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This set of Basics of Economics Multiple Choice Questions & Answers (MCQs) focuses on Basics Of Economics Set 3

Q1 | In drawing an individual demand curve for a commodity, all but whichof the following are kept constant:
  • individual’s money income
  • the prices of the related commodity
  • price of the commodity under consideration
  • tastes of the consumer
Q2 | When an individual’s income rises, when everything else remains thesame, his demand for normal goods:
  • rises
  • falls
  • remains the same
  • any of the above is possible
Q3 | When an individual’s income falls, when everything else remains thesame, his demand for inferior goods:
  • increases
  • decreases
  • remains unchanged
  • cannot say
Q4 | When the price of the substitute commodity of X falls, the demand for X:
  • rises
  • falls
  • remains unchanged
  • all of the above is possible
Q5 | If the quantity demanded remains unchanged as the price of thecommodity falls, the coefficient of price elasticity of demand is:
  • greater than
  • one equal to one
  • smaller than one
  • zero
Q6 | If the income elasticity of demand is greater than one, then thecommodity is:
  • necessity
  • luxury
  • inferior
  • non-related commodity
Q7 | Which of the following is an exception to the law of demand?
  • giffen good
  • normal good
  • superior good
  • all of the above
Q8 | The law of diminishing marginal utility was popularized by:
  • keynes
  • marshall
  • smith
  • samuelson
Q9 | If the income elasticity of demand for a commodity is found to be 0.4,then the commodity concerned is:
  • luxury
  • necessity
  • giffen’s goods
  • independent good
Q10 | Cross elasticity of demand in the case of substitutes:
  • zero
  • negative
  • positive
  • infinity
Q11 | If a small change in price leads to infinitely large change in quantitydemanded, then the demand is:
  • perfectly elastic
  • perfectly inelastic
  • elastic
  • inelastic
Q12 | Net addition to total utility when one more unit is consumed is:
  • au
  • mu
  • mc
  • tu
Q13 | Most important determinant of demand is :
  • income
  • wealth
  • price
  • advertisement
Q14 | Which of the following is the reason for law of demand:
  • price effect
  • backlash effect
  • income effect
  • real balance effect
Q15 | Net addition to total cost is called:
  • marginal cost
  • average cost
  • fixed cost
  • variable cost
Q16 | The market equilibrium for a commodity is determined by :
  • market demand
  • market supply
  • balancing of the forces of demand and supply
  • any of the above
Q17 | When there are only few sellers of the commodity, the market is called:
  • monopoly
  • duopoly
  • oligopoly
  • monopsony
Q18 | If the supply curve of the commodity is having a positive slope, a rise inthe price of the commodity, results in:
  • increase in supply
  • increase in quantity supplied
  • decrease in supply
  • decrease in quantity supplied
Q19 | From the position of stable equilibrium, the market supply of a commoditydecreases, while the market demand remains unchanged, then:
  • equilibrium price falls
  • equilibrium quantity rises
  • both equilibrium price and equilibrium quantity decreases
  • equilibrium price rises, but equilibrium quantity falls
Q20 | Elasticity of supply for a positively sloped straight line supply curve thatintersects the price axis is:
  • equal to zero
  • equal to one
  • greater than one
  • constant
Q21 | In which of the following market, advertisement is absent:
  • monopolistic competition
  • perfect competition
  • oligopoly
  • none of the above
Q22 | -------------- cost can never become zero.
  • variable cost
  • fixed cost
  • marginal cost
  • average cost
Q23 | If a positively sloped linear supply curve crosses the quantity axis, theelasticity of supply is:
  • inelastic
  • elastic
  • unitary elastic
  • perfectly elastic
Q24 | If a positively sloped linear supply curve passes through the origin, theelasticity of supply is
  • inelastic
  • elastic
  • unitary elastic
  • perfectly elastic
Q25 | Average cost is the sum of AVC and
  • mc
  • tc
  • afc
  • atc