Basics of Economics MCQ Solved Paper for SSC MTS

1. 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

2. The external economies of scale experienced by a firm include the:
A. Growth of firms processing its waste materials
B. Development of research bureau serving the industry
C. Supply of suitable skilled labor in the area
D. All of the above
Answer : D

3. At the point where a straight line demand curve meets the quantity axis (x-axis), elasticity of demand is:
A. Equal to zero
B. Equal to one
C. Equal to infinite
D. More than one
Answer : A

4. When a consumer reached at the point of saturation then marginal utility (MU) is:
A. Negative
B. One
C. Positive
D. Zero
Answer : D

5. In the long run average costs curve, a firm can change:
A. Labour
B. Capital
C. Both of them
D. None of them
Answer : C

6. 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

7. 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

8. In monopolistic competition, because of difference in choices, the firm charges:
A. Different prices
B. Similar prices
C. High prices
D. Low prices
Answer : A

9. Identify the work of Irving Fisher:
A. Policy on trade
B. Policy against inflation
C. The making of index numbers
D. Labor theory
Answer : C

10. In substitution effect, we:
A. Move to another indifference curve
B. Move along given indifference curve
C. Move to a higher indifference curve
D. Move to a lower indifference curve
Answer : B

11. Firms average and marginal revenues are equal under:
A. Monopoly
B. Perfect competition
C. Oligopoly
D. Monopolistic competition
Answer : B

12. According to classical approach, utility can be:
A. Ranked
B. Consumed
C. Expressed in numbers
D. Cannot be expressed in numbers
Answer : C

13. Which describes a competitive market?
A. Many buyers and many sellers
B. One seller, many buyers
C. One buyer, many sellers
D. Few sellers, many buyers
Answer : A

14. Who developed the concept of Representative Firm?
A. A.C.Pigou
B. Alfred Marshal
C. J.M.Keynes
D. D.H.Robertson
Answer : B

15. A demand curve which is horizontal and parallel to x-axis represents:
A. Infinitely elastic demand
B. Infinitely inelastic demand
C. Relatively elastic demand
D. Relatively inelastic demand
Answer : A

16. If the demand for good is more elastic and government levied a tax per unit of output, the price per unit for the firm would:
A. Rise by the amount of the tax
B. Rise by more than the amount of the tax
C. Rise by less than the amount of the tax
D. Remain the same
Answer : C

17. The Law of Proportionality is another name of:
A. The law of diminishing marginal utility
B. The law of demand
C. The Law of Diminishing Returns
D. The law of supply
Answer : C

18. 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

19. Marginal cost is always:
A. Less than the average cost
B. More than the average cost
C. Equal to the average cost at minimum point
D. Never equal to the average cost
Answer : C

20. Equilibrium of a discriminating monopolist requires the fulfillment of which one of the following conditions?
A. It must be profitable to him to sell output in more than one market
B. Marginal revenue in both markets must be the same
C. Marginal revenue in both markets must also be equal to the marginal cost of producing the monopolists aggregate output
D. All the above
Answer : D

21. In the perfect competition, there is a process of:
A. Restricted entry and exit of the firms
B. Semi free exit but absolute free entry
C. Free entry but restricted exit of the firms
D. Free entry and free exit of the firms
Answer : D

22. The longer the period of time, the elasticity of supply will be:
A. Constant
B Less elastic
C. More elastic
D. Perfectly elastic
Answer : C

23. The income effect means that consumer purchase more when:
A. Price falls
B. Price increases
C. Price is unchanged
D. Taste changed
Answer : A

24. Marginal utility is only meant for:
A. Half utility
B. Full utility
C. Additional utility
D. Multiplied utility
Answer : C

25. If at the unchanged price, the demand for a commodity goes up, or the quantity demanded remains the same when its price goes up, it is called:
A. Contraction of demand
B. Decrease in demand
C. Increase in demand
D. Extension of demand
Answer : C

26. Marginal cost curve cuts the average cost curve:
A. At the left of its lowest point
B. At its lowest point
C. At the right of its lowest point
D. None of the above
Answer : B

