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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.

1.

Explain the implications of minimum price ceiling.

Answer» The government fixes the price on agricultural products and food grains in particular so that the farmers get their fair price of a commodity which otherwise actually can be sold with too low of a price.
Discussion
2.

Under which market form a firm is a price taker ?

Answer» Perfect competition.
Discussion
3.

State clearly any three feature of a perfectly competitive market.

Answer» 1. Large number of buyers and sellers.
2. Free entry and exit of firms.
3. Homegeneous products.
Discussion
4.

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

Answer» It can discourage the consumption of such products by imposing taxes on them.
It can also refrain from granting licenses to industries producing them.
Discussion
5.

Giving reasons, state whether the following statement are true or false : (i) Excess supply of a commodity exists when its market price is greater than equilibirum price.

Answer» Correct Answer - True, because at a price higher than equilibrium price demand falls while supply rises. This creates excess supply.
TRUE. If the market supply is greater than the equilibrium price there will be excess supply since producers will now be incentivized by the higher profits caused by higher prices.
Discussion
6.

When the prevailing market price is different from the equilibrium price, is immediately results in :A. Excess demandB. Excess supplyC. Either (a) or (b)D. Neither (a) and (b)

Answer» Correct Answer - C
Discussion
7.

Fixation of minimum wage below the equilibrium wage rate leads to :A. UnemploymentB. OveremploymentC. Neither (a) nor (b)D. Either (a) or (b)

Answer» Correct Answer - C
Discussion
8.

Any departure of price from the equilibrium price must, through a series of a actions and reactions, result in :A. New higher equilibrium priceB. New lower equilibrium priceC. Back to the given equilibrium priceD. Any of the above

Answer» Correct Answer - C
Discussion
9.

Consumer awareness campaign successfully spreads market information about an essential product. Explain how ill it benefit the users of this product.

Answer» Since its an essential prdouct, awarness of the same will lead to an increased demand for the product leading to higher utility for the consumers.
Discussion