PPSC FPSC KPPSC SPSC BPSC Lecturer Economics Sample Paper

1). What is Economics?

(A). Management of scarce resources to maximize utility.

(B). Management of resources only.

(C). Maximization of utility.

(D). None of the above

2). The concept of Invisible hand was coined by:

(A). David Ricardo

(B). Alfred Marshall

(C). J.M Keynes

(D). Adam Smith

3). Adam Smith was also a:

(A). Political economist

(B). Sociologist

(C). Politician

(D). None of the above

4). David Ricardo coined the concept of:

(A). Invisible Hand

(B). Diminishing Returns

(C). Partial Equlibrium

(D). General Equilibrium

5). Theory of choice is about:

(A). Production

(B). Cost of Production

(C). Market Structure

(D). Preferences of People

6). Linear isoquant shows the……………….substitutability of factors of production:

(A). Perfect

(B). No

(C). Limited

(D). Continuous

7). Input-Output isoquant shows the……………..substitutability of factors of production:

(A). Perfect

(B). No

(C). Limited

(D). Continuous

8). Kinked isoquant shows the ……………..substitutability of factors of production:

(A). Perfect

(B). No

(C). Limited

(D). Continuous

9). Returns to scale refers to the ………………..analysis of laws of production:

(A). Short-run

(B). Long-run

(C). Both a & b

(D). None of the above

10). Law material bears …………………relation to output at all level of production:

(A). Increasing

(B). Decreasing

(C). Constant

(D). No

11). Efficiency parameter in production function refers to the ………efficiency:

(A). Land

(B). Labor

(C). Capital

(D). Entrepreneurial-organizational

12). Marginal product is defined as the change in ………….due to change in…………..

(A). Output, Input factors

(B). Input factors, Output

(C). Both a & b

(D). None of the above

13). The Slope of the isoquant is called:

(A). rate of technical substitution

(B). Marginal product of labor and capital

(C). Both a & b

(D). None of the above

14). The elasticity of substitution of factors is defined as the percentage change in………… divided by the percentage change in……………..

(A). capital-Labor ratio, rate of technical substitution

(B). rate of technical substitution, capital-labor ratio

(C). labor, capital

(D). marginal product of labor, marginal product of capital

15). Cost functions are derived from…………….

(A). Production function

(B). Utility function

(C). Both a & b

(D). None of the above

16). There is concept of ………………in traditional Theory of Cost:

(A). Reserve Capacity

(B). Excess Capacity

(C). Constant level of Capacity

(D). None of the above

17). Excess Capacity implies that there is ………… where firm can produce optimally:

(A). One point

(B). a range

(C). No point

(D). None of the above

18). Utility is defined as……………..

(A). Satisfaction

(B). Preferences

(C). Constraint

(D). All of the above

19). Ceteris Paribus is defined as:

(A). everything is variable

(B). other things are equal/constant

(C). Both a & b

(D). None of the above

20). The theories of consumer behavior explains that:

(A). How to maximize utility without considering budget constraint

(B). How to maximize utility from consuming goods/services within in the limit of budget.

(C). How to allocate budget without considering utility maximization

(D). All of the above

21). There are two theories of consumer behavior i.e.

(A). Cardinal approach

(B). Ordinal approach

(C). Budget constraint Theory

(D). Both A & B

22). Cardinal Approach implies that:

(A). Utility is measurable in terms of number of goods consume

(B). Utility is measurable in monetary terms.

(C). Utility cannot be measure

(D). None of the above

23).In cardinal approach of consumer behavior marginal utility of money is:

(A). increasing

(B). decreasing

(C). constant

(D). Varies with time and situation

24). According to cardinal approach of consumer behavior, Consumer is:

(A). Rational

(B). Irrational

(C). Varies person to person

(D). None of the above

25). Which of the following is considered as a factor of production?

(A). Unskilled Labor

(B). Traders

(C). Land

(D). Labor

26). Short run is the time period in which:

(A). All factors of production are fixed

(B). Variable factors of production can change

(C). All factors of production can change

(D). None of the above

27). Long run is a period in which:

(A). All factors of production can change

(B). Capital cannot be changed

(C). only one factor of production is fixed

(D). Labor cannot be changed

28). Which group shows the basic factors of production?

