Explore topic-wise InterviewSolutions in .

This section includes InterviewSolutions, each offering curated multiple-choice questions to sharpen your knowledge and support exam preparation. Choose a topic below to get started.

5601.

What is meant by expansion in demand ?

Answer»

Solution :When the quantity DEMANDED CHANGES DUE to a change in price, keeping other factors constant, it is KNOWNAS expansion in demand.
Discussion
5602.

Railway is an example of

Answer»

PERFECT competition
Monopolistic Competition
Monopoly
Oligopoly

Solution :N/a
Discussion
5603.

Define price elaticity of demand

Answer»

Solution :Price ELASTICITY of DEMAND means the degree of RESPONSIVENESS of demand for a COMMODITY with REFERENCE to change in the price of such commodity.
Discussion
5604.

What is meant by the problem of "What to produce"?

Answer»

SOLUTION :The problem involves selection of GOODS and services to be PRODUCED and the quantity to be produced of each selected COMMODITY.
Discussion
5605.

Producer is not at equailibrium when MC gt MR bacause :

Answer»

PROFITS can be increased by producing more
Benefit is less than cost
Both (a) and (B)
NONE of these

Solution :N/a
Discussion
5606.

When a curve is drawn based on a series where there are two classes with highest frequencies is called bimodal curve. (True / False)

Answer»


SOLUTION :TRUE
Discussion
5607.

Explain with the help of a diagram the effect of a rightward shift of supply curve of a commodity on Its equilibrium price and quantity. OR Market for a good is in equilibrium. Supply of the good 'increases'. Explain the chatn of effects of this change.

Answer»

SOLUTION :An increase in supply of a commodity leads to a shift in the supply CURVE rightwards. When supply increases, it creates an excess supply at the old equilibrium price. This leads to a COMPETITON among sellers, which reduces the price. DECREASE in price leads to an increase in demand and fall in supply. These changes continue till a new equilibrium is achieved. EVENTUALLY, equilibrium price falls and equilibrium quantity rises.
Discussion
5608.

The exceptions to the law of demand may be true for an individual but not for the whole market.

Answer»


Solution :Exceptions to the law may be true in CASE of certain individuals, but for the whole MARKET, law of demand is applicable, ASSUMING the NORMAL conditions and assumptions.
Discussion
5609.

State the law of diminishing marginal utility.

Answer»

Solution :The Law Of Diminishing Marginal Utility states that all else equal as consumption increases the marginal utility DERIVED from each additional unit declines. Marginal utility is derived as the CHANGE in utility as an additional unit is consumed. Utility is an ECONOMIC TERM used to represent satisfaction or happiness.
Discussion
5610.

Tabulation is the process of presenting ….......... In the form of a table. (description/data)

Answer»


SOLUTION :DATA
Discussion
5611.

What is the shape of average variable cost curve ?

Answer»

SOLUTION :AVERAGE VARIABLE COST CURVE is a U-shaped curve.
Discussion
5612.

__________ Statistics refers to those methods which are used for the collection of data. (Descriptive/Inferential)

Answer»


SOLUTION :DESCRIPTIVE
Discussion
5613.

In an imperfectly competitive market, if the Total Revenue is maximum, Marginal Revenue will be...........

Answer»

SOLUTION :ZERO
Discussion
5614.

With which of the following, the concept of marginal cost is closely related ?

Answer»

VARIABLE Cost
Fixed Cost
Opportunity Cost
Implicit cost

Solution :N//A
Discussion
5615.

Can marginal product be zero or negative

Answer»

Solution :Yes, marginal product can be zero as WELL as NEGATIVE. It can be zero if TOTAL product remains same with increase in VARIABLE input. It can also be negative when total product falls with increase in variable input.
Discussion
5616.

Explain the effects of 'Maximum Price Ceiling's on the market of a good. Use diagram.

Answer»

Solution :
Maximum Price CEILING refers to imposition of upper limit on the price of a good by the government. For example, in the diagram, OP is Price Ceiling, while equilibrium price is `OP_(1)`. At this price, the producers are willing to supply only PA `(Or OQ_(1))`, while consumers demand PB `(Or OQ_(2))`. The effect of the ceiling is that SHORTAGE, equal to AB `(Q_(1)Q_(2))`. is created, which may further lead to black marketing.
Discussion
5617.

