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 economics laws of returns - returns to a factor and returns to scale total product, average product and marginal product production and law of variable proportions production return to scale and cobb douglas function

In the stage of Diminishing Returns, Marginal Product (MP)-

  1. First increases, reaches a maximum and then decreases

  2. Decreases

  3. Increases

  4. Remains constant
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

By definition, the stage of diminishing returns is characterized by a declining marginal product of the variable factor.

Multiple choice economics laws of returns - returns to a factor and returns to scale total product, average product and marginal product production and law of variable proportions production return to scale and cobb douglas function

If a change in scale inputs leads to a proportional change in the output, it is a case of-

  1. Increasing Returns to Scale

  2. Constant Returns to Scale

  3. Diminishing Returns to Scale

  4. Variable Returns to Scale
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Constant returns to scale occur when a proportional increase in all inputs leads to an exactly proportional increase in output.

Multiple choice economics laws of returns - returns to a factor and returns to scale total product, average product and marginal product production and law of variable proportions production return to scale and cobb douglas function

A rational producer will always operate in which stage of law of variable proportion?

  1. increasing returns.

  2. diminishing returns.

  3. constant returns.

  4. negative returns.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A rational producer operates in the second stage of the law of variable proportions. In the first stage, marginal product is rising, and in the third stage, marginal product is negative, making both inefficient for production.

Multiple choice geography food security in india components of food security government measures for food security important index numbers

The minimum guaranteed price at which the government offers to purchase any quantity is known as ______.

  1. Procurement price

  2. Minimum Support Price

  3. Issue price

  4. Market price
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Minimum Support Price (MSP) is announced by the Government of India at the beginning of the sowing season for certain crops. The MSP is a guarantee price for farmers.

Multiple choice geography food security in india components of food security government measures for food security important index numbers

Minimum Support Price is decided by the ___________.

  1. Farmers

  2. Government

  3. Mediators

  4. Traders
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Minimum Support Price (MSP) is decided by the government. This is the price at which the government pays to the farmers for their produce. Government buys the crops from farmers at MSP and then sell it in the market. This policy helps the farmers as they get a fixed amount for their produce no matter what the market price is. And also they don’t have to look after the distribution of the produce. 

Multiple choice business maths linear programming problems structure of linear programming model linear programming problem operations research

Mark the wrong statement:

  1. The primal and dual have equal number of variables.

  2. The shadow price indicates the change in the value of the objective function, per unit increase in the value of the RHS.

  3. The shadow price of a non-binding constraint is always equal to zero.

  4. The information about shadow price of a constraint is important since it may be possible to purchase or, otherwise, acquire additional units of the concerned resource.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The number of variables in dual is equal to the number of constraints in the primal and the  number of variables in primal is equal to the number of constraints in the dual.


Therefore, the primal and dual doesn't have equal number of variables.

Multiple choice business mathematics and statistics introduction to index number introduction to index numbers index numbers applied statistics

Consumer price index indicates:

  1. Rise

  2. Fall

  3. Both (a) and (b)

  4. Neither (a) and (b)
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The Consumer Price Index (CPI) indicates the measure of the average change over time in the prices paid by consumers for a market basket of consumer goods and services.

It indicates both Rise and Fall in the price.
Multiple choice business mathematics and statistics introduction to index number introduction to index numbers index numbers applied statistics

Consumer price index numbers are obtained by:

  1. Laspeyre's formula

  2. Fisher ideal formula

  3. Marshall Edgeworth formula

  4. Paasche's formula
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

CPI figures for most countries are usually calculated by using a Laspeyre's Index or Lowe Index.


The CPI calculated via a Paasche index, helps give an idea of what today basket would have cost at yesterday prices.
Answer. (A)

Multiple choice business mathematics and statistics introduction to index number introduction to index numbers index numbers applied statistics

When the prices of rice are to be compared, we compute: 

  1. Volume index

  2. Value index

  3. Price index

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

$\Rightarrow$  When the prices of rice are to be compared, we compute: $Price\,Index.$

$\Rightarrow$  Price index, measure of relative price changes, consisting of a series of numbers arranged so that a comparison between the values for any two periods or places will show the average change in prices between periods or the average difference in prices between places. 
$\Rightarrow$  In most countries price indexes are used to measure inflation, each focusing on the prices of a collection of goods and services important to a particular segment of the economy.

Multiple choice business mathematics and statistics introduction to index number introduction to index numbers index numbers applied statistics

A weighted aggregate price index where the weight for each item is its base period quantity is known as the

  1. Paasche Index

  2. Consumer Price Index

  3. Producer Price Index

  4. Laspeyres Index
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A weighted aggregate price index where the weight for each item is its base period quantity is known as the Laspeyres Index.

Multiple choice elements of business sources of business finance - 1 classification & choice of sources of funds classification of sources of finance owned funds and borrowed funds

Few sellers is a feature of ________________.

  1. monopoly

  2. perfect competition

  3. monopolistic competition

  4. oligopoly
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
Meaning of Oligopoly:
Oligopoly refers to a market situation or a type of market organisational in which a few firms control the supply of a commodity. The competing firms are few in number but each one is large enough so as to be able to control the total industry output and a moderate. However, increase of its output or sales will reduce the sales of rival firms by a noticeable amount.
This is surely the case if three to six or even ten firms control an industry’s output, with each controlling enough to exert influence on price. Oligopoly is the most prevalent form of market organisation in the manu¬facturing sector at modern times and arises due to various reasons (such as, economies of scale, patents and trademarks, control over the sources of raw materials, government’s sanction, need of a large capital, and so on). The chief characteristic of oligopoly is the interdependence among the rival sellers.
Types of Oligopoly:
Oligopoly is of two types:
(a) Pure oligopoly
Here, the oligopolists sell practically homogeneous products. This type is found in steel, copper, cement petrol and a few other industries.
(b) Differential Oligopoly:
In such a case a few firms sell similar but not identical products under the same conditions. It is found in automobiles, tyres, electrical appliances, cigarettes, baby food and a few other industries.
Multiple choice economics consumption and investment functions keynesian law of consumption and propensity to consume ex ante and ex post concept of consumption function, saving function and investment function

 If the marginal propensity of consume is greater than marginal propensity to save, the value of the multiplier will be (Choose the correct alternative): 

  1. greater than 2

  2. less than 2

  3. equal to 2

  4. equal to 5
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

If the value of MPC IS greater than MPS, then the value of the multiplier is always more than two because the change in savings or investment will always be less than half the change in income.