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.

4401.

An owner withdraws ₹ 10,000 from his personalbank account and puchaes a machinery for the business. Identify the explicit costand implicit cost.

Answer»

Solution :Imputed intereston amount WITHDRAWN from bank' is the implicit COST as the OWNER WOULDHAVE earned the interestif the amountremained in the bank. "Amount of `₹10,000` paid to purchase the machinery" is theexplicit cost as it is ACTUAL money expenditure.
Discussion
4402.

Production in an economy is below its potential due to unemployment. Government starts employment generation schemes. Explain its effect using production possibility curve.

Answer»

Solution :Production below the potential means that total production in the economy is somewhere below the production possibility curve PP' , for example at point U, in the diagrame. When GOVERNMENT starts employment generation schemes, and since the production is below potential level due to unemployment and REACH the potential. the MOVEMENT FORWARDS is towards the PP' curve.
Discussion
4403.

Law of Demand is a Qualitative statement. Comment

Answer»

Solution :LAW of demand is only an indicative, and not a quantitative statement. It indicates only the direction, in which the demand will change with a change in price. It SAYS nothing about the magnitude of such a change. For example, price of Pepsi rises from Rs. 10 to Rs. 12 per bottle then, as per law of demand, we can say that the demand for Pepsi wall fall. But the law does not give the actual AMOUNT by which the demand for Pepsi will decline.
Discussion
4404.

Define slope of budget line.

Answer»

Solution :This NEGATIVE relation between consumption quantities of two goods causes the BUDGET line to slope downwards. The slope of the budget line is the amount of good 2 given up to have ONE more unit of good 1.
Discussion
4405.

When MPP is falling and is positive, at what rate TPP is changing ?

Answer»


ANSWER :TPP is RISING at a DIMINISHING RATE
Discussion
4406.

Give an example of indirect inervention by government in market mechanism.

Answer»


Solution :Under indirect INTERVENTION, market price is changed indirectly via shifting the demand and supply curves through taxes and subsidies. Sales TAX, SUBSIDY on essential goods and EXCISE duty are the examples of indirect intervention.
Discussion
4407.

Coefficient of standard deviation is:

Answer»

`(MD_(BARX))/(barX)`
`(MD_(m))/(M)`
`(MD_(Z))/(Z)`
all of these

SOLUTION :A
Discussion
4408.

Unemployment is reduced due to the measures taken by the government. State its economic value in the context of production possibilities frontier.

Answer»

Solution :The ECONOMIC value of reduction in unemployment is that it will help the ECONOMY in realizing its PRODUCTION POTENTIAL.
Discussion
4409.

What is meant by the puchasing power of money ?

Answer»

Solution :PURCHASING power of money MEANS the power of money to COMMAND other commodities in its EXCHANGE.
Discussion
4410.

Both equilibrium price and quantity rise when :

Answer»

Increase in demand `GT` Increase in SUPPLY
Decrease in supply when the demand is prefectly INELASTIC
Increase in supply when the demand is PERFECTLY elastic
Decrease in demand `LT` Increase in supply

Answer :(a)
Discussion
4411.

When TP increases at increasing rate, MP

Answer»

falls
rises
remains constant
all of these

Answer :B
Discussion
4412.

Which cure is not affected by fixed cost ?

Answer»

MC Curve
TC Curve
AC Curve
AFC Curve

Solution :N//A
Discussion
4413.

What will happen if the price prevailing in the market is (i) Above the equilibrium price ? (ii) Below the equilibrium price ?

Answer»

Solution :(i) When the market PRICE is above the equilibrium price there will be excess SUPPLY i.e., the QUANTITY DEMANDED is LESS than quantity supplied.
(ii) When the market price is lower than the equilibrium price there will be excess demand i.e., the quantity demanded is more than the quantity supplied.
Discussion
4414.

Demand is more elastic in the long period than in the short period.

Answer»

Solution :Because consumers find it difficult to change their in the SHORT PERIOD, wherse, in the long period, it is EASY to shift to other subsitiutes in case PRICE of the given commodity rises.
Discussion
4415.

Both average product and marginal product can be zero.

Answer»

SOLUTION :MARGINAL product can be zero when TOTAL product remains same with increase in variable INPUT. Average product can also be zero when total product is zero.
Discussion
4416.

What will be the impact of recently launched 'Clean India Mission' (Swachh Bharat Mission) on the Production Possibilities curve of the economy and why?

Answer»

Solution :CLEANLINESS reduces chances of PEOPLE FALLING ill and, thus can ensure bwtter health. This in turn will reduce forced absenteeism form work, raise efficiency level and thus raise country's PRODUCTION potential. Rise in this potential shifts PP CURVE to the right.
Discussion
4417.

Explain the effects of a 'Price Ceiling'.

