241. Which of the following statements is incorrect, if resources were unlimited?
1. there would still be scarcity and opportunity costs
2. there would still be scarcity but no opportunity costs
3. there would be no scarcity, but there would be opportunity costs.
4. there would neither be scarcity nor opportunity costs
Option “C” is correct Opportunity cost is a key concept in economics, and has been described as expressing “the basic relationship between scarcity and choice. The notion of opportunity cost plays a crucial part in attempts to ensure that scarce resources are used efficiently. Thus, opportunity costs are not restricted to monetary or financial costs.
242. If hiring an extra worker increases a brick making unit’s output from 2000 to 2250 units per day, but the factory has to reduce the price of its brick from Rs 15 to Rs 14 per brick to sell the additional output, the marginal revenue product of the last worker is
1. Rs 1500
2. Rs 250
3. Rs 3000
4. Rs 100
Option “A” is correct Marginal Revenue product=(change in revenue)/(change in number of worker) Change in revenue=(2250×14)-(2000×15) =31500-30000 =1500 Change in number of worker = 1 Marginal Revenue Product=1500/1 =1500.
243. If demand curve for racing cycles is D = 80200 – 13P and supply curve is S = 6200 + 12P, What is the equilibrium Quantity?
1. 2960 units
2. 31220 units
3. 8750 units
4. 41720 units
Option “D” is correct In equilibrium, Demand=Supply Thus, 80200-13P = 6200+12P P =74000/25 P =2960 Hence, Quantity demanded(D)=Quantity supplied(S) D=S=6200+12(2960) = 41,720.
244. If demand curve for a fishing rod is D = 37000 – 11P and supply curve is S = 12000 + 9P, find the equilibrium quantity?
1. 1250 units
2. 23250 units
3. 52350 units
4. 2500 units
Option “B” is correct Demand= Supply ( at Equillibrium) 37000-11P=12000+9P 25000=20P P=1250 (Equillibrium)D=37000-11*1250 =23250
245. The minimum price at which I was willing to sell my old TV was Rs. 7,000. I quoted Rs. 12,000 while selling it, but it sold for Rs. 10,500. This transaction generated –
1. Rs. 3,500 worth of consumer surplus
2. Rs. 5000 worth of consumer surplus
3. Rs. 5000 worth of producer surplus
4. Rs. 3,500 worth of producer surplus
Option “D” is correct Transaction= 10500-7000 =3500 Thus, the transaction generated is Rs. 3,500 worth of producer surplus .
246. If the fixed costs of a factory producing candles is Rs 20,000, selling price is Rs 30 per dozen candles and variable cost is Rs 1.5 per candle, what is the break-even quantity?
1. 20000
2. 10000
3. 15000
4. 12000
Option “A” is correct B.E.Q=Fixed cost/(price per unit- variable cost)
Price per unit=30/12 =2.5 B.E.Q=20000/(2.5-1.5) =20000.
247. Calculate the economic profit for a firm if it’s total revenues are Rs. 35 crores, explicit costs are Rs. 7 crores, and implicit costs are Rs. 10 crores.
248. Calculate a country’s GDP if for the year, consumer spending is $400 million, government spending is $150 million, investment by businesses is $80 million, exports are $35 million and imports are $40 million.
1. $625 million
2. $465 million
3. $475 million
4. $635 million
Option “A” is correct GDP=Personal Consumption Expenditures + Business Investment + Government Expenditure + (export -import) GDP=400+150+80+(35-40) GDP=$625 million.
249. Economics assumes that –
1. people have unlimited desires but limited resources
2. people have limited desires but unlimited resources
3. allocation of resources if not centrally planned will cause inefficiency
4. people are emotional and make irrational decisions
Option “A” is correct Economics assumes that people have unlimited desires but limited resources.
250. Match the characteristics with their market structure:
(1) MC = Price
(2) Firm will tend to set output so that it earns maximum profits.1. (1) Pure Competition, (2) Pure Monopoly
2. (1) Pure Monopoly, (2) Monopolistic Competition
3. (1) Oligopoly, (2) Monopolistic Competition
4. (1) Pure Competition, (2) Oligopoly
Option “A” is correct A firm under Pure competition can sell as much as it likes at a growing price, its MR = P. In Pure Monopoly, Firm will tend to set output so that it earns maximum profits.
