Elements of Economic Theory Mcqs

F.Y B.COM

SEMESTER - 1

ELEMENTS OF ECONOMIC THEORY

(EET)

MCQS- 29 JANUARY 2022

1. In the Robbins' definition of Economics, the term 'end' refers to

A. scarcity of resources 

B. end of production processes

C. human wants

D. end use of resources

2. Which of these statements is true?

A. in the market period increase in supply plays the most important role in determining price of the good

B. The market period tends to dampen (lower) the price of the good the most 

C. In the long period the supply curve tends to be the flattest compared to market period and short period supply curves

D. The short run supply curve will be a vertical straight line

3. When the value of income elasticity of demand, the income-demand curve will be

A. flatter

B. steeper 

C. vertical 

D. negatively sloped

4. In a free market economy, if the distribution of income in the society is highly unequal, then greater amount of _________ will be produced.

A. inferior goods

B. luxury goods

C. necessary goods

D. comfort goods

5. Consumer Surplus is the highest in respect of which of the following category of goods?

A. Giffen goods

B. Necessities

C. Luxury goods

D. Prestige goods

6. Which of these is not a central problem of an economy?

A. What to produce?

B. How to maximize profits?

C. How to produce?

D. For whom to produce? 

7. If there is a transportation strike in the State for one week, it may cause the price of milk and vegetables in the State to

A. fall

B. rise

C. remain constant

D. fall to zero

8. What happens to the opportunity cost of producing additional units of a good as we move from left of right on a production possibility curve which is downward sloping and concave to the origin?

A. It increases 

B. It decreases

C. It remains constant

D. It first increases and then decreases

9. Which of these can be attributed to Adam Smith?

A. Principles of Economics [1890]

B. Economics [1948]

C. The Wealth of Nations [1776] 

D. An Essay on the Nature and Significance of Economic Science [1932]

10. Under the law of demand,

A. price is the dependent variable

B. price is the independent variable 

C  quantity demanded is the independent variable 

D. tastes and preferences is the independent variable

11. Frome the given option, which product reflects negative income elasticity?

A. Kerosene

B. Petrol

C. Car 

D. Salt 

12. Which of these is a feature of non-durable goods?

A. Capable of repetitive use

B. Purchased regularly 

C. Purchased at Irregular Intervals

D. They are repairable

13. According to Marshall's Welfare definition: 

1. Wealth is not a be-all and end-all of economic activities. 

2. Economics is the study of economic man and not an ordinary man. 

3. Economics is the study of a person living in society and not an individual. 

4. Economics studies the material requisites of wellbeing. 

Which of the following statements are CORRECT?

A. 1, 2, 3

B. 2, 3, 4 

C. 1, 3, 4

D. 1, 2, 3, 4

14. When demand for a particular product is independent of the demand for other products, such a demand is called _______. 

A. derived demand

B. intermediate demand

C. autonomous demand 

D. company demand

15. Adam Smith stated Economics as ________. 

A. an Enquiry into Nature and Causes of Wealth of Nations 

B. firstly a study about man and then after it considers about wealth

C. a relationship between ends and scarce means

D. a study of growth of the economy over time

16. _________ in demand means greater demand at same price of the same quantity demanded at a higher price hcrease

A. Extension

B. Contraction

C. Decrease

D. Increase

17. Which commodity is relatively price inelastic?

A. Petrol

B. Gold ornaments

C. Air Conditioner

D. Car

18. When the price of fan increased from Rs.600 to Rs.650, the demand for fan decreased from 200 units to 188 units. What is the price elasticity of demand for Fans?

A. 0.88

B. 0.72

C. 0.56

D. 0.65

19. Transformation of a wooden log into a piece of furniture is a case of creation of __________. 

A. form utility

B. place utility

C. time utility

D. service

20. Which of these statements is correct?

A. Short run demand is that which will ultimately exist as a result of the changes in pricing, promotion or product improvement.

B. Short-run demand refers to the demand with its immediate reaction to price changes, income fluctuations, promotional strategies, etc. 

C. Short run demand would reflect psychological changes in consumer behaviour over time.

D. Short-run demand forecasts help firms to plan expansion, diversification and curtailment of investment. 

21. The downward sloping demand curve is derived from

A. The law of diminishing marginal returns

B. The law of supply

C. The law of diminishing marginal utility

D. The law of substitution

22. If consumption in time period 't' is expressed as a function of Income in time period 't-1', it refers to

A. deductive analysis

B. inductive analysis

C. static analysis

D. dynamic analysis 

23. Which theory is generally included under microeconomics?

A. Employment theory

B. Income theory

C. Price theory

D. Inflation theory

24. Which of the following will NOT shift the market supply curve of good X?

A. A change in the cost of inputs used to produce good X.

B. A change in the technology used to produce X.

C. A change in the price of good X.

D. A change number of sellers of good X.

25. For which commodity is the income elasticity of demand positive?

A. normal goods 

B. inferior goods

C. low priced goods

D. luxury goods

26. If a point lies on the Production Possibility Frontier, which of these is not one of the implications?

A. Production efficiency

B. Combination of the two goods produced in the economy

C. Trade off between the two goods

D. Growth of resources

27. Which of these is not a non-durable good?

A. Petrol

B. Milk

C. Soap

D. Furniture

28. Suppose from an equilibrium position, the supply curve shifts to the right with the demand curve unchanged. The new equilibrium will comprise of

A. price unchanged and quantity increased

B. fall in price and decrease in quantity

C. rise in price and decrease in quantity

D. fall in price and increase in quantity

29. "Economics is what Economist do" is a definition of economic given by ________. 

A. Adam Smith

B. Ely

C. Jacob Viner

D. Friedman

30. If it is not possible to make any one person better off without making at least one person worse off through any redistribution of national output, it means

A. distribution is Pareto Optimal

B. distribution is not Pareto Optimal

C. distribution is inefficient

D. government's tax policy is improper

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