1. the circular flow of income
2. the decision making of a single economic variable like demand
3. understanding unemployment
4. economic growth
Option “B” is correct Micro economics deals with the decision making of a single economic variable like demand.
12. __________________is a good whose quantity demanded decreases when consumer income rises.
1. Veblen good
2. Normal good
3. Exclusive good
4. Inferior good
Option “D” is correct An inferior good is a good whose quantity demanded decreases when consumer income rises unlike normal goods, for which the opposite is observed. Normal goods are those for which consumers demand increases when their income increases.
13. Find Point elasticity of demand, if quantity demanded falls from 1050 to 950 when of the item is increased from Rs. 250 to Rs. 290?
1. –0.65
2. –0.6
3. 0.68
4. 0.6
Option “A” is correct Elasticity=(%change in the quantity) /(% change in the price) =(-100/950)×(250/40) =-0.65.
14. If Money supply growth is faster than real GDP growth, it results in _____.
Option “A” is correct If Money supply growth is faster than real GDP growth, it results in Inflation.
15. During a recession ________
1. Producers will be cautiously optimistic
2. There will be decrease in inventory
3. There will be capacity under utilization
4. There will be expansion in bank credit
Option “C” is correct In economics, a recession is a business cycle contraction which results in a general slowdown in economic activity.During a recession there will be capacity under utilization.
16. A price floor is _____.
1. a maximum legal price
2. a minimum legal price
3. the price where demand equals supply
4. the price where elasticity of demand equals elasticity of supply
Option “B” is correct A price floor is the lowest legal price a commodity can be sold at. Price floors are used by the government to prevent prices from being too low.
17. If a person’s income increases from Rs 20 lakhs per year to Rs 24 lakhs per year and tax increases from Rs 3,50,000 to Rs 4,00,000 the marginal tax rate is
Option “B” is correct Marginal Tax Rate =(50000/400000)×100 =12.5.
18. A minimum wage _____.
1. is the price floor below which workers may not sell their labor
2. is set at a price below the equilibrium wage
3. creates a price ceiling below which the wage cannot legally go
4. decreases unemployment
Option “A” is correct A minimum wage is the price floor below which workers may not sell their labor.
19. In economic equilibrium _____
1. supply is equal to the demand.
2. the surplus is larger than the shortage.
3. elasticity of demand equals elasticity of supply
4. price elasticity of demand is unity
Option “A” is correct In economic equilibrium, supply is equal to the demand.
20. The _________ of a firm is a relationship between inputs used and output produced by the firm.
1. Marginal product
2. Production function
3. Total product
4. Average product
Option “B” is correct In economics, a production function relates physical output of a production process to physical inputs or factors of production in a firm.
