive firms owns specialized resources that earn a return called:
A. Economic profit
B. Rent
C. Accounting profit
D. Normal profit
Answer : B

49. The average cost curve is a geometrical illustration of:
A. Hydraulic function
B. Cubic function
C. Pentagonic function
D. Quadratic function
Answer : D

50. In the long-run competitive equilibrium:
A. There is tendency for firms to enter but not leave the industry
B. Firms have no tendency either to enter or to leave the industry
C. Some firms may enter while the others may leave the market even after the equilibrium of the industry
D. Entry or exit of the firms cannot be predicted
Answer : C