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 social science prices and cost of living value and price utility, value and price price rise/inflation

When price discrimination extends to two or more countries it is called __________.

  1. dumping

  2. differentiation

  3. dual pricing

  4. price preference
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Dumping is, in general, a situation of international price discrimination where the price of a product which is sold to the importing country is less than the price of the same product when sold in the market of the exporting country. It is generally perceived that dumping would result in unfair trade.

Multiple choice social science prices and cost of living value and price utility, value and price price rise/inflation

Long run determinant of price, is equal to ______.

  1. marginal utility

  2. market forces

  3. cost of production

  4. brand value
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

It is believed in long run production function,total revenue is equal to total cost . There is no extra normal profit or abnormal loss.Thus , in long run price of the product is equal to the cost of production.

Multiple choice social science prices and cost of living value and price utility, value and price price rise/inflation

The price which a consumer would be willing to pay for a commodity equals to his ________.

  1. Total utility

  2. Marginal utility

  3. Average utility

  4. Does not have any relation to any of the above options
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The price which a consumer pays for a commodity is always less than what he is willing to pay for it, so that the satisfaction which he gets from its purchase is more than the price paid for it and thus he derives a surplus satisfaction which Marshall calls Consumer’s Surplus (CS). 

Multiple choice social science prices and cost of living value and price utility, value and price price rise/inflation

The internal factors which governing the prices are _________________.

  1. The costs and the management policy

  2. The elasticity of demand and supply

  3. The goodwill of the company

  4. The government policy
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

There are certain factors which govern the prices. Internal and external factors. Internal factors are the ones which are caused internally in the organization due to certain policies set by the firm. Thus the cost and management policies influence the prices. 

Multiple choice social science prices and cost of living value and price utility, value and price price rise/inflation

The fundamental elements in the price- setting process is ________________.

  1. Cost data

  2. Demand elasticity

  3. Managerial ability

  4. Wages and Salaries
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The main element in the price-setting process of a product is the cost data of the product. This is because for any producer, it is first important to cover up the cost of making the good and then add a profit margin to set the appropriate price. Thus, it is important to cover the cost so that the firm does not incur a loss.

Multiple choice social science prices and cost of living value and price utility, value and price price rise/inflation

Real value of a commodity is ________.

  1. the amount of other goods which have to be given up in order to get it.

  2. its exchange value

  3. its total utility

  4. its cost of production.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

At the time of barter system, commodities were exchanged for commodities. But after the introduction of money, the concept of opportunity cost came up where the real value of a commodity is measured in terms of the next best alternative that needs to be sacrificed to buy the commodity.

Multiple choice social science prices and cost of living value and price utility, value and price price rise/inflation

The paradox of value means that _____________________.

  1. people are irrational in consumption choices

  2. the total utilities yielded by commodities do not necessarily have relationship to their prices

  3. value has no relationship to utility schedules

  4. free goods are goods that are essential to life.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The paradox of value, also known as the diamond water paradox, is a contradiction which means that the total utilities yielded by commodities do not necessarily have relationship to their prices. We see that though water is available in abundance and it so useful and essential for survival yet it costs much lower than diamond which is just a luxury item costs much higher price in the market. This paradox discusses the concepts of value in use and value in exchange. The things which have the greatest value in use have little or no value in exchange; whereas those which have the greatest value in exchange have frequently little or no value in use.

Multiple choice social science prices and cost of living value and price utility, value and price price rise/inflation

When a relationship between DMU of a product and its prices is decided than it helps in determining __________.

  1. total marginal value of a product

  2. average utility of product

  3. price of product in market

  4. total utility value of product
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

When the diminishing marginal utility is set in the market then that is compared with various prices in the market for the commodity which decides the ideal price for the commodity in the market which the consumer is willing to pay if they get required utility from the product. 

Multiple choice social science prices and cost of living value and price utility, value and price price rise/inflation

Administered prices means:

  1. Prices fixed by private sector under the guidance of government

  2. Prices fixed by consumer forums

  3. Prices fixed by the Government and private sector

  4. Prices level fixed by the Government
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Administered prices are prices set by a government authority rather than being determined solely by market forces of supply and demand. This is often done to protect consumers or ensure stability in essential goods.

Multiple choice economics agriculture sector profile of indian agriculture and agricultural marketing role of agriculture sector foreign trade in india

The situation of excess demand can be tackled by ______.

  1. Rationing

  2. Queue system

  3. Tie in sale

  4. All the three
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Excess demand occurs when aggregate demand exceeds supply. Rationing, queue systems, and tie-in sales are all administrative or market-based methods used to manage shortages.

Multiple choice organization of commerce and management consumerism the consumer protection act, 1986 consumer protection commerce

A consumer consuming two goods will be in equilibrium, when the marginal utilities from both goods are ____________________.

  1. Maximum possible positive

  2. Minimum possible positive

  3. Equal

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

According to the law of equi-marginal utility, a consumer is in equilibrium when the ratio of marginal utility to price is equal for all goods consumed.

Multiple choice organization of commerce and management consumerism the consumer protection act, 1986 consumer protection commerce

Match the following:

A. Various combinations of two commodities that a consumer can purchase 1.  Indifference map
B. Various combinations of two commodities that give consumer equal satisfaction 2. Indifference curve
C.  A set of indifference curves 3. Budget line
D. Point of agency of a budget line and an indifference curve 4. Consumer's equilibrium

  1. A-1, B-2, C-4, D-3

  2. A-4, B-3, C-2, D-1

  3. A-2, B-3, C-4, D-1

  4. A-3, B-2, C-1, D-4
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
a) Various combinations of two commodities that a consumer can purchase is depicted by the budget line.
b) Various combinations of two commodities that give consumer equal satisfaction is depicted by an indifference curve.c) A set of indifference curves is known as indifference map.d) Point of agency of a budget line and an indifference curve is known as consumer's equilibrium point.

Multiple choice elements of accounts ratio analysis activity (or turnover) ratios accounting ratio's accounting ratios

Falling demand for the product in the market indicated by ________________.

  1. Finished goods turnover ratio

  2. Work in progress turnover ratio

  3. Net profit ratio

  4. Gross profit ratio
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A falling finished goods turnover ratio indicates that goods are not being sold as quickly as they are produced, which suggests a decline in market demand for the product.