 (A). Land, Labor, Natural Resources, Capital

(B). Land, Labor, Capital, Technology

(C). Land, Management Skills, Capital, Technology

(D). Land, Labor, Capital, Enterprise

29) Economies of scale represents the:

(A). Rising average cost

(B). Constant average cost

(C). Falling average cost

(D). Positive average cost

30). The fundamental economic problem is:

(A). Unemployment

(B). Scarcity

(C). Poverty

(D). Inflation

31). The term capitalism refers the:

(A). State and Private ownership of capital goods

(B). Use of markets

(C). State ownership of capital goods

(D). Private ownership of capital goods

32). Economic growth is Illustrated as:

(A). Production Possibilities Frontier shifts outwards

 (B). Production Possibilities Frontier shifts inwards

(C). Movement from inside the curve towards the curve

(D). Movement along the production possibilities Frontier towards capital goods

33). Points on the Production Possibilities Frontier are:

(A). Inefficient

(B). Unattainable

(C). Efficient

(D). None of the above

34). The opportunity cost of a good refers the:

(A). the expenditure on a good

(B). the others goods sacrificed to get another unit of that good

(C). Loss of interest in using savings

(D). the time lost in finding it

35). Microeconomics is related to:

(A). the whole economy

(B). the household purchase decisions

(C). the individual economic behavior

(D). None of the above

36). The author of the book “The Wealth of Nations” is:

(A). David Ricardo

(B). Alfred Marshall

(C). J.M Keynes

 (D). Adam Smith

37). “The Wealth of Nations” was published in:

(A). 1676

(B). 1776

(C). 1876

(D). 1976

38). Total utility increases at ……………rate:

 (A). Increasing

(B). Decreasing

(C). Constant

(D). Varies with time and situation

39). When total utility increases at decreasing rate, Marginal Utility:

(A). Increases

(B). Decreases

(C). remains constant

(D). Varies with time and situation

40). When total utility falls, Marginal utility becomes:

(A). Positive

(B). Negative

(C). Constant

(D). Varies with time and situation

41). Marginal utility is defined as:

(A).The net change in total utility by consuming an additional unit of commodity.

(B). No change in total utility by consuming an additional unit of commodity.

(C). the net change in Marginal utility by consuming an additional unit of commodity.

(D). No change in Marginal utility by consuming an additional unit of commodity.

42). What is law of diminishing marginal utility?

(A). Marginal utility decreases as we consume more and more of a commodity.

 (B). Marginal utility increases as we consume more and more of a commodity

(C). Marginal utility remains constant as we consume more and more of a commodity

(D). Varies with time and situation

43). Consumer equilibrium in law of equi marginal utility of cardinal approach of consumer behavior:

(A). MUx/Px = MUy/Py

(B). MUx/Px > MUy/Py

(C). MUx/Px < MUy/Py

(D). All of the above

44). If MUx/Px > MUy/Py, the consumer will:

(A). consume more items of goods X

(B). consume more items of goods Y

(C). consume more items of goods X and goods Y

(D). None of the above

45).Income elasticity of demand of a commodity is defined as the responsiveness of its demand due to change in:

(A). Income of consumer

(B). Price of another commodity

(C). its own price.

(D). All of the above

46). Cross elasticity of demand of a good is defined as the responsiveness of its demand due to change in:

(A). Income of consumer

(B). Price of another commodity

(C). its own price.

(D). All of the above

47). Price elasticity is measured by two formulas called ……….and……….

(A). Point elasticity, Arc elasticity

(B). Income elasticity, Arc elasticity

(C). Cross elasticity, point elasticity

(D). None of the above

48). Point elasticity is used when change in price is:

(A). Small

(B). greater

(C). Both a & b

(D). None of the above

49). Arc elasticity is used when change in price is:

(A). Small

(B). greater

(C). Both a & b

(D). None of the above

50). Arc elasticity is also known as…………….elasticity:

(A). Average Elasticity

(B). Income elasticity

(C). Point Elasticity

(D). All of the above

51). Formula of point elasticity or general price elasticity is:

(A). (dQ/Q)/(dP/P)

(B). (dQ/Q)/(dY/Y)

(C). (dP/P)/(dQ/Q)

(D). None of the above

52). Formula of Arc elasticity is:

(A). (dQ / (Q1+Q2)) / (dP / ((P1+P2))

(B). (dQ/Q)/(dP/P)

(C). (dQ/Q)/(dY/Y)

(D). None of the above

53). Income elasticity is measured as:

