Basics of Economics MCQ Solved Paper for SSC CGL

1. Price discrimination is possible:
A. When elasticities of demand in different markets are the same at the ruling price
B. When elasticities of demand are different in different markets at the ruling price
C. When elasticities cannot be known
D. When elasticities of demands are zero in different markets at the rulling price
Answer : B

2. The general markets results from the imposition of price ceilings has been:
A. Higher prices
B. Increased prices
C. Increased consumption
D. Shortage of products
Answer : D

3. A typical demand curve cannot be:
A. Convex to the origin
B. Concave to the origin
C. A straight line
D. Rising upwards to the right
Answer : D

4. For monopolistic competitive firm:
A. P=AR and P>MR
B. PC. P=MC and MC=AC
D. None of the above
Answer : A

5. The Chamberline model recognizes mutual:
A. Independence of firms
B. Interdependence of firms
C. Independence of individuals
D. Interdependence of materials
Answer : B

6. According to Smith, by value we mean the value with respect to use, and the price we mean the value with respect to:
A. Production
B. Consumption
C. Exchange
D. Formation
Answer : C

7. The slope of budget line shows the price ratios of:
A. Many goods
B. Few goods
C. Two goods
D. Three goods
Answer : C

8. On the total utility curve the economically relevant range is the portion over which:
A. The total utility is rising at a declining rate
B. The total utility is raising at an increasing rate
C. Total utility is maximum
D. Total utility is declining
Answer : A

9. The game theory takes into consideration:
A. Reaction of rival firms
B. Reactions of people
C. No reaction of rival firms
D. None of the above
Answer : A

10. Because the price elasticity of demand for OPEC oil is approximately .08, in order to increase revenues OPEC should:
A. Lower price in order to increase revenues
B. Lower price in order to decrease the amount of oil sold
C. Rise price in order to increase the amount of oil sold
D. Raise price in order to increase revenues
Answer : D

11. In short run:
A. Labor is variable
B. Labor is fixed
C. Capital is variable
D. None of the above
Answer : A

12. Human wants are:
A. Thousands
B. Few
C. Innumerable
D. Hundreds
Answer : C

13. Production function shows:
A. Technical relationship between inputs and output
B. Profitability production
C. Relation between MR and MC
D. Relation between AR and AC
Answer : A

14. In monopolistic competition, the individual demand curve is also known as:
A. Planned products curve
B. Planned material curve
C. Planned costs curve
D. Planned sales curve
Answer : D

15. The long-run average cost is based on the fact that:
A. None of the factors are variable in the long-run
B. All factors are perfectly divisible in the long-run
C. None of the factors is divisible
D. Management factor is indivisible while all other factors are divisible and can be varied in long-run
Answer : D

16. In monopolistic competition, the customers are attached with one product because of:
A. Product similarity
B. Product differentiations
C. Product inferiority
D. None of the above
Answer : B

17. In Recardian theory of value, the stress has been made on:
A. Marginal cost
B. Production cost
C. Labor cost
D. Supply cost
Answer : A

18. The relationship between MC and MP shown by the marginal cost concept is:
A. Inverse
B. Direct
C. Negative
D. Positive
Answer : A

19. In long run, a firm can change:
A. Fixed factors
B. Variable factors
C. Both of them
D. None of them
Answer : C

20. If the production increases under decreasing returns to scale, the cost will:
A. Increase at decreasing rate
B. Increase at constant rate
C. Decrease at increasing rate
D. Increase at increasing rate
Answer : D

21. In monopolistic competition (also in kinked demand curve model), a firm sells the amount where:
A. Individual demand curve (IDC) is equal to proportional demand curve (PDC)
B. Individual demand curve (IDC) is greater than proportional demand curve (PDC)
C. Individual demand curve (IDC) is less than proportional demand curve (PDC)
D. None of the above
Answer : A

22. The number of sellers in oligopoly is:
A. Two
B. One
C. Very large
D. A few
Answer : D

23. The demand curve of ostentation goods (Veblen goods) will be:
A. Negatively sloped
B. Positively sloped
C. Parallel to X-axis
D. None of the above
Answer : B

