Economics · Commerce Accountancy

Microeconomics and Pricing

1,413 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 economics and quantitative methods foreign trade in india the government and economic development indian economy on the eve of independence impact of technology on livelihoods

_______ is the price at which demand, for a commodity is equal to is supply.

  1. Normal price

  2. Equilibrium price

  3. Short run price

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

Equilibrium price is the price at which the quantity demanded and the quantity supplied is the same. After equilibrium is achieved the price does not change. It is the ideal market price.

Multiple choice business economics and quantitative methods foreign trade in india the government and economic development indian economy on the eve of independence impact of technology on livelihoods

Consumer surplus arises because:

  1. Consumer has lot of money

  2. Quality of different units of the same commodity differs

  3. Consumer receives more than what he pays for

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

Consumer surplus is the excess of amount that the consumer is willing to pay and the amount that the consumer actually pays. Hence, surplus arises because consumer receives more than what he pays for. 

Multiple choice business economics and quantitative methods foreign trade in india the government and economic development indian economy on the eve of independence impact of technology on livelihoods

The equilibrium price clears the market: It is the price at which ________.

  1. everything is sold

  2. quantity demanded equals quantity supplied

  3. excess demand is zero

  4. B and C
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

1:A market-clearing price is the price of a good or service at which quantity supplied is equal to quantity demanded, also called the equilibrium price
2:The equilibrium price clears the market: It is the price at which quantity demanded equals quantity supplied with excess demand is zero.

Multiple choice business economics and quantitative methods foreign trade in india the government and economic development indian economy on the eve of independence impact of technology on livelihoods

Sellers market denotes a situation where _______.

  1. commodities are available at competitive rates

  2. demand exceeds supply

  3. supply exceeds demand

  4. supply and demand are evenly balanced
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A market is termed to be sellers market when the demand is high and seller has a high degree of control on the market due to limited supply; in this case, the demand tends to exceed the available supply for a commodity.

Multiple choice business economics and quantitative methods foreign trade in india the government and economic development indian economy on the eve of independence impact of technology on livelihoods

What is dual pricing?

  1. Wholesale price and Retail pricning

  2. Pricing by agents and Pricing by retailers

  3. Price fixed by Government and Price in open market

  4. Daily prices and Weekly prices
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Dual pricing is a system where the government fixes a price for a portion of a commodity (often for public distribution) while allowing the remainder to be sold at a higher price in the open market.

Multiple choice business economics and quantitative methods foreign trade in india the government and economic development indian economy on the eve of independence impact of technology on livelihoods

As per indifference curve and price line, a consumer will not be in equilibrium when

  1. Ratios of marginal utilities and prices of the respective goods are equal

  2. Ratio of marginal utilities of the two goods is equal to the ratio of their respective prices

  3. The marginal rate of substitution is equal to the ratio of prices of the two goods

  4. The marginal rate of substitution is decreasing
Reveal answer Fill a bubble to check yourself
A Correct answer
Multiple choice business economics and quantitative methods foreign trade in india the government and economic development indian economy on the eve of independence impact of technology on livelihoods

The difference between the minimum price the producer is willing to accept and the equilibrium price is called ________.

  1. price

  2. profit

  3. producers surplus

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

Producer surplus is the difference between the actual price a producer receives (the equilibrium price) and the minimum price they would have been willing to accept for that quantity.

Multiple choice business economics and quantitative methods foreign trade in india the government and economic development indian economy on the eve of independence impact of technology on livelihoods

Graphically, when is the supply curve is below the demand curve?

  1. Excess demand

  2. Excess supply

  3. Equilibrium

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

When the supply curve is below the demand curve, it means that at a given price, the quantity demanded is greater than the quantity supplied, which is the definition of excess demand.

Multiple choice business economics and quantitative methods foreign trade in india the government and economic development indian economy on the eve of independence impact of technology on livelihoods

Graphically, an equilibrium is a point where _____.

  1. supply curve is above the demand curve

  2. supply curve is below the demand curve

  3. market supply curve intersects the market demand curve

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

Market equilibrium is defined as the point where the quantity supplied equals the quantity demanded, which is represented graphically by the intersection of the supply and demand curves.

Multiple choice business economics and quantitative methods foreign trade in india the government and economic development indian economy on the eve of independence impact of technology on livelihoods

At any price lower than equilibrium price, there is _____.

  1. excess supply

  2. excess demand

  3. deficient supply

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

When the price is set below the equilibrium level, the quantity demanded by consumers exceeds the quantity supplied by producers. This gap is referred to as excess demand or a shortage.

Multiple choice business economics and quantitative methods foreign trade in india the government and economic development indian economy on the eve of independence impact of technology on livelihoods

Demand curve of an Oligopoly firm is characterized by being  _________.

  1. Horizontal to X axis

  2. Kinked at a point

  3. U shaped curve

  4. A linear line
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

In an oligopoly, firms face a kinked demand curve because competitors are expected to match price decreases but ignore price increases, leading to price rigidity.

Multiple choice business economics and quantitative methods foreign trade in india the government and economic development indian economy on the eve of independence impact of technology on livelihoods

The consumer surplus of a product represent.

  1. Excess of demand price over price paid

  2. Excess of price over cost of production

  3. Excess of demand price of equilibrium price

  4. Demand price minus taxes
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Consumer surplus is the difference between the maximum price a consumer is willing to pay for a good and the actual price they pay. This represents the net benefit to the consumer.

Multiple choice business economics and quantitative methods foreign trade in india the government and economic development indian economy on the eve of independence impact of technology on livelihoods

Shortage of supply of goods would cause ________.

  1. Equilibrium price to rise

  2. Equilibrium price to fall

  3. Equilibrium price to remain same

  4. Cost of production to go up
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

When the supply of goods is lower than the demand (shortage), competition among buyers for the limited supply drives the equilibrium price upward.

Multiple choice business economics and quantitative methods foreign trade in india the government and economic development indian economy on the eve of independence impact of technology on livelihoods

When a market is in equilibrium_________.

  1. No shortages exist

  2. Quantity demanded equals Quantity supplied

  3. A price is established that clears the market

  4. All of the above are correct
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

When market is in equilibrium there is a balance of quantity demanded and quantity supplied are the same. Hence, because quantity demanded = quantity supplied there are no shortages in the market and the price is fixed which clears the market. 

Multiple choice business economics and quantitative methods foreign trade in india the government and economic development indian economy on the eve of independence impact of technology on livelihoods

In the situation of market equilibrium:

  1. Market demand = Market supply.

  2. Market demand > Market supply.

  3. Market demand < Market supply.

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

At equilibrium level market demand is equal to market supply. This is the state where the market forces of demand and supply are same and there can be no change in the price. This is the state where the ideal market price is achieved.