Explain the meaning of marginal rate of substitution. Why does it diminish as one good is substituted for the other ? Explain

Answer»

Solution :The marginal rate of substitution (MRS) is the rate at which a consumer can GIVE up some amount of one good in exchange for another good while maintaining the same LEVEL of UTILITY. At equilibrium consumption levels (assuming no externalities), marginal rates of substitution are identical. MRS decline continuously in IC curve because of law of diminishing marginal utility. It means when the consumer consumes more and more of good 1 then his marginal utility from another good keeps on declining and he is willing to give up less and less of good 2 for each good 1.
Discussion
5618.

An economyhas 2 alternatives of production form the available resources: (i) 20X + 1Y, of (ii) 18X + 2Y. If the economy chooses the second alternative, then what is MOC of producing Y:

Answer»

1X
2X
1Y
None of these.

Solution :B
Discussion
5619.

What will be the impact of "Education for All campaign" (Sarv Shiksha Abhiyan) on the Production Possibilities Curve of the Indian economy and why?

Answer»

SOLUTION :EDUCATION RAISES EFFICIENCY be making a worker a skilled worker This will increase production potential shifting the PP CURVE upwards.
Discussion
5620.

Whichone of the followingis theresultof increase in price offactors of production ?

Answer»

Priceof the commodity
Period oftime
Willingess to buy
QUANTITY of thecommodity

Solution : when there is more WILLINGNESS to buy , PRICES of factors of production increase. CORRECT answer is option (C).
Discussion
5621.

Define economic activity.

Answer»

SOLUTION :Economic activity is an activity which is related to the USE of SCARCE means (also CALLED scarce resources).
Discussion
5622.

Producer's equilibrium refers to stage of that output level when :

Answer»

Firm earns maximum profit
Firm BEARS minimum losses
Firm has no inclination to EXPAND CONTRACT the output
All of these

Solution :N/a
Discussion
5623.

Supply curve is the rising portion of marginal cost curve over and above the minimum of Average Variable cost curve. Do you agree? Support your answer with valid reason.

Answer»

Solution :YES, we do agree with the GIVEN statement. No rational producer WOULD like to SUPPLY his output in the market if he is unable to recover his per unit VARIABLE cost as it would lead to losses between the rangeof minimum of marginal cost and minimum of average variable cost. So, supply curve is the rising portion of MC curve over and above the AVC curve.
Discussion
5624.

Why is the average revenue curve of a firm under perfect competition parallel to X-axis and negativ sloped under monopoly?

Answer»

SOLUTION :N/a
Discussion
5625.

When the percetage increase in demand of a commodity is more than percentage increase in price, then demand cruve is steeper.

Answer»

SOLUTION :The DEMAND curve will be FLATTER as price elasticity FO demand is more thanone .
Discussion
5626.

Given that Es is 3 and the producer supplies 200 units at a price Rs.4 per unit. Price falls to Rs. 3 per unit. How much quantity will producer now supply ?

Answer»


ANSWER :50 UNITS
Discussion
5627.

When AC is rising, what is the relation between MC and AC?

Answer»

Solution :When MC is EQUAL to AC, i.e. when MC and AC CURVES intersect each other at POINT A, AC is constant and at its MINIMUM point. 3. When MC is more than AC, AC rises with increase in output
Discussion
5628.

As the variable input is increased by one unit, total output falls What would you about marginal productivity of labour ?

Answer»


ANSWER :MARGINAL PRODUCTIVITY of LABOUR is NEGATIVE.
Discussion
5629.

A seller cannot influence the market price under

Answer»

PERFECTLY COMPETITION only
Monopoly
Monopoly Competition
All of these

Solution :N/a
Discussion
5630.

The mean monthly salary paid to 77 employees in a company was Rs. 78. The mean salary of 32 of then was Rs. 45 and of the other 25 was Rs. 82. What was the mean salary of the remaining ?

