Economics · Commerce Accountancy

Microeconomics and Pricing

1,364 Questions

Microeconomics and pricing analyze market structures, consumer utility, marginal cost, and strategic pricing models like predatory pricing. These foundational economic concepts are regularly featured in civil services and state administrative examinations. Solve these practice questions to understand market equilibrium, demand elasticity, and competitive firm behavior.

Market equilibrium pricingIncome elasticity of demandMarginal cost conceptsUtility functions analysisPredatory pricing strategiesOligopoly market structures

Microeconomics and Pricing Questions

Multiple choice business mathematics and statistics applications of calculus revenue functions from marginal revenue functions minimization of cost function and maximization of revenue function and profit function integral calculus – ii

Find the elasticity of supply when price $5$ units. Supply function is given by $q = 25 - 4p +p^2$

  1. $1$
  2. $2$
  3. $0$

  4. Cannot be determined
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation
$q=25-4p+p^{2}$
Elasticity of supply $=\cfrac{\cfrac{dq}{q}}{\cfrac{dp}{p}}=\cfrac{(-4+2p)\times p}{(25-4p+p^{2})}$
When $p=5$ units
Elasticity of supply $=\cfrac{(-4+10)\times 5}{(25-20+25)}=1$
Multiple choice business mathematics and statistics applications of calculus revenue functions from marginal revenue functions minimization of cost function and maximization of revenue function and profit function integral calculus – ii

Find the elasticity of supply for supply function $x = 2p^2+5$, when $p=3$.

  1. $\dfrac{23}{36}$
  2. $\dfrac{36}{23}$
  3. $\dfrac{63}{32}$

  4. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
Elasticity of supply$\Rightarrow\cfrac{\cfrac{+dx}{x}}{\cfrac{dp}{p}}$$\Rightarrow\cfrac{(4p)p}{2p^{2}+5}$
Elasticity of supply when $p=3\Rightarrow\cfrac{36}{23}$
Multiple choice elements of accounts origin of transactions - source documents and preparation of vouchers business transactions and source document source documents voucher and transactions

Which of the following is NOT a characteristic of perfect competition?

  1. Free entry and exit of the firms

  2. The demand curve of firm is horizontal

  3. The marginal revenue curve is horizontal

  4. An individual firm can influence the price
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

In perfect competition, firms are price takers, meaning they have no power to influence the market price. Options A, B, and C are all standard characteristics of perfect competition.

Multiple choice elements of accounts origin of transactions - source documents and preparation of vouchers business transactions and source document source documents voucher and transactions

When marginal is negative, it must be true that _______________.

  1. The average is negative

  2. The average is decreasing

  3. The total is negative

  4. The total is decreasing
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Marginal value is the change in total value. If the marginal value is negative, it means the total value is decreasing with each additional unit.

Multiple choice social science index number value and price important index numbers price rise/inflation

If customers perceive that price of product is greater than value then customer _______.

  1. Would get product free of cost

  2. Would get discount

  3. Would buy that product

  4. Would not buy the product
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

If customers after bergain find out the offered price of a product is more than what it is originally, that means the customer needs to give a higher price for their satisfaction. In such a case, the opportunity cost of the product is more than expected. o customers will prefer not buy such products.

Multiple choice social science index number value and price important index numbers price rise/inflation

Set price limit from which no more demand is accepted is termed as _______.

  1. Cost ceiling

  2. Cost floor

  3. Price ceiling

  4. Price floor
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A price ceiling is a government-imposed price control or limit on how high a price is charged for a product. Governments intend price ceilings to protect consumers from conditions that could make commodities prohibitively expensive. Such conditions can occur during periods of high inflation or in monopolistic markets.

Multiple choice social science index number value and price important index numbers price rise/inflation

Company will face low sales and low markups if company sets its product prices _____.

  1. Too high

  2. Too low

  3. Too discount

  4. None of above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

If any company sets the price of its product or service too high, in the sense it is higher than others, even if they aren't compromising on other factors such as quality etc, the company will face low sales and low markup by the consumers. That is because the consumers will tend to buy from ones who have lesser prices at the best opportunity cost of other factors.

