Competitive Exams: Economics MCQs (Practice-Test 106 of 122)

  1. Disposable income is

    1. National Income

    2. National Income less direct taxes

    3. national Income less direct taxes less undistributed profits

    4. National Income less direct taxes less undistributed profits plus transfer payments.

  2. Net National Income at market prices is equal to

    1. Gross national product at market prices minus depreciation

    2. Net Domestic Product at market prices plus or minus earnings from abroad

    3. Gross Domestic product minus indirect taxes and subsidies

    4. Gross National Product plus or minus depreciation.

  3. Assume that in a country's national accounts, the corporate sector's savings equal its investment. Also, the government's budget is exactly balanced. An excess of household savings over its own investment will be reported as

    1. government sector's excess of investment over savings

    2. excess of imports over exports in the external account.

    3. excess of exports over imports in the external account

    4. no change in the external account.

  4. In the case of a Cobb-Douglas production function, output elasticity of an input is

    1. a constant

    2. unity

    3. a function of all the inputs

    4. indeterminate

  5. A consumer will generally obtain the greatest total utility from expenditure of a given income when.

    1. the marginal utility of each commodity purchased is unity

    2. the marginal utility of each commodity purchased is in the same ratio to its price.

    3. the marginal utility of each commodity purchased is in the same ratio to its cost of production.

    4. the prices of the commodities purchased are equal to one another.

  6. If the price consumption curve is negative, it is because of one or more of the following reason.

    1. Negative Income effect is stronger than the substitution effect.

    2. Substitution effect is negative.

    3. The commodity is Giffengood

    Of the reason given above

    1. 1 alone is correct

    2. 1 and 2 are correct

    3. 2 and 3 are correct

    4. I and 3 are correct

  7. Which one of the following assumptions is not necessary for the cardinal utility theory?

    1. Rationality of the consumer

    2. Constant marginal utility of money

    3. Perfectly competitive market

    4. Additively of utility

  8. If two goods are complements then a rise in the price of one commodity will induce.

    1. an upward shift in the demand for the other commodity

    2. a rise in the price of the other commodity

    3. a downward shift in the demand for the other commodity

    4. no shift in the demand of the other commodity

  9. the relation between average revenue (AR) marginal revenue (MR) and price elasticity of demand (Ep) is such that

    1. the sum of AR and MR equals the Ep

    2. the difference between AR and MR depends inversely on Ep.

    3. the difference between AR and Ep depends on the value of MR.

    4. when AR = MR. Ep = 0

  10. Which one of the following statements is correct?

    1. Diminishing and independent marginal utilities imply convexity of the indifference curves.

    2. Independent utilities and convex indifference curves imply diminishing marginal utility of each good.

    3. Diminishing marginal utilities and convex indifference curves imply that the marginal utility of each commodity is independent of the quantity of the other.

    4. Thee is no relation between utility and indifference curve

  11. if sales tax on a commodity is raised, but the revenue earned through its sale decreases sharply, which one of the following statements about the nature of this commodity would be correct?

    1. Price elasticity of demand for it is low

    2. It must be an essential good

    3. Price elasticity of demand for it is high

    4. Price elasticity of demand for it is unity

  12. If the price elasticity of demand for a commodity is less than unity, a decrease in price would result in:

    1. a less than proportionate change in the quantity purchased

    2. a more than proportionate change in the quantity purchased

    3. an increase in the total expenditure on the product

    4. a shift in the demand curve

  13. Income elasticity of demand equals

    1. Proportionate change in income of the consumer Proportionate change in quantity demanded of a commodity

    2. Proportionate change in quantity demanded of a commodity Proportionate change in income of the consumer

    3. Proportionate change in price of the commodity Proportionate change in income of the consumer

    4. Proportionate change in income of the consumer

    Proportionate change in price of the commodity

  14. Dumping involves

    1. selling at lower prices in the market

    2. price discrimination between the two markets.

    3. surplus production at lower cost

    4. price discrimination between the home market and foreign market.

  15. Which one of the following views about profit could be associated with the name of frank Knight?

    1. Profit is an implicit return to owned factors

    2. profit is a reward for innovation.

    3. profit is closely tied with risk and uncertainty.

    4. profit is merely the earnings of monopoly