Answer»

Solution :Price ceiling REFERS to fixing the MAXIMUM price of a commodity that is lower than the equilibrium price.
As a result of price ceiling, the MARKET price falls below the equilibrium price LEADING to excess DEMAND. This creates a shortage of the commodity leading to "black marketing".
Discussion
4418.

Define variable cost.

Answer»

Solution :It REFERS to those COSTS which VARY DIRECTLY with the level of output.
Discussion
4419.

What is the impact of diminishing marginal rate of substitution on the slope of indifference curve ?

Answer»

Solution :Indifference CURVE BECOME CONVEX towards the ORIGIN.
Discussion
4420.

Producer's equilibrium is determined where difference between TR and TC is

Answer»

constant
minimum
maximum
none of these.

Answer :C
Discussion
4421.

What is the shape of perfecitly elastic demand curve ?

Answer»

SOLUTION :A perfectly elastic DEMAND CURVE is horizontal or it is PARALLEL to the X-axis.
Discussion
4422.

Which of the following measures of price elasticity shows elastic supply? (Choose the correct alternative)

Answer»

0
`0.5`
`1.0`
`1.5`

SOLUTION :1.5
Discussion
4423.

What will be the effect on equilibrium price and equilibrium quantitywhen income increases in case of normal goods ?

Answer»

Both equilibrium price and quantity FALLS
Both equilibrium price and quantity RISES
Equilibrium price rises and equilibrium quantity falls
Equilibrium price falls and equilibrium quantity rises

Answer :(B)
Discussion
4424.

When Economists speak of the utility of a certain product, they are referring to:

Answer»

Demands for the product
Usefulness of the product in consumption
Satisfaction GAINED from consuming such product
Rate at which consumers are willing to EXCHANGE ONE GOOD for another

Answer :C
Discussion
4425.

If the percentage increase in the quantity demanded of a commodity is less than the percentage fall in its price, then elasticity of demand is:

Answer»

`GT1`
`=1`
`LT1`
`=0`

SOLUTION :N/a
Discussion
4426.

In case of single commodity, consumer's equilibrium is achieved when:

Answer»

<P>`MU_(X) gt P_(X)`
`MU_(X) LT P_(X)`
`MU_(X) != P_(X)`
`MU_(X) = P_(X)`

Answer :D
Discussion
4427.

When edmand curve is parallel to Y axis, whatwill be its price elasticity.

Answer»

Solution :When demand curve is parallel to Y AXIS, the price ELASTICITY of demand will be zero IMPLYING that demand of the commodity is unaffected by any CHANGES in the price LEVEL of the good.
Discussion
4428.

What does sub-divided bar diagram show ?

Answer»


SOLUTION :Sub-divided BAR diagrams which simultaneously PRESET, TOTAL values as well as part values of a set of data.
Discussion
4429.

Economising of resources refer to saving resources of future use.

Answer»

Solution :It REFERS to making optimum of BEST possible USE of available RESOURCES.
Discussion
4430.

AR and price are always equal under :

Answer»

PERFECT competion only
monopolistic competion only
monopoly only
all MARKET FORMS

Answer :D
Discussion
4431.

When price ofa good rises ny 10%, the supply remains the same. What is Es ?

Answer»


ANSWER :ZERO
Discussion
4432.

How does an increase in the price of an input affect the supply curve of a firm ?

Answer»

Solution :It will increase MC. Thus supply of the commodity will DECREASE and the supply curve will SHIFT LEFTWARDS.
Discussion
4433.

What is scarcity?

Answer»

SOLUTION :Scarcity means that resources are LIMITED in RELATIONS to demand for them. DEMANDIS greater than Supply.
Discussion
4434.

Due to 'Make in India', there has been large inflow of foreign capital. It will lead to the folowing change in PPC:

Answer»




Solution :B. The PPC of an economy shifts outward if: Resources used in PRODUCTION such as coal, oil, and population in the economy INCREASE. The economy sees improvements in technology which make production more efficient; more goods can be produced with the same resources.
Discussion
4435.

When total revenue is constant, what will be the effect on average revenue ?

Answer»

AR will FALL
AR will INCREASE
AR will also be CONSTANT
No EFFECT on AR

Solution :N/A
Discussion
4436.

How does technological progress affect the supply curve of a firm?

Answer»

Solution :It REDUCES MC (marginal cost). Thus SUPPLY INCREASES and the supply CURVE shifts to right.
Discussion
4437.

When two or more goods are demanded simultaneously, it is known as :

Answer»

JOINT Demand
Alternate Demand
Direct Demand
Composite Demand

Answer :A
Discussion
4438.

Disucuss the percentagemethod to measure price elasticity of demand.

Answer»
Discussion
4439.

