Top 100 Economics MCQ Questions with Answers
The 100 most important Economics questions — pulled from our full bank of 360 Economics questions, ranked by how frequently they're asked in real exams. Answers and explanations are shown directly below each question.
1.The RBI is called the "banker's bank" because it:
easy- A.accepts deposits from the general public
- B.lends directly to farmers
- C.finances industrial projects
- D.acts as the lender of last resort to commercial banks Correct Answer
Explanation: Commercial banks can borrow from the RBI in need, and the RBI regulates and holds their reserves.
Practice more on this topic →2.NABARD is the apex institution for:
easy- A.housing finance
- B.foreign trade finance
- C.stock market regulation
- D.agriculture and rural development finance Correct Answer
Explanation: NABARD (National Bank for Agriculture and Rural Development) refinances institutions lending for agriculture and rural activities.
Practice more on this topic →3.Which scheme, launched in 2014, aims at universal access to bank accounts for every household?
easy- A.Atal Pension Yojana
- B.Pradhan Mantri Jan Dhan Yojana Correct Answer
- C.Sukanya Samriddhi Yojana
- D.Pradhan Mantri Mudra Yojana
Explanation: PMJDY was launched on 28 August 2014 to provide a basic bank account, debit card and insurance cover.
Practice more on this topic →4.Which is the largest public sector bank in India by assets?
easy- A.State Bank of India Correct Answer
- B.Punjab National Bank
- C.Bank of Baroda
- D.Canara Bank
Explanation: SBI is the largest public sector bank in India.
Practice more on this topic →5.The abbreviation ATM stands for:
easy- A.Automatic Transfer Machine
- B.Automated Trading Machine
- C.Automated Teller Machine Correct Answer
- D.Advanced Teller Mechanism
Explanation: An ATM lets customers withdraw cash and do simple banking without a teller.
Practice more on this topic →6.How many major commercial banks were nationalised in July 1969?
easy- A.6
- B.14 Correct Answer
- C.20
- D.28
Explanation: 14 banks with deposits above ₹50 crore were nationalised in 1969; six more followed in 1980.
Practice more on this topic →7.The Imperial Bank of India was converted into the State Bank of India in:
medium- A.1955 Correct Answer
- B.1947
- C.1949
- D.1969
Explanation: The State Bank of India Act, 1955 took over the Imperial Bank, creating SBI.
Practice more on this topic →8.The second round of bank nationalisation, covering six banks, took place in:
medium- A.1975
- B.1980 Correct Answer
- C.1985
- D.1991
Explanation: Six more commercial banks with deposits above ₹200 crore were nationalised in April 1980.
Practice more on this topic →9.Regional Rural Banks (RRBs) were first set up in:
medium- A.1969
- B.1982
- C.1991
- D.1975 Correct Answer
Explanation: The first RRBs started in October 1975 to serve small farmers and rural artisans.
Practice more on this topic →10.The Banking Regulation Act, which governs the functioning of banks in India, was passed in:
medium- A.1934
- B.1956
- C.1969
- D.1949 Correct Answer
Explanation: The Banking Regulation Act came in 1949 and gave the RBI wide powers over banks.
Practice more on this topic →11.The Unified Payments Interface (UPI) was developed by:
medium- A.SEBI
- B.IRDAI
- C.NPCI Correct Answer
- D.NABARD
Explanation: The National Payments Corporation of India (NPCI) launched UPI in 2016.
Practice more on this topic →12.The Basel norms on capital adequacy of banks are issued by the:
medium- A.International Monetary Fund
- B.World Trade Organization
- C.World Bank
- D.Basel Committee on Banking Supervision Correct Answer
Explanation: The Basel Committee, hosted by the Bank for International Settlements, sets the Basel norms.
Practice more on this topic →13.Domestic commercial banks are required to lend what share of adjusted net bank credit to the priority sector?
medium- A.25 per cent
- B.32 per cent
- C.40 per cent Correct Answer
- D.50 per cent
Explanation: The priority sector lending target for domestic commercial banks is 40 per cent of adjusted net bank credit.