Answer»

Solution :`"Given: "N=77,barX_(123)=78""N_(1)=32,barX_(1)=45`
`N_(2)=25,barX_(2)=82""N_(3)=77-32-25=20`
USING theformula of combined arithmetic mean, we have
`barX_(123)=(barX_(1)N_(1)+barX_(2)N_(2)+barX_(3)N_(3))/(N_(1)+N_(2)+N_(3))`
`78=(45xx32+82xx25+barX_(3)xx20)/77`
`78=(1,440+2,050+20barX_(3))/77`
`78=(3,490+20barX_(3))/77`
`3,490+20barX_(3)=6,006`
`20barX_(3)=6,006-3,490`
`20barX_(3)=2,516`
`barX_(3)=(2,516)/20=125.8`
Mean SALARY of the remaining EMPLOYEES = Rs `125.8`.
Discussion
5631.

A movement along the demand curve for soft drinks is best described as :

Answer»

INCREASE in demand
Decrease in demand
Change in QUANTITY demanded
Change in demand

Answer :C
Discussion
5632.

How is MC derived from TVC?

Answer»

Solution :MC is DERIVED from total variable COST (TVC). MC is the addition to TVC. when one more unit of OUTPUT is produced.MC CURVES is U-shaped due to the Law of Variable PROPORTIONS.
Discussion
5633.

What is meant by scarcity ?

Answer»

SOLUTION :Scarcity REFERS to LIMITATION of supply in relation of to the DEMAND for a commodity.
Discussion
5634.

Explain the implication of the following, (a) Large number of sellers, (b) Homogenous products.

Answer»

SOLUTION :N/a
Discussion
5635.

Consider the following table {:("Production Possibilities",A,B,C,D,E),("Guns (Units)",0,1,2,3,4),("Butter(Units)",10,9,7,4,0):} If at some other point say G, the economy produces 2 units of guns and 6 units of butter, then,

Answer»

It represent under-utilization of RESOURCES
Economy WOULD operate at a point below PPF
Both (a) and (b)
Neither (a) nor (b)

Solution :C.
Discussion
5636.

How is range calculated for grouped and ungrouped data ?

Answer»
Discussion
5637.

How many ice -cream will a consumer have, it ice-cream is available free of cost'' ?

Answer»

Solution :In case of FREE ice-cream, consumer will carry on the consumption till his total utility is MAXIMUM. It means, till an additional ice-cream yields positive satisfaction, consumer will KEEP on having ice-creams.

As seen in the given diagram, consumer will STOP the consumption at the POINT of satiety (Point 'K'), i.e., where marginal utility is equal to zero. In the given diagram, this happens at the `5^(th)` ice-cream.
Discussion
5638.

Make a format of table presenting all its parts.

Answer»


SOLUTION :N/a
Discussion
5639.

What is meant by 'market period'?

Answer»

Solution : Market period REFERS to a very short period in which the SUPPLY cannot be changed in response to the CHANGE in demand.
Discussion
5640.

State and explain the characteristics of indifference curve.

Answer»

Solution :The four most important properties of indifference curves are given below:1. Indifference Curves are Downward Sloping:Virtually all indifference curves have a negative slope. That is, they slope downward from left to right. The slope of an indifference curve shows the rate of substitution between two goods, i.e. the rate at which an individual is willing to give up some QUANTITY of good A to get more of good B. If we assume that the individual likes both goods, the quantity of good B has to increase as the quantity of good A decreases, to keep the overall level of satisfaction the same. Because both axes each represent one of the two goods, this relationship results in a downward sloping curve. This becomes pretty obvious if we look at the illustration below.2)Higher Indifference Curves Are Preferred to LOWER Ones:The higher the indifference curves are, the larger the quantities of both goods. And thus, the more preferable the indifference curve becomes. Check out the illustration below to see this.3)Indifference Curves Cannot Intersect:The indifference curves cannot intersect each other. It is because at the point of tangency, the higher curve will give as MUCH as of the two commodities as is given by the lower indifference curve.4)Indifference Curves are convex (i.e. bowed inward):In most cases indifference curves are bowed inward. This has to do with the marginal rate of substitution (MRS). We know that the marginal utility of consuming a good decreases as its supply increases (see also DIMINISHING marginal utility). Therefore consumers are willing to give up more of this good in order to get another good of which they have little.
Discussion
5641.

