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CS Foundation- June 2020

Economics Test (Full Syllabus) Total Marks = 80

Total Time = 90 minutes

Answer all questions

1. A normative economic statement is- (a) Unemployment rate decreases with industrialization (b) Economics is a social science that studies human behaviour (c) The minimum wage should be raised to ₹ 200/- per day (d) India spends a huge amount of money on national defence

2. A downward movement along a demand curve indicate-

(a) Increase in demand (b) Decrease in demand (c) Contraction of demand (d) Expansion of Demand

3. The consumer is in equilibrium at a point where the budget line-

(a) Is above an indifference curve (b) Is below an indifference curve (c) Is tangent to an indifference curve (d) Cuts an indifference curve

4. When the price of commodity increases by 40% and its quantity demanded falls from 150 to 120 units ,

then the price elasticity of demand for a commodity is- (a) -0.8% (b) 0.8% (c) 0.5% (d) -0.5%

5. Identify the coefficient of price-elasticity of demand when the percentage increase in the quantity of a

good demanded is smaller than the percentage fall in its price- (a) Equal to one (b) Greater than one (c) Smaller than one (d) Zero

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6. A consumer demands 5 units of a commodity at the price of Rs. 4 per unit. He demands 10 units when the price falls to Rs 3 per unit. Price elasticity of demand is equal to- (a) 3 (b) 2 (c) 1.5 (d) 4

7. The supply curve for perishable commodities is-

(a) elastic (b) inelastic (c) perfectly elastic (d) perfectly inelastic

8. Demand for water is –

(a) Elastic (b) Inelastic (c) Perfectly elastic (d) Relatively elastic

9. Suppose income elasticity of bread is 0.25, its means that bread is-

(a) Inferior goods (b) Luxury goods (c) Normal goods (d) Can’t say

10. If the demand is more than supply, then the pressure on price will be-

(a) Upward (b) Downward (c) Constant (d) None of the above

11. Demand for pepsi is elastic because-

(a) Its falls under luxuries (b) Its consumption can be postponed (c) Its substitutes are available in the market (d) It is a multiple use product

12. A consumer of two goods X and Y is in equilibrium. The price of good X is Rs. 10 and price of the good Y

is Rs. 20 respectively. If the MUX is 60 utils , then the MUy is- (a) 30 utils (b) 20 utils (c) 60 utils (d) 6 utils


13. In the third phase of Law of variable proportions, MP becomes- (a) Zero (b) Negative (c) Positive (d) None of these

14. When Marginal product is zero, then Total product is –

(a) Zero (b) Falling (c) Rising (d) Maximum

15. Diminishing returns occur-

(a) When units of a variable input are added to a fixed input and total product falls (b) When units of a variable input are added to a fixed input and marginal product falls (c) When the size of the plant is increased in the long run. (d) When the quantity of the fixed input is increased and returns to the variable input falls.

16. When total product is 200 units and units of variable factor are 8, average product will be –

(a) 25 (b) 1600 (c) 96 (d) 60

17. Which of the following cost curve is termed as a rectangular hyperbola-

(a) TVC curve (b) AVC Curve (c) TFC curve (d) AFC curve

18. Total costs is the vertical summation of –

(a) TFC and TVC (b) AFC and AVC (c) TVC and AVC (d) None of these

19. TVC can be calculate as-

(a) AVC/Q (b) TC-TFC (c) AC-AFC (d) None of these


20. Economies of scale exist because as a firm increases its size in the long run- (a) Labour and management can specialize in their activities more (b) As a larger input buyer, the firm can get finance at lower cost and purchase inputs at a lower per

unit cost. (c) The firm can afford to employ more sophisticated technology in production (d) All of these

21. When average revenue is Rs.30 and output is equal to 50 units total revenue will be –

(a) 2500 (b) 1500 (c) 1800 (d) 2000

22. If total revenue of a firm increases by Rs 65025 due to an increase in sale of good X from 60 units to 75

units , then marginal revenue will be – (a) 3000 (b) 4335 (c) 4000 (d) 3335

23. Product differentiation is a key feature of-

(a) Perfect competition (b) Oligopoly (c) Monopoly (d) Monopolistic competition

24. In the context of oligopoly, the kinked demand hypothesis is designed to explain -

(a) Price and output determination (b) Price rigidity (c) Price leadership (d) Collusion among rivals

25. A firm encounters its “shutdown point” when-

(a) Average total cost equals price at the profit-maximising level of output (b) Average variable cost equals price at the profit-maximising level of output (c) Average fixed cost equals price at the profit-maximising level of output (d) Marginal cost equals price at the profit-maximising level of output