Practice more on this topic →14.In 2019, Vijaya Bank and Dena Bank were merged with:
medium- A.State Bank of India
- B.Canara Bank
- C.Bank of Baroda Correct Answer
- D.Punjab National Bank
Explanation: The three-bank merger took effect on 1 April 2019 and created the third largest public sector bank.
Practice more on this topic →15.For RTGS transfers, the minimum amount is:
medium- A.₹2 lakh Correct Answer
- B.₹1
- C.₹10,000
- D.₹50,000
Explanation: RTGS is meant for large-value transfers, with a minimum of ₹2 lakh; NEFT has no minimum.
Practice more on this topic →16.NABARD was established in which year?
medium- A.1982 Correct Answer
- B.1969
- C.1975
- D.1991
Explanation: NABARD was set up on 12 July 1982 on the recommendation of the Shivaraman Committee.
Practice more on this topic →17.Which committee recommended the creation of payments banks and small finance banks?
hard- A.The Narasimham Committee
- B.The Shivaraman Committee
- C.The Nachiket Mor Committee Correct Answer
- D.The Khusro Committee
Explanation: The Nachiket Mor Committee on financial services for small businesses and low-income households made this proposal.
Practice more on this topic →18.The Banking Ombudsman Scheme was introduced by the RBI in:
hard- A.1995 Correct Answer
- B.1969
- C.1982
- D.2005
Explanation: The scheme began in 1995 to resolve customer complaints against banks quickly and cheaply.
Practice more on this topic →19.The Narasimham Committee (1991) is associated with reforms of the:
hard- A.agricultural marketing system
- B.banking and financial sector Correct Answer
- C.power sector
- D.public distribution system
Explanation: It recommended lowering CRR and SLR and giving banks more operational freedom.
Practice more on this topic →20.Which committee recommended the setting up of NABARD?
hard- A.The Narasimham Committee
- B.The Shivaraman Committee Correct Answer
- C.The Nachiket Mor Committee
- D.The Khusro Committee
Explanation: The Shivaraman Committee (1979) proposed a dedicated apex body for agricultural and rural credit.
Practice more on this topic →21.In India, the census is conducted after every:
easy- A.five years
- B.seven years
- C.ten years Correct Answer
- D.twenty years
Explanation: India's census is a decennial exercise.
Practice more on this topic →22.According to the 2011 Census, the most populous State of India is:
easy- A.Maharashtra
- B.Bihar
- C.West Bengal
- D.Uttar Pradesh Correct Answer
Explanation: Uttar Pradesh had about 19.98 crore people in 2011, followed by Maharashtra.
Practice more on this topic →23.According to the 2011 Census, the least populous State of India is:
easy- A.Mizoram
- B.Goa
- C.Arunachal Pradesh
- D.Sikkim Correct Answer
Explanation: Sikkim had about 6.1 lakh people in 2011.
Practice more on this topic →24.The literacy rate of India as per the 2011 Census was:
easy- A.65.38 per cent
- B.74.04 per cent Correct Answer
- C.52.21 per cent
- D.82.14 per cent
Explanation: The 2011 literacy rate was 74.04 per cent (male 82.14, female 65.46).
Practice more on this topic →25.The overall sex ratio of India in the 2011 Census was:
easy- A.943 females per 1,000 males Correct Answer
- B.1,000 females per 1,000 males
- C.927 females per 1,000 males
- D.972 females per 1,000 males
Explanation: The sex ratio improved from 933 in 2001 to 943 in 2011.
Practice more on this topic →26.India's population according to the 2011 Census was about:
easy- A.102 crore
- B.136 crore
- C.121 crore Correct Answer
- D.95 crore
Explanation: The 2011 Census counted 121.09 crore people.
Practice more on this topic →27.The first synchronous census of India, conducted on the same date across the country, was held in:
medium- A.1872
- B.1881 Correct Answer
- C.1891
- D.1901
Explanation: The 1872 count was not synchronous; the 1881 census under Lord Ripon was the first regular, synchronous census.
Practice more on this topic →28.The first census after India's independence was conducted in:
medium- A.1951 Correct Answer
- B.1947
- C.1950
- D.1961
Explanation: The 1951 Census was the first census of independent India.