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

25. In joint-profit maximization cartel, central agency sets the:
A. Output
B. Input
C. Demand
D. Price
Answer : D

26. Excess capacity is not found under:
A. Monopoly
B. Monopolistic competition
C. Perfect competition
D. Oligopoly
Answer : C

27. The costs faced by the firm against fixed factors are:
A. Total costs
B. Fixed costs
C. Variable costs
D. Marginal costs
Answer : B

28. Moving down along a linear demand curve:
A. Demand becomes less elastic
B. Elasticity does not change
C. Demand has unitary elasticity
D. Demand becomes more elastic
Answer : A

29. Utility is:
A. A subjective concept
B. An ethical concept
C. An objective concept
D. A historical concept
Answer : A

30. Price is measured in:
A. Physical units
B. Monetary units
C. Constant units
D. Current units
Answer : B

31. Rent is a creation of value, not of wealth who made this observation?
A. Adam Smith
B. David Ricardo
C. Alfred Marshal
D. A.C.Pigou
Answer : B

32. If the marginal utility is divided by the price of the commodity then it is called:
A. Real Marginal Utility
B. Gross Marginal Utility
C. Weighted Marginal Utility
D. Money Marginal Utility
Answer : C

33. There is no difference between fixed and variable factors in the:
A. Long run
B. Short run
C. Average run
D. None of the above
Answer : A

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

35. Production is a function of:
A. Profits
B. Costs
C. Inputs
D. Price
Answer : A

36. The total revenue curve for monopolist is the shape of:
A. Circle
B. Rectangle
C. Parabola
D. None of the above
Answer : C

37. If the price of coffee increases, you would predict that:
A. Demand curve for sugar will shift downward (leftward)
B. Supply curve for sugar will shift leftward (upward)
C. Demand curve for bread will shift downward (leftward)
D. None of the above
Answer : A

38. Indifference curve approach (ordinal approach) is superior to utility approach (cardinal approach) because:
A. In ordinal approach we can separate the income effect from the substitution effect of a price change
B. In ordinal approach we can study the consumer behavior more closely
C. In ordinal approach the consumer is assumed more rational
D. In ordinal approach the consumer has more income
Answer : A

39. Law of Diminishing Marginal Utility is practically untrue because:
A. It is given to a lot of criticism
B. It is too difficult to be explained
C. It is based on assumptions which are unreal
D. Economists do not agree on this
Answer : C

40. The point on which the average cost is minimum in a firm, short run average cost curve will also be the minimum cost point on the firms long-run average cost curve. This is true:
A. Always
B. Never
C. When LAC is falling
D. Only at that level of output when LAC is at its minimum
Answer : D

41. If a new production technology for producing compact discs is developed and new firms are attracted to this field:
A. The supply curve will shift down or right
B. The supply curve will shift up or left
C. Both demand and supply curve shifts would occur
D. None of the above
Answer : A

42. In finding equilibrium position of a profitmaximizing firm, which technique is most convenient?
A. Total revenue and total cost technique
B. Marginal revenue and marginal cost technique
C. Demand and supply technique
D. None of the above
Answer : B

43. If regardless of changes in its price, the quantity demanded of a commodity remains unchanged, then the demand curve for the commodity will be:
A. Horizontal
B. Vertical
C. Positively sloped
D. Negatively sloped
Answer : B

44. In Edgeworth model, if price falls below competitive price, the demand is:
A. More than maximum output
B. More than minimum output
C. Less than maximum output
D. Less than minimum output
Answer :

45. Increasing return to scales can be explained in terms of:
A. Optimal factor proportions
B. Fixed scale of plant
C. External and internal economies
D. Labor productivity
Answer : C

46. A firm enjoys maximum control over the price of its product under:
A. Monopoly
B. Perfect competition
C. Oligopoly
D. Imperfect competition
Answer : A

47. Which of the following formulae explain the term average revenue?
A. Total units /No. of Revenues
B. Total Revenue/No. of Units
C. Marginal Revenue × Units
D. Total Units/ Price
Answer : B

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

49. In the long-run:
A. Fixed cost will be greater than variable cost
B. Variable costs will be greater than fixed costs
C. All costs are variable costs
D. All costs are fixed costs
Answer : C

50. Monopolistic firm can fix:
A. Both price and output
B. Either price or output
C. Neither price nor output
D. None of the above
Answer : B