26. A market structure in which many firms sell products that are similar but not identical is known as-

(a) Monopolistic competition (b) Monopoly (c) Perfect competition (d) Oligopoly


27. A monopolist is a- (a) Price maker (b) Price –taker (c) Price adjuster (d) None of the above

28. The lowest point in the business cycle is referred as the –

(a) Expansion (b) Boom (c) Peak (d) Trough

29. Example of Lagging indicator is-

(a) Corporate profits (b) Interest rates (c) Consumer price index (d) All of these

30. When aggregate economic activity is declining, the economy is said to be in-

(a) Contraction (b) An Expansion (c) Trough (d) Turning point

31. Who gave the positive aspect of science (a) Alfred Marshall (b) A.C.Pigou (c) Adam Smith (d) Robbins

32. Who has defined economics as “Science which deals with wealth”

(a) Adam Smith (b) Canon (c) J.B.Say (d) A.C.Pigou

33. Which economic system is described by Schumpeter as capitalism in the oxygentent?

(a) Laissez-faire Economy (b) Command Economy (c) Mixed Economy (d) Agrarian Economy


34. Socialist economy is _________ (a) Self regulation (b) Profit Oriented (c) Command Economy (d) Allocation of resources as per market requirements

35. Increase in Price from ₹ 4 to ₹ 6 then decrease in demand from 15 units to 10 units. What is the price

elasticity. (a) 0.66 (b) 5 (c) -1.5 (d) 2

36. Demand of i-pod increases from 950 to 980 and income increases from 9,000 to 9,800. What is income

elasticity? (a) 0.53 (b) 0.35 (c) 0.43 (d) None

37. Which amongst the following is the right formula for calculating price elasticity of demand using ratio

method? (a) (∆Q/∆P) X (P/Q) (b) (∆P/∆Q) X (Q/P) (c) (∆Q/∆P) X (Q/P) (d) (∆P/∆Q) X (1/P)

38. Elasticity of supply is defined as responsiveness of quantity supplied of a good to change in _______

(a) price of concerned good (b) price of substitute good (c) demand (d) none

39. The Supply Curve shifts to right because of:

(a) Improved Technology (b) Increased price of factors of production (c) Increased excise duty (d) All of the above

40. External economies of scale are obtained by:

(a) A firm (b) A group of firm (c) Small Production (d) Society


41. Which of the following is the reason of the working of law of increasing returns? (a) Fuller utilization of fixed factors (b) Indivisibility of the factors (c) Greater specialization of labour (d) All of the above

42. Which among the following is not a characteristic of Land?

(a) It is an active factor (b) It has variety of uses (c) Its production power are indestructible (d) Its supply is limited

43. Marginal, average and total product of a firm in the short run will not comprise with

(a) When marginal product is at a maximum, average product is equal to marginal product, and total product is rising

(b) When average product is maximum, average product is equal to marginal product, and total product is rising

(c) When marginal product is negative, total product and average product are falling (d) When total product is increasing, average product and marginal product may be either rising or

falling

44. A firm producing 7 units of output has an average total cost of ₹ 150 and has to pay ₹ 350 to its fixed factors of production. How much of the average total cost is made up of variable cost? (a) ₹ 200 (b) ₹ 50 (c) ₹ 300 (d) ₹ 100

45. Average Revenue Curve is also known as ________

(a) profit curve (b) demand curve (c) supply curve (d) average cost curve

46. When AC curve is rising, the MC curve must be _________ to it.

(a) equal (b) above (c) below (d) parallel

47. Which of the following cost curves is never “U” shaped?

(a) Average cost curve (b) Marginal cost curve (c) Average variable cost curve (d) Average fixed cost curve


48. Which of the following curve is not U shaped? (a) AFC (b) MC (c) AVC (d) TC

49. Opportunity cost is _________

(a) Recorded in the books of accounts (b) Sacrificed alternative (c) Both (a) and (b) (d) None of the above

50. The market for ultimate consumer is known as:

(a) Wholesale market (b) Regulated market (c) Unregulated market (d) Retail market

51. When price is ₹ 20, Quantity demanded is 10 units and price is decreased by 5% then quantity demand

increased by 10% then Marginal revenue is ________ (a) ₹ 10 (b) ₹ 11 (c) ₹ 9 (d) ₹ 20

52. When increase in demand is equal to increase in supply and equilibrium price remains constant, then

what about equilibrium quantity? (a) Increases (b) Decreases (c) Remains Constant (d) None of the above