Practice more on this topic →29.The census in India is conducted by the Office of the Registrar General and Census Commissioner, which functions under the:
medium- A.Ministry of Finance
- B.NITI Aayog
- C.Ministry of Home Affairs Correct Answer
- D.Election Commission
Explanation: The Census Commissioner works under the Union Ministry of Home Affairs.
Practice more on this topic →30.Which State had the highest literacy rate in the 2011 Census?
medium- A.Kerala Correct Answer
- B.Mizoram
- C.Goa
- D.Tripura
Explanation: Kerala recorded 93.91 per cent literacy.
Practice more on this topic →31.Which State had the lowest literacy rate in the 2011 Census?
medium- A.Uttar Pradesh
- B.Rajasthan
- C.Bihar Correct Answer
- D.Jharkhand
Explanation: Bihar recorded 63.82 per cent literacy.
Practice more on this topic →32.Which State had the highest sex ratio in the 2011 Census?
medium- A.Tamil Nadu
- B.Andhra Pradesh
- C.Odisha
- D.Kerala Correct Answer
Explanation: Kerala had 1,084 females per 1,000 males.
Practice more on this topic →33.Which State had the lowest sex ratio in the 2011 Census?
medium- A.Haryana Correct Answer
- B.Punjab
- C.Rajasthan
- D.Uttar Pradesh
Explanation: Haryana had 879 females per 1,000 males.
Practice more on this topic →34.The child sex ratio (0-6 years) of India in the 2011 Census was:
medium- A.919 Correct Answer
- B.933
- C.943
- D.1,000
Explanation: The child sex ratio fell from 927 in 2001 to 919 in 2011.
Practice more on this topic →35.The population density of India in the 2011 Census was about:
medium- A.325 persons per sq km
- B.450 persons per sq km
- C.267 persons per sq km
- D.382 persons per sq km Correct Answer
Explanation: Density rose from 325 in 2001 to 382 in 2011.
Practice more on this topic →36.Which State had the highest population density in the 2011 Census?
medium- A.Kerala
- B.West Bengal
- C.Bihar Correct Answer
- D.Uttar Pradesh
Explanation: Bihar had about 1,102 persons per sq km among the States.
Practice more on this topic →37.The Census in India is conducted under the:
hard- A.Registration Act, 1908
- B.Census Act, 1948 Correct Answer
- C.Representation of the People Act, 1951
- D.Statistics Collection Act, 1953
Explanation: The Census Act, 1948 provides the legal framework for the decennial census.
Practice more on this topic →38.The decadal growth rate of India's population during 2001-2011 was:
hard- A.21.54 per cent
- B.17.64 per cent Correct Answer
- C.24.80 per cent
- D.13.20 per cent
Explanation: The growth rate fell from 21.54 per cent in 1991-2001 to 17.64 per cent.
Practice more on this topic →39.Which State had the lowest population density in the 2011 Census?
hard- A.Sikkim
- B.Mizoram
- C.Nagaland
- D.Arunachal Pradesh Correct Answer
Explanation: Arunachal Pradesh had about 17 persons per sq km.
Practice more on this topic →40.The 2011 Census was the ___ census since Independence.
hard- A.fifth
- B.seventh Correct Answer
- C.sixth
- D.eighth
Explanation: Counting from 1951 (first) the 2011 Census was the seventh after Independence and the fifteenth overall.
Practice more on this topic →41.The Human Development Index (HDI) is published by the:
easy- A.World Bank
- B.IMF
- C.WTO
- D.UNDP Correct Answer
Explanation: The United Nations Development Programme publishes the Human Development Report and HDI.
Practice more on this topic →42.Economic growth refers to a sustained increase in a country's:
easy- A.real output or real GDP Correct Answer
- B.population only
- C.number of banks
- D.tax rates
Explanation: Growth is measured by the rise in real GDP over time.
Practice more on this topic →43.Which of these is NOT a component of the HDI?
easy- A.Health (life expectancy)
- B.Military strength Correct Answer
- C.Education
- D.Standard of living (income)
Explanation: HDI combines health, education and income.