27. Equilibrium of a firm represents maximization of profits as well as:
A. Maximization of losses
B. Minimization of losses
C. Minimization of profits
D. None of the above
Answer : B

28. Under the perfect competition, the transportation cost:
A. Is considered to be negligible and thus ignored
B. Is considered to be vital for the calculation of total cost
C. Is charged along with the price of the commodity
D. None of the above
Answer : A

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

30. The budget-line is also known as the:
A. Iso-utility curve
B. Production possibility line
C. Isoquant
D. Consumption possibility line
Answer : D

31. The equilibrium of a firm is determined by the equality of MC and MR in only:
A. Under perfect competition
B. Under monopoly
C. Under imperfect competition
D. Under all the above market forms
Answer : D

32. LMC represents change in LTC (long-run total cost) due to producing an additional unit of a good while the fixed and variable factors:
A. Cannot be changed
B. Can be changed
C. Can partially be changed
D. None of the above
Answer : B

33. Perfect competition assumes:
A. All buyers and sellers have perfect knowledge of the market
B. Freedom of entry of firms into the industry
C. Homogeneous product
D. All of the above
Answer : D

34. The slope of marshallian demand curve is:
A. Upward
B. Vertical
C. Downward
D. Horizontal
Answer : C

35. In cournot model, firms sell:
A. Superior goods
B. Inferior goods
C. Identical goods
D. Differential goods
Answer : C

36. Ceteris paribus clause in the law of demand means:
A. The price of substitute does not change
B. The taste of the consumer does not change
C. The income of the consumer does not change
D. All of the above
Answer : D

37. Indifference curve represents:
A. Only two commodities
B. Only three commodities
C. More than three commodities
D. Any number of commodities
Answer : A

38. Total utility:
A. Diminishes with increased consumption
B. Reflects the overall level of satisfaction of the consumer
C. Is directly related to the price the consumer is willing to pay for a good or service
D. Is independent of price changes
Answer : B

39. When the consumer is in equilibrium not only his income is fully spent, but the ratio of marginal utility and price is:
A. Increased
B. Equalized
C. Prominent
D. Zero
Answer : B

40. Repetition of a game (Repeated Game):
A. Yields the same outcome over and over
B. Can result in behavior that is different from what it would be if the game were played once
C. Is not possible
D. Makes cooperative games into noncooperative games
Answer : B

41. Technological Progress (Invention) can be defined as:
A. Technological progress shifts the production function by allowing the firm to achieve more output from a given combination of inputs (or the same output with fewer inputs)
B. Technological progress shifts the production function by allowing the firm to achieve less output from a given combination of inputs (or the same output with more inputs)
C. Technological progress shifts the import function to the right
D. None of the above
Answer : A

42. Diseconomies of management lead to:
A. Decreasing returns to scale
B. Constant returns to scale
C. Increasing returns to scale
D. maximum returns to scale
Answer : A

43. Kinked Demand Curve is consistent with which one of the following market situations?
A. Pure competition
B. Pure monopoly
C. Oligopoly
D. Monopolistic competition
Answer : C

45. In 1890, Principles of Economics was written by:
A. Prof. Robbins
B. Alfred Marshal
C. Prof. Senior
D. Adam Smith
Answer : B

46. Under monopolistic competition, the firms compete alongwith:
A. Supreme powers
B. Discretionary powers
C. Low powers
D. None of the above
Answer : B

47. When price increases and with it the total outlay on a commodity also increases, it is a case of:
A. Perfect elasticity (infinitely elastic)
B. Relative elasticity (greater than one elasticity)
C. Perfect inelasticity (zero elasticity)
D. Relative inelasticity (less than one elasticity)
Answer : D

48. The monopolist often lead to exploitation of:
A. Producers
B. Workers
C. Managers
D. Consumers
Answer : D

49. In monopolistic competition, the real differentiation in products is due to difference in:
A. Style
B. Consumer
C. Cost
D. Material
Answer : D

50. In collusive olligopoly, the firms may make:
A. Open agreements
B. Secret agreements
C. Both a and b
D. None of the above
Answer : C