53. Which market have characteristics of product differentiation?

(a) Perfect Competition (b) Monopoly (c) Monopolistic Competition (d) Oligopoly

54. OPEC is an example of:

(a) Monopolistic Competition (b) Monopoly (c) Oligopoly (d) Duopoly


55. In a competitive market, if price exceeds Average Variable Cost (AVC) but remains less than Average Cost (AC) at the equilibrium, the firm is: (a) Making a profit (b) Planning to quit (c) Experiencing loss but should continue production (d) Experiencing loss but should discontinue production

56. Price discrimination will not be profitable, if the elasticity of demand is ________ in different markets

(a) uniform (b) different (c) less (d) zero

57. Which is the first order condition for the firm to maximize the profit

(a) AC=MR (b) AC=AR (c) MC=MR (d) MR=AR

58. Fashion Retailer is business of?

(a) Cyclical business (b) Sun rise business (c) Sluggish business (d) None of these

59. __________ is the measurable economic factor that changes before economy starts to follow a

particular pattern or trend: (a) Leading indicator (b) Lagging indicator (c) Concurrent indicator (d) Coincident indicator

60. When aggregate economic activity is declining, is the phase of:

(a) Expansion (b) Contraction (c) Recovery (d) Trough

61. Two of the major factors contributing to growth are –

(a) money and efficiency (b) money and luck (c) resources and luck (d) resources and a good climate


62. Which of the following is not correctly marked with respect to the year? (a) Reserve bank of India 1977 (b) Industries(Development and Regulation)Act 1951 (c) Bureau of Industrial and Financial Reconstruction 1987 (d) Third five year plan 1961

63. Homi J. Bhabha was the first chairman of –

(a) Finance Commission (b) Planning Commission (c) Election Commission (d) Atomic Energy Commission

64. The three annual plans from 1966-69 are also known as –

(a) Plan Break (b) Plan Holiday (c) All the above (d) None of the above

65. TRAI stands for –

(a) Telecommunication Regulatory Authority of India (b) Telecom Regulatory Authority of India (c) Telecom Regulatory Area of India (d) Telecom Regulatory Authority Institute

66. In the production function, equation expressed as Qx = f(L,K,T…………n), L stands for –

(a) land (b) labour (c) longlife (d) luxury goods

67. Homogeneous products are

(a) identical products (b) differential products (c) Both (a) and (b) (d) None of the above

68. In case of Perfect Competition, number of sellers would be –

(a) Large (b) Single (c) Varied but not too many (d) None of the above


69. Which of the following has NOT been an objective of planning in India? (a) creation of capitalist economy (b) Self-Reliance (c) Increase in National Income (d) None of the above

70. Following was the last Five Year Plan in India

(a) 11th Five Year Plan (b) 12th Five Year Plan (c) 13th Five Year Plan (d) 14th Five Year Plan

71. Agricultural Price Commission is now named as –

(a) Commission for Agricultural Costs and Prices (CACP) (b) Costs and Prices Commission for Agricultural (CPCA) (c) Agricultural Commission for Costs and Prices (ACCP) (d) None of the above

72. IMR stands for

(a) Infant Mortality Rate (b) Indian Mortality Rate (c) Innocent Mortality Rate (d) None of the above

73. HDI stands for

(a) Human Development Index (b) Happiness and Development Index (c) Human Demographic Index (d) Human Development in India

74. Which of the following is not the basic economic problem?

(a) What to produce (b) How to produce (c) For whom to produce (d) Where to produce

75. PPC shifts outward

(a) If technology improves (b) If technology deteriorates (c) If quantity of productive resources decreases (d) Both b and c


76. From society’s point of view, society would be better off if a monopolist – (a) produced more and charged a higher price (b) produced less and charged a higher price (c) produced more and charged a lower price (d) produced less and charged a lower price

77. A positive cross elasticity of demand coefficient indicates that:

(a) a product is an inferior good (b) a product is a normal good (c) two products are substitutes (d) two products are complementary goods

78. As a consumer move upward along an indifference curve, his total utility –

(a) First increases and then decreases (b) First decreases and then increases (c) Remains constant (d) Increases

79. The central banking functions in India are performed by the

(a) Central Bank of India (b) Reserve Bank of India (c) State Bank of India (d) Punjab National Bank

80. The money supply is ___________.

(a) Currency in circulation only (b) Demand deposits only (c) Cheques + money + bank cards + credit cards (d) Currency in circulation plus demand deposits

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