Practice more on this topic →44.Per capita income is a measure of:
easy- A.the income of the richest person
- B.total government revenue
- C.total exports
- D.the average income of a person in the country Correct Answer
Explanation: It is national income divided by population and hides inequality.
Practice more on this topic →45.Sustainable development means development that:
easy- A.ignores the environment
- B.benefits only urban areas
- C.depends only on foreign aid
- D.meets present needs without compromising the needs of future generations Correct Answer
Explanation: This definition comes from the Brundtland Commission report.
Practice more on this topic →46.Which country is known for the concept of Gross National Happiness (GNH)?
easy- A.Nepal
- B.Sri Lanka
- C.Bhutan Correct Answer
- D.Maldives
Explanation: Bhutan's king introduced GNH in the 1970s as a measure of progress.
Practice more on this topic →47.The value of the HDI lies between:
medium- A.0 and 1 Correct Answer
- B.0 and 10
- C.1 and 100
- D.-1 and 1
Explanation: A value closer to 1 indicates higher human development.
Practice more on this topic →48.The first Human Development Report was published in:
medium- A.1975
- B.1985
- C.2000
- D.1990 Correct Answer
Explanation: It was prepared under the leadership of Mahbub ul Haq with inputs from Amartya Sen.
Practice more on this topic →49.The Gini coefficient is used to measure:
medium- A.the rate of inflation
- B.the size of the fiscal deficit
- C.inequality in the distribution of income Correct Answer
- D.the level of literacy
Explanation: A Gini value of 0 means perfect equality and 1 means perfect inequality.
Practice more on this topic →50.The Lorenz curve is used to show:
medium- A.the supply of money
- B.the distribution of income or wealth Correct Answer
- C.the balance of payments
- D.the business cycle
Explanation: The further the curve bends from the equality line, the greater the inequality.
Practice more on this topic →51.The global Multidimensional Poverty Index (MPI) is published by UNDP along with:
medium- A.the Oxford Poverty and Human Development Initiative (OPHI) Correct Answer
- B.the World Economic Forum
- C.the OECD
- D.the Asian Development Bank
Explanation: The MPI measures deprivation in health, education and living standards.
Practice more on this topic →52.India's national Multidimensional Poverty Index is released by:
medium- A.NITI Aayog Correct Answer
- B.Reserve Bank of India
- C.Finance Commission
- D.Election Commission
Explanation: NITI Aayog has published the national MPI based on survey data.
Practice more on this topic →53.The Brundtland Commission's 1987 report on sustainable development was titled:
medium- A.Our Common Future Correct Answer
- B.Limits to Growth
- C.Silent Spring
- D.Small is Beautiful
Explanation: The report popularised the idea of sustainable development.
Practice more on this topic →54.The Sustainable Development Goals (SDGs) adopted in 2015 are how many in number?
medium- A.8
- B.17 Correct Answer
- C.12
- D.25
Explanation: The 17 SDGs replaced the eight Millennium Development Goals and cover the period to 2030.
Practice more on this topic →55.The capability approach to development is associated with:
medium- A.Adam Smith
- B.Amartya Sen Correct Answer
- C.W. W. Rostow
- D.Milton Friedman
Explanation: Sen argued that development means expanding people's real freedoms and capabilities.
Practice more on this topic →56.The Gender Inequality Index (GII) measures disparities between women and men in:
medium- A.military spending, trade and tax
- B.rainfall, crops and soils
- C.reproductive health, empowerment and labour market participation Correct Answer
- D.banking, insurance and stock markets
Explanation: The GII is published by UNDP in the Human Development Report.
Practice more on this topic →57.The "Stages of Economic Growth" (1960), which describes a stage of "take-off", was written by:
hard- A.Simon Kuznets
- B.W. W. Rostow Correct Answer
- C.Paul Samuelson
- D.Joseph Schumpeter
Explanation: Rostow listed five stages from traditional society to the age of high mass consumption.
