Competitive Exams: Economics MCQs (Practice-Test 116 of 122)

  1. If the demand and cost function of a firm are given as q = 20 − P and C = Q2 + 8Q + 2, then the profit maximizing level of output (in units) will be

    1. 10

    2. 8

    3. 3

    4. 0

  2. A profit maximizing firm will stop production in the short run if price is

    1. less than average cost

    2. below the marginal cost

    3. less than average variable cost.

    4. equal to average cost.

  3. The burden of a tax on monopoly profit will be

    1. entirely on the producer

    2. entirely on the consumer

    3. equally distributed among the producer and the consumer

    4. more on the consumer than on the producer.

  4. An individual's supply curve of labour will bend backward when.

    1. the income effect of a higher wage on the demand for leisure is greater than the substitution effect.

    2. the substitution effect of a higher was is greater than the income effect.

    3. the income and substitution effects of a higher wage reinforce each other.

    4. leisure is a Giffen good

  5. The necessary condition for a paretooptimal allocation of any tow factors of production, say K and L, are equality of

    1. marginal productivity of the two factors, K and L is all uses firms.

    2. MRTS between the two factors in all uses/firms

    3. MRTS with the ratio of their market prices

    4. the market prices of the tow factors

  6. Match List with List II and select the correct answer:

    List-I List-II
    1. Value added

    2. Nominal income

    3. Real income

    4. transfer earnings

    1. Constant prices Input-Output matrix

    2. Pension

    3. Current prices

    • A
    • B
    • C
    • D
      • 4
      • 2
      • 3
      • 1
      • 2
      • 4
      • 1
      • 3
      • 4
      • 2
      • 1
      • 3
      • 2
      • 4
      • 3
      • 1
  7. Value added means value added

    1. output at market prices

    2. goods and services less depreciation

    3. goods and services less cost of intermediate goods and services

    4. output at factor cost

  8. Gross national product includes depreciation

    1. Gross national product includes depreciation

    2. value added includes transfer payments

    3. personal income includes undistributed profits

    4. disposable income includes personal taxes

  9. The GNP at market price for 1983 − 84 was Rs. 192866 crores and the GNP at factor cost was Rs. 171201 crores. The government paid at Rs. 5107 crores as subsides crores as subsidies during the year. The amount of indirect taxes in crores for the year should work out to

    1. Rs. 31879

    2. Rs. 26772

    3. Rs. 21665

    4. Rs. 16558

  10. GNP exceeds NNP by

    1. the amount of total taxes

    2. government expenditure

    3. transfer payments

    4. the difference between gross investment and net investment

  11. If MPC = APC for all levels of income (Y), then the corresponding consumption function will be

    1. C = a + bY

    2. C = bY

    3. C = bY2

    4. C = a + b Y2

  12. The accelerator theory of investment relates the current rate of investment to the

    1. long-term rate of interest

    2. short-term rate of interest

    3. current level of output

    4. change in the level of output

  13. If the consumption function undergoes a parallel shift.

    1. rise

    2. fall

    3. remain constant

    4. be double

  14. Match List with List II and select the correct answer:

    List-I List-II
    1. J M Keynes

    2. J Duesenberry

    3. M Friedman

    4. F Modigliani

    1. Permanent income hypothesis

    2. Life cycle hypothesis

    3. Relative income hypothesis

    4. Absolute income hypothesis

    • A
    • B
    • C
    • D
      • 4
      • 3
      • 2
      • 1
      • 3
      • 4
      • 1
      • 2
      • 3
      • 4
      • 2
      • 1
      • 4
      • 3
      • 1
      • 2
  15. If MPS rises, then the equilibrium level of output will

    1. rise

    2. fall

    3. remain constant

    4. be indeterminate