Question:

_________ introduced the concept of welfare in the study of economics:

A.

Fischer

B.

Alfred Marshall

C.

J S Mill

D.

Adam Smith

Answer» b. Alfred Marshall

Question:

When investment is negatively related to the rate of interest, equilibrium output in the goods market:

A.

Is unrelated to the rate of interest

B.

Is inversely related to the rate of interest

C.

Is positively related to the rate of interest

D.

Falls as the rate of interest decreases

Answer» b. Is inversely related to the rate of interest

Question:

The market equilibrium for a commodity is determined by:

A.

Market demand

B.

Market supply

C.

Balancing of the forces of demand and supply

D.

Any of the above

Answer» c. Balancing of the forces of demand and supply

Question:

When price of a product falls, more of it is purchased because of

A.

the substitution effect

B.

the income effect

C.

neither substitution effect nor income effect

D.

both the substitution and income effects

Answer» d. both the substitution and income effects

Question:

“Effective demand is different from aggregate demand”. This statement is:

A.

True

B.

False

C.

Baseless

D.

None of these

Answer» a. True

Question:

The sum of marginal propensity to consume plus marginal propensity to save must equal to:

A.

0

B.

1

C.

100

D.

1000

Answer» b. 1

Question:

Marginal costs and average variable costs are equal when

A.

Average variable cost is a maximum

B.

Average variable cost is rising

C.

Average variable cost is falling

D.

Average variable cost is a minimum

Answer» d. Average variable cost is a minimum

Question:

If a firm’s average cost is Rs.32 at 6 units of output and Rs.34 at 7 unit, whichone among the following is the marginal cost of producing the 7th unit

A.

46

B.

2

C.

36

D.

42

Answer» a. 46

Question:

Marginal utility is

A.

always zero

B.

increases at a diminishing rate

C.

the utility derived from last unit

D.

all the above

Answer» c. the utility derived from last unit

Question:

Which of the following statements describes increasing returns to scale:

A.

Doubling the inputs used leads to double the output.

B.

Increasing the inputs by 50% leads to a 25% increase in output.

C.

Increasing inputs by 1/4 leads to an increase in output of 1/3.

D.

None of the above.

Answer» c. Increasing inputs by 1/4 leads to an increase in output of 1/3.