Practice more on this topic →58.The Harrod-Domar model emphasises that economic growth depends mainly on:
hard- A.the size of the army
- B.the rate of exports only
- C.the rate of saving and the capital-output ratio Correct Answer
- D.the level of rainfall
Explanation: Growth rate = saving rate divided by the capital-output ratio.
Practice more on this topic →59.The Kuznets curve describes an inverted-U relationship between:
hard- A.inflation and unemployment
- B.interest rates and investment
- C.exports and imports
- D.income inequality and economic development Correct Answer
Explanation: Kuznets suggested inequality first rises and then falls as an economy develops.
Practice more on this topic →60.The dual-sector model of development, based on surplus labour in agriculture, was proposed by:
hard- A.Ragnar Nurkse
- B.Amartya Sen
- C.W. Arthur Lewis Correct Answer
- D.Alfred Marshall
Explanation: Lewis (1954) described labour moving from a low-productivity traditional sector to a modern sector.
Practice more on this topic →61.The Planning Commission of India was set up in:
easy- A.1950 Correct Answer
- B.1947
- C.1952
- D.1956
Explanation: It was set up by a Cabinet resolution in March 1950, with the Prime Minister as chairman.
Practice more on this topic →62.NITI Aayog replaced the Planning Commission in:
easy- A.2010
- B.2014
- C.2015 Correct Answer
- D.2017
Explanation: NITI Aayog came into being on 1 January 2015.
Practice more on this topic →63.The First Five-Year Plan in India covered the period:
easy- A.1947-52
- B.1951-56 Correct Answer
- C.1956-61
- D.1961-66
Explanation: The First Plan began on 1 April 1951 and emphasised agriculture, irrigation and power.
Practice more on this topic →64.The chairman of the erstwhile Planning Commission was the:
easy- A.President
- B.Finance Minister
- C.Chief Justice of India
- D.Prime Minister Correct Answer
Explanation: The Prime Minister chaired the Commission, with a Deputy Chairman running it day to day.
Practice more on this topic →65.The Second Five-Year Plan (1956-61) gave priority to:
easy- A.only agriculture
- B.heavy and basic industries Correct Answer
- C.only services
- D.only foreign trade
Explanation: The Second Plan, based on the Mahalanobis approach, stressed capital goods and heavy industry.
Practice more on this topic →66.The last Five-Year Plan of India was the:
easy- A.Tenth Plan (2002-07)
- B.Eleventh Plan (2007-12)
- C.Thirteenth Plan (2017-22)
- D.Twelfth Plan (2012-17) Correct Answer
Explanation: After the Twelfth Plan ended in March 2017, Five-Year Plans were discontinued.
Practice more on this topic →67.The First Five-Year Plan was based on which growth model?
medium- A.Harrod-Domar model Correct Answer
- B.Mahalanobis model
- C.Lewis model
- D.Rostow model
Explanation: The First Plan used the Harrod-Domar model, linking growth to saving and investment.
Practice more on this topic →68.The "Plan Holiday" in India covered the period:
medium- A.1951-56
- B.1975-78
- C.1966-69 Correct Answer
- D.1990-92
Explanation: After the Third Plan, three annual plans were followed between 1966 and 1969.
Practice more on this topic →69.The National Development Council (NDC) was formed in:
medium- A.1947
- B.1950
- C.1961
- D.1952 Correct Answer
Explanation: The NDC brings together the Centre and States to approve Five-Year Plans.
Practice more on this topic →70.The Bombay Plan of 1944 was drawn up by:
medium- A.leading Indian industrialists Correct Answer
- B.the Indian National Congress
- C.the British government
- D.Mahatma Gandhi
Explanation: Industrialists such as J. R. D. Tata and G. D. Birla proposed a state-supported industrial plan.
Practice more on this topic →71.Rolling Plans, which are revised every year, were introduced in India in:
medium- A.1951
- B.1966
- C.1978 Correct Answer
- D.1992
Explanation: The Janata government introduced the Rolling Plan for 1978-83.
Practice more on this topic →72.The Gadgil formula is used for:
medium- A.fixing the minimum support price
- B.determining the repo rate
- C.allocating central plan assistance among the States Correct Answer
- D.setting the poverty line
Explanation: The formula was adopted in the Fourth Plan to distribute central assistance among States.