(A). (dQ / Q) / (dP / P)

(B). (dQ / (Q1+Q2)) / (dP / ((P1+P2))

(C). (dQ / Q) / (dY / Y)

(D). None of the above

54). Cross elasticity is measured as:

(A). (dQx / Qx) / (dPy / Py)

(B). (dQ/Q)/(dP/P)

(C). (dQ/Q)/(dY/Y)

(D). None of the above

55). If elasticity is equal to 0, Demand is:

(A). inelastic

(B). perfectly inelastic

(C). More elastic

(D). perfectly elastic

56). If elasticity is equal to 1, Demand is:

 (A). inelastic

(B). perfectly inelastic

(C). More elastic

(D). Unitary elastic

57). If elasticity is equal to infinity, Demand is:

(A). inelastic

(B). perfectly inelastic

(C). More elastic

(D). perfectly elastic

58). If close substitutes of a goods are available, demand for good is:

(A). inelastic

(B). perfectly inelastic

(C). More elastic

(D). perfectly elastic

59). In case of necessary goods, price elasticity of demand is:

(A). inelastic

(B). perfectly inelastic

(C). More elastic

(D). perfectly elastic

60). if MUx/Px < MUy/Py, the consumer will:

(A). consume more items of goods X

(B). consume more items of goods Y

(C). consume more items of goods X and goods Y

 (D). Stop consuming

61). If MUx/Px = MUy/Py, the consumer will:

(A). consume more items of goods X

(B). consume more items of goods Y

(C). consume more items of goods X and goods Y

(D). Stop consuming, utility from both goods is maximized

62). When price falls, marginal utility of money:

(A). Increases

(B). Decreases

(C). remains constant

(D). Varies with time and situation

63). In cardinal Approach, Leon Walras had derived consumer demand curve for goods X from:

(A). Marginal Utility schedule of goods X

(B). Total Utility schedule of goods X

(C). Cardinal Equilibrium approach

(D). All of the above

64). In cardinal Approach, Alfred Marshal had derived consumer demand curve from goods X from:

(A). Marginal Utility schedule of goods X

(B). Total Utility schedule of goods X

(C). Cardinal Equilibrium approach

(D). None of the above

65). Sir Jhon Richard Hicks was a……………….economist:

(A). British and neo-classical

(B). British and Classical

(C). British and Modern

(D). All of the above

66). Ordinal Approach to consumer behavior is presented by …………….economist:

(A). Neo-Classical

(B). Classical

(C). Modern

(D). None of the above

67). Ordinal Approach to consumer behavior is also known a:

(A). Optimal Choice theory

(B). Hicksian/neo-classical approach to consumer behavior

(C). Indifference curve theory

(D). Axiomatic approach to consumer behavior

(E). All of the above

68). IC stands for:

(A). Incomplete Curve

(B). Independent Curve

(C). Indifference curve

(D). All of the above

69). Who introduced the concept of IC for the first time in 1881:

(A). Jhon Richard Hicks

(B). Alfred Marshall

(C). Francis Edgeworth

(D). None of the above

70). Cardinal Approach theory measures the utility:

(A). Quantitatively

(B). Qualitatively

(C). Both a & b

(D). None of the above

71). Ordinal approach to consumer behavior implies that, utility cannot be measured:

(A). Quantitatively

(B). Qualitatively

(C). Both a & b

(D). None of the above

72). According to neo-classical utility can be:

(A). Ranked Qualitatively

(B). Measured Quantitatively

(C). Both a & b

(D). None of the above

73). IC shows different combinations of two goods that yield:

(A). Same level of satisfaction

(B). Different levels of satisfaction

(C). Nill

(D). Nill

74). The convex IC shows the………………marginal rate of substitution:

(A). Diminishing

(B). Increasing

(C). constant

(D). None of the above

75). The slope of IC is called:

(A). Marginal rate of substitution (MRS)

(B). Marginal rate of technical substitution (MRTS)

(C). Both a & b

(D). None of the above

76). Marginal rate of substitution is defined as:

(A). How many units of one commodity has to forego to get an additional unit of another commodity that give same level of satisfaction

(B). How many units of one commodity has to forego to get an additional unit of another commodity that gives different levels of satisfaction

(C). Both a & b

(D). None of the above

77). Budget line shows the……………of consumer, when price of two commodity is given:

(A). Purchasing Power

(B). Level of satisfaction

(C). Both a & b

(D). None of the above

78). In ordinal approach, consumer is in equilibrium when:

(A). Budget line cuts IC

(B). Slope of Budget line tangent Slope of IC

(C). only at budge line

(D). only at IC

79). The necessary condition for consumer equilibrium for two commodities is:

(A). MUx/Px = MUy/Py

(B). MUx/Px > MUy/Py

(C). MUx/Px < MUy/Py

(D). All of the above

80). The sufficient condition for two commodities for consumer equilibrium is that:

(A). IC must be vertical

(B). IC must be horizontal

(C). IC must concave to origin

(D). IC must Convex to origin

81). Price elasticity of demand of a good is defined as the responsiveness of its demand due to change in:

(A). Income of consumer

(B). Price of another commodity

(C). its own price.

(D). All of the above

82). In case of luxury goods, price elasticity of demand is:

(A). inelastic

 (B). perfectly inelastic

(C). More elastic

(D). perfectly elastic

83). In long run usually price elasticity of demand is:

(A). inelastic

(B). perfectly inelastic

(C). More elastic

(D). Perfectly elastic

84). If elasticity of demand lies between 0 and 1, the demand of a goods is:

(A). perfectly inelatic

(B). Less elastic

(C). More elastic

(D). perfectly elastic

85). If elasticity of demand lies between 1 and infinity, the demand of a goods is (A). inelastic:

(B). perfectly inelastic

(C). More elastic

(D). perfectly elastic

86). If elasticity is equal to 0, Demand curve is:

(A). negatively sloped

(B). Horizontal

(C). Vertical

 (D). None of the above

87). If elasticity is equal to 1, Demand curve is:

(A). negatively sloped

(B). Horizontal

(C). Vertical

(D). None of the above

88). If elasticity is equal to infinity, Demand curve is:

(A). negatively sloped

(B). Horizontal

(C). Vertical

(D). None of the above

89). Market demand is defined as:

(A). Individual demand

(B). Demand from elite class consumers

(C). Demand from poor class consumer

(D). Sum of individuals demand in the market

90). Total expenditure of consumers in market is derived by:

(A). Market demand

(B). Individual demand

(C). Both a & b

(D). None of the above

91). Total expenditure of consumers of purchasing particular commodity is equal to the ……………..of the firms selling the particular commodity:

(A). Marginal Revenue

(B). Total Cost

(C). Total Revenue

(D). None of the above

92). Total revenue of firm is obtained as the product of ……………..and its ………..

(A). Quantity sold, price

(B). Quantity sold and quantity demanded

(C). quantity sold and total expenditure

(D). None of the above

93). Marginal revenue is defined as the change in…………….resulting in selling additional unit of commodity:

(A). Total cost

(B). Total revenue

(C). Average revenue

(D). Marginal cost

94). The relationship between marginal revenue and price is explained by the …………………… of demand:

(A). Price Elasticity

(B). Income elasticity

(C). Cross elasticity

(D). None of the above

95). If price elasticity of demand is more elastic (e > 1), Slope of total revenue will be …………… and marginal revenue will ………….

(A). Increasing, greater than 0

(B). Increasing, less than 0

(C). Increasing, equal to 0

(D). None of the above

96). If price elasticity of demand is unitary elastic (e = 1), Slope of total revenue will be ……………. and marginal revenue will be ……………

(A). Maximum, Greater than 0

(B). Maximum, Less than 0

(C). Maximum, equal to 0

(D). None of the above

97). If price elasticity of demand is less elastic (e < 1), Slope of total revenue will be …………and marginal revenue will be …………….

(A). Decreasing, greater than 0

(B). Decreasing, less than 0

(C). Decreasing, equal to 0

(D). None of the above

CORRECT ANSWER IS: Decreasing, less than 0

98). Production function shows the technical relationship between …………. and …………..

(A). Input (factors of production) and Output (produced goods)

(B). Input (factors of production) and profit of the firm

(C). Revenue and cost of firm

(D). All of the above

99). Isoquant shows all possible combination of two factors of production …………….and ……………. to produce a given level of output:

(A). Land and Labor

(B). Land and Capital

(C). Labor and Capital

(D). None of the above

100). There are two theories of consumer behavior i.e.

(A). Cardinal approach

(B). Ordinal approach

(C). Budget constraint Theory

(D). Both A & B

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