There is a sudden change in climatic conditions resulting in hot weather. Assuming no change in the price of the cold drinks, it will lead to :

Answer»

UPWARD movement along the same market DEMAND curve
Downward movement along the same market demand curve
Rightward SHIFT in the market demand curve
Leftward shift in the market demand

Answer :C
Discussion
4440.

How does change in price of a substitute/complementary good affect the demand of the given good ? Explain with the help of an example.

Answer»

Solution :There are two types of related GOODS :- (i) Substitute goods, (ii) COMPLEMENTARY goods.
In case of substitute goods there is a positive relationship between price of one good and the DEMAND for another i.e as price of one good rises the demand for its substitute rises.
On the other hand, in case of complementary goods there is a negative relationship between price of one good and the demand for its COMPLEMENT i.e as price of one good rises the demand for its complement falls.
Discussion
4441.

Describe the four genreal guidelines for the construction of a table.

Answer»


SOLUTION :N/a
Discussion
4442.

Give two examples of underutilisation of resources.

Answer»

Solution :(i) Underutilised labour LEADING to mass unemployment.
(ii) LOWER PRODUCTION during DEPRESSION.
Discussion
4443.

When price falls with rise in output, then as quantity sold increases :

Answer»

MR falls quicklythan AR
MR falls SLOWLY than AR
Both MR and AR fall at the same rate
MR and AR do not CHANGE

Solution :N/A
Discussion
4444.

Marginal revenue of (n-1) units is :

Answer»

`TR_n-TR_(n-1)`
`TR_(n-1)-TR_n`
`TR_(n-1)-TR_(n-2)`
`TR_(n-2)- TR_(n-1)`

ANSWER :C
Discussion
4445.

"_____" cost refers to actual payment made by the entreneurto the providers of factor services.

Answer»

Explicit
Implicit
Variable
Fixed

Solution :N//A
Discussion
4446.

A consumer consumes only two goods X and Ywhose prices are Rs. 4 and Rs. 5 per unit respectiveely. Ifthe consumer chooses a combination of the two goods with marginal utility of X equal to 5 and that of Y equal to 4 , isthe consumer in equilibrium ? Given reasons . What will a rational consumer do in this situation ? Use utility analysis.

Answer»

SOLUTION :GIVEN `P_(x)=4,P_(y)=5and MU_(x)=5,MU_(y)=4` , a consumer will be in equilibrium when :
`(MU_(x))/(P_(x))=(MU_(y))/(P_(y))`
Substituting values , we find that
`(5)/(4)gt(4)/(5)" Or " (MU_(x))/(P_(x))gt(MU_(y))/(P_(y))`
Since PER RUPESS `MU_(x)`is higher than per rupee `MU_(y)` , consumer is not in equilibrium.Theconsumer will continue till`(MU_(x))/(P_(x))and(MU_(y))/(P_(y))`AREEQUAL and consumer is in equilibrium.
Discussion
4447.

When total revenue is constant, average revenue falls.

Answer»

SOLUTION :True : AR = `(TR)/("Output")`. When TR is CONSTANT, AR falls with RISE in output.
Discussion
4448.

Marginal revenue is always the price at which last unit of a commodity is sold.

Answer»

SOLUTION :FALSE : It is possible only when price is CONSTANT at all levels of output. If price falls with RISE in output, then MARGINAL revenue is less than the price (or average revenue).
Discussion
4449.

Explain the relationship between : (i) Prices of other goods and demand for the given good , (ii) Income of the buyers and demand for a good.

Answer»

SOLUTION :(i) If the two GOODS are substitues, then a FALL in price of one good leads to fall in DEMAND of the other good and vice-versa. On the other hand, if the two goods are complementary goods, a fall in price of one good leads to an increase in demand of the other good and vice-versa
(ii)In case the good is a normal good, a rise in income of the consumer leads to an increase in demand for the good and vice-versa.
If the good is an inferior good, a rise in income of the consumer leads to a decrease in demand of the commodity and vice-versa.
Discussion
4450.

How are equilibrium price and quantity affected when income of the consumers: (a) Increase, (b) Decrease

Answer»

Solution :(a) An increase in income of buyers will increase the demand (assuming NORMAL goods) at the given price. It will lead to excess demand. This leads to competition among buyers, which raises the price. Increase in price leads to RISE in supply and fall in demand. These CHANGES continue till supply and demand become EQUAL at a new equilibrium price. As there is an increase in demand only, equilibrium price rises.
(b) A DECREASE in income will decrease the demand (assuming normal goods) at the given price. It will lead to excess supply. This leads to competition among sellers, which reduces the price. Fall in price leads to decrease in supply and rise in demand. These changes continue till supply and demand become equal at a new equilibrium price. As there is a decrease in demand only, both equilibrium price and equilibrium quantity will fall.
Discussion