Practice more on this topic →73.The Sixth Five-Year Plan (1980-85) laid special stress on:
medium- A.defence production
- B.poverty alleviation Correct Answer
- C.space research
- D.tourism
Explanation: The Sixth Plan launched programmes such as IRDP and NREP for the rural poor.
Practice more on this topic →74.The Eighth Five-Year Plan (1992-97) was launched after:
medium- A.the Emergency of 1975
- B.the Green Revolution of 1966
- C.the nationalisation of banks in 1969
- D.the economic reforms of 1991 Correct Answer
Explanation: The Plan came after the 1991 liberalisation and stressed human development and employment.
Practice more on this topic →75.The theme of the Twelfth Five-Year Plan was:
medium- A.garibi hatao
- B.growth with stability
- C.self-reliance
- D.faster, more inclusive and sustainable growth Correct Answer
Explanation: The Twelfth Plan aimed at faster, more inclusive and sustainable growth.
Practice more on this topic →76.The Ninth Five-Year Plan (1997-2002) had as its main theme:
medium- A.heavy industrialisation
- B.growth with social justice and equity Correct Answer
- C.self-reliance in food grains
- D.removal of poverty only through subsidies
Explanation: The Ninth Plan aimed at growth with social justice and equity, coinciding with India's fiftieth year of independence.
Practice more on this topic →77.The 1934 book "Planned Economy for India" was written by:
hard- A.P. C. Mahalanobis
- B.M. Visvesvaraya Correct Answer
- C.Jawaharlal Nehru
- D.J. R. D. Tata
Explanation: Sir M. Visvesvaraya proposed a ten-year plan to double national income.
Practice more on this topic →78.The "People's Plan" of 1944 was drafted by:
hard- A.M. N. Roy Correct Answer
- B.Sriman Narayan Agarwal
- C.Jayaprakash Narayan
- D.Dadabhai Naoroji
Explanation: M. N. Roy drafted the People's Plan for the Indian Federation of Labour.
Practice more on this topic →79.The "Gandhian Plan" of 1944 was formulated by:
hard- A.Sriman Narayan Agarwal Correct Answer
- B.M. N. Roy
- C.Jayaprakash Narayan
- D.M. Visvesvaraya
Explanation: It stressed village industries, decentralisation and agriculture.
Practice more on this topic →80.The "Sarvodaya Plan" of 1950 was put forward by:
hard- A.Sriman Narayan Agarwal
- B.M. N. Roy
- C.Jayaprakash Narayan Correct Answer
- D.C. D. Deshmukh
Explanation: The Sarvodaya Plan was inspired by Gandhian ideas and Vinoba Bhave's Sarvodaya movement.
Practice more on this topic →81.According to the law of demand, when the price of a good rises (other things unchanged), the quantity demanded:
easy- A.rises
- B.stays constant
- C.becomes zero always
- D.falls Correct Answer
Explanation: Price and quantity demanded move in opposite directions, so the demand curve slopes downward.
Practice more on this topic →82.According to the law of supply, when the price of a good rises, the quantity supplied:
easy- A.falls
- B.stays constant
- C.rises Correct Answer
- D.becomes zero
Explanation: Higher prices encourage producers to supply more.
Practice more on this topic →83.A market with a single seller of a product with no close substitutes is called:
easy- A.oligopoly
- B.perfect competition
- C.duopoly
- D.monopoly Correct Answer
Explanation: In a monopoly one firm controls the supply of the good.
Practice more on this topic →84.A market with only a few large sellers is called:
easy- A.oligopoly Correct Answer
- B.monopoly
- C.perfect competition
- D.monopsony
Explanation: Sellers in an oligopoly are few and interdependent, as in the telecom sector.
Practice more on this topic →85.Which feature belongs to perfect competition?
easy- A.many buyers and sellers selling identical products Correct Answer
- B.a single seller
- C.a few powerful sellers
- D.a government-fixed price
Explanation: In perfect competition no single firm can influence the market price.