Explain three features of monopoly market.

Answer»
Discussion
5642.

State any two factors determining supply.

Answer»

SOLUTION :(i) PRICE of the GIVEN COMMODITY, (i) Price of other GOODS
Discussion
5643.

Distinguish between an inferior good and a normal good . Is a good which is inferior for one consumer also inferior fpr all the comsumer ? Explain.

Answer»

Solution :When with the RISE in income of the consumer DEMAND for a good increases , that good is a normal good for that consumer . Ifwith rise in income demandfor the good decreases then that good is inferior for that consumer.
A good is not necessarily inferior for all the consumers . A good which is inferior for a higher income consumer may be a normal good for the lower income consumer . ITIS not the consumer but the income level of the consumer which DETERMINES WHETHER a good is normal or inferior .
Discussion
5644.

Giving reason, state the impact of each of following on demand curve of a normal good 'X' if: (i) Price of its complementary good falls. (ii) News reports claims that consumption of product X has harmful effect on human health. (iii) Income of consumer increases.

Answer»

Solution :(i) Demand of the good X will INCREASES, hence demand curve of good X shifts towards right.
(II) Demand of Good X may decrease as people may be inclined to consume less due to media reports of harmful EFFECT of the good X. As a result, demand curve may shift towards left.
(iii) When income of consumer increases, the disposable income increases and consumer is in a better position of SPENDING more on the good X. Hence, consumer may consume more of the commodity due to which the demand for the good increases and demand curve shifts awya from ORIGIN.
Discussion
5645.

Discuss the characteristics of Production Possibility Frontier. OR Draft a hypothetical schedule for a straight line Production Possibility Curve.

Answer»

SOLUTION :The TWO basic characteristics of Production POSSIBILITY FRONTIER (PPF) are:
1. PPF slopes Downwards as more of one good can be produced only by taking resources away from the production of another good.
2. PPF is Concave Shaped because of increasing marginal rate of transformation (MRT), i.e., more and more units of one commodity are sacrificed are sacrificed to gain an additional unit of another comodity. MRT Increases because it is assumed that no resource is equally efficient in production of all goods.
OR

SINCE Marginal Rate of Transformation is constant, PPC will be a straight line.
Discussion
5646.

Starting from initial situation of consumer equilibrium, if price of the commodity rises, where will consumer equilibrium be determined ?

Answer»


Solution :For initial SITUATION of CONSUMER equilibrium, refer to section 2.4.1. We have studied in that section that consumer equilibrium is DETERMINED at 3 units of the COMMODITY where
MU=Price =Rs.3

Now the consumer has to buy less Le, 2 units as here
MU(Rs.)=Price(Rs.)
This can be shown in the diagram also

Initially, the price was Rs.3, accordingly, consumer equilibrium was determined at POINT E .i.e, 3 units Now after increase in price from Rs.3 to Rs.4. consumer equilibrium is determined at point `E_1` i.e., at 2 units.
Therefore, the consumer buys less than before.
Discussion
5647.

Cigaratte smoking is injurious to health. How can the government reduce its consumption but only through the normal market forces. Explain the chain of effects of government's action.

Answer»

Solution :Given thatcigarettemarket is in equilibrium, government can impose heavy taxes on production of cigarettes. This will 'decrease' supply. As a result excess demand will be created. This will lead to competition between BUYERS and lead to rise in PRICE of cigarettes. This will go on tilll thecigarettes market reaches at new equilibrium at a higher price of cigarettes falls. (Or any other relevant answer but BASED on market forces.)
Discussion
5648.

What is meant by individual series?

Answer»

Solution :Individual SERIES is that series in which the terms are listed SINGLY. In such series, there is no class of the ITEMS and also there is no frequency of the items
Discussion
5649.

Give anyone feature of monopolistic competition.

Answer»
Discussion
5650.

Justify the statement, 'in economics, normal profits are always a part of total cost'.

Answer»

Solution : NORMAL profits refers to a SITUATION WHEREIN the FIRM is just able to cover its fixed and variable costs. Herein, the costs include both the EXPLICIT costs as well as the implicit costs.
Discussion