Multiple choice business organisation and correspondence transport: economic and social importance and kinds of transport modes and choice of transportation meaning and definition of transport transport services

Transport helps in stabilization of price.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Transport helps in stabilization of price. Transport exerts considerable influence upon the stabilization of the prices of several commodities by moving commodities from surplus to deficit areas.

Prices are also reduced because of the facilities offered by transport for large-scale production.
It is important to producers or manufacturers, retailers, and consumers. The various modes of transportation in this country are Rail, Water, Road, Pipeline, and Air transport.

 Factors affecting the choice of transportation mode are: the nature of goods, customer wishes, speed, simplicity, price, and supporting functions.

Multiple choice economics consumption and investment functions determinants of consumption function and savings function production, consumption, saving and economic units ex ante and ex post

AD Curve starts ____________.

  1. From the origin

  2. Point Below the origin

  3. Point above the origin

  4. None of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Aggregate demand curve is upward sloping showing a positive relation between level of income and overall expenditure in the economy. The curve intercepts on Y-axis because even at zero level of income, there is some consumption which is required for the very existence of life. 

Multiple choice economics consumption and investment functions determinants of consumption function and savings function production, consumption, saving and economic units ex ante and ex post

Which of the following is not true about AD in a two-sector economy?

  1. AD = Consumption + Saving

  2. AD curve starts from some point above the origin

  3. AD = Consumption + Investment

  4. AD curve has a positive slope
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The aggregate demand in two sector economy only includes the expenditure made by the consumer sector and the producer sector. The expenditure by the government sector and net exports are not included in the two sector economy. 

Multiple choice business mathematics and statistics index numbers weighted methods to calculate index numbers construction of index numbers applied statistics

The following commodities have the given price indices relative to a base of $100$. The weights are also given:

Commodity Relative Index Weight
Butter 181 4
Bread 116 12
Tea 110 3
Bacon 152 7

Calculate the new index for this set of commodities

  1. $132$
  2. $133$
  3. $134$
  4. $135$
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

New index $=\cfrac { \sum _{ i=1 }^{ 4 }{ { \left( \text{Relative index }\right)  } _{ i } } \times { \left( \text{Index no. Weight }\right)  } _{ i } }{ \sum _{ i=1 }^{ 4 }{ { \left( \text{weight }\right)  } _{ i } }  } $
$=\cfrac { 181\times 4+116\times 12+110\times 3+152\times 7 }{ 4+12+3+7 } $
$=\cfrac { 724+1392+330+1064 }{ 26 } $
$=\cfrac { 3510 }{ 26 } =\cfrac { 1755 }{ 13 } $
$=135$

Multiple choice economics circular flow of income and methods of calculating national income some macroeconomic identities national income accounting national income aggregates

If factor cost is greater than market price, then it means that ____________________.

  1. Indirect Taxes$ >$ Subsides
  2. Indirect Taxes $=$ Subsidies
  3. Indirect Taxes $<$ Subsides
  4. Indirect Taxes $\ge$ subsidies
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

If factor cost is greater than market price, then it means Indirect taxes < Subsidies. Market price can be less than factor cost when subsidies will be more than the indirect tax.

Formula: Market price - indirect tax + subsidies = Factor cost

Multiple choice economics circular flow of income and methods of calculating national income some macroeconomic identities national income accounting national income aggregates

In Dx$=$f(Px, T, Y)Y is?

  1. Income level of consumer

  2. Tastes of consumer

  3. Quantity of demand of goods

  4. None of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

In the demand function Dx = f(Px, T, Y), Px is the price of the good, T represents consumer tastes, and Y represents the income level of the consumer.

Multiple choice economics circular flow of income and methods of calculating national income some macroeconomic identities national income accounting national income aggregates

If there is a simultaneous fall in consumers disposal income as well as number of suppliers of a product in the market, the _________.

  1. equilibrium quantity will decrease

  2. equilibrium price will decrease

  3. equilibrium price will go up

  4. equilibrium quantity will increase
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A fall in disposable income decreases demand (shifting the demand curve left), and a fall in the number of suppliers decreases supply (shifting the supply curve left). Both shifts lead to a decrease in equilibrium quantity.