Practice more on this topic →86.The point where the demand curve and the supply curve intersect gives the:
easy- A.maximum price
- B.equilibrium price Correct Answer
- C.minimum wage
- D.black-market price
Explanation: At equilibrium, quantity demanded equals quantity supplied.
Practice more on this topic →87.A Giffen good is one for which demand:
medium- A.falls when income rises
- B.rises when its price rises Correct Answer
- C.is perfectly elastic
- D.never changes
Explanation: A Giffen good is a strongly inferior staple whose demand rises with price, violating the law of demand.
Practice more on this topic →88.If the price elasticity of demand for a good is greater than 1, demand is said to be:
medium- A.inelastic
- B.elastic Correct Answer
- C.perfectly inelastic
- D.unitary
Explanation: Demand is elastic when quantity demanded changes proportionately more than the price.
Practice more on this topic →89.The demand for a necessity such as salt is generally:
medium- A.highly elastic
- B.perfectly elastic
- C.negative
- D.inelastic Correct Answer
Explanation: People keep buying salt even if its price rises, so demand responds little to price.
Practice more on this topic →90.Which of the following is a pair of complementary goods?
medium- A.tea and coffee
- B.butter and margarine
- C.car and petrol Correct Answer
- D.rice and wheat
Explanation: Complements are used together, so a rise in the price of one lowers demand for the other.
Practice more on this topic →91.Which of the following is a pair of substitute goods?
medium- A.tea and coffee Correct Answer
- B.car and petrol
- C.pen and ink
- D.bread and butter
Explanation: Substitutes can replace each other, so a rise in the price of one raises demand for the other.
Practice more on this topic →92.The main feature of monopolistic competition is:
medium- A.a single seller
- B.many sellers offering differentiated products Correct Answer
- C.identical products
- D.no advertising
Explanation: Toothpaste, soap and clothing brands are examples of product differentiation.
Practice more on this topic →93.An inferior good is one for which demand:
medium- A.falls as consumer income rises Correct Answer
- B.rises as consumer income rises
- C.is unaffected by price
- D.rises only in winter
Explanation: As incomes rise, people shift away from inferior goods to better ones.
Practice more on this topic →94.Consumer surplus is the difference between:
medium- A.price and cost of production
- B.income and expenditure
- C.what a consumer is willing to pay and what is actually paid Correct Answer
- D.demand and supply
Explanation: The gain to buyers from paying less than the maximum they would pay is consumer surplus.
Practice more on this topic →95.The law of diminishing marginal utility states that as a person consumes more units of a good, the additional satisfaction from each extra unit:
medium- A.increases
- B.remains constant
- C.doubles
- D.decreases Correct Answer
Explanation: The first glass of water satisfies more than the fifth.
Practice more on this topic →96.For a normal good, a rise in consumers' incomes causes the demand curve to:
medium- A.shift to the left
- B.shift to the right Correct Answer
- C.become vertical
- D.remain unchanged
Explanation: Higher income raises demand at every price, shifting the whole curve rightwards.
Practice more on this topic →97.Goods whose demand rises as their price rises because they confer status are called:
hard- A.Veblen goods Correct Answer
- B.Giffen goods
- C.inferior goods
- D.complementary goods
Explanation: Veblen goods are luxury items bought for prestige; unlike Giffen goods they are not inferior.
Practice more on this topic →98.The kinked demand curve model is associated with which market form?
hard- A.perfect competition
- B.monopoly
- C.oligopoly Correct Answer
- D.monopsony
Explanation: Paul Sweezy's model explains why oligopoly prices tend to be rigid.
Practice more on this topic →99.A market in which there is only one buyer is called a:
hard- A.monopoly
- B.oligopoly
- C.duopoly
- D.monopsony Correct Answer
Explanation: Monopsony is the buyer-side counterpart of monopoly.
Practice more on this topic →100.When the price elasticity of demand is exactly 1 (unitary), a change in price leaves total revenue:
hard- A.higher
- B.lower
- C.unchanged Correct Answer
- D.doubled
Explanation: With unitary elasticity the percentage change in quantity exactly offsets the percentage change in price.
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