Tag: prices and cost of living

Questions Related to prices and cost of living

Which of the following is not a main approaches to Pricing of commodities.

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

  1. Classical Ecoomists

  2. Australian approach

  3. Marshall approach

  4. Neo-classical economist

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Correct Option: D

Which of the following method of constructing index number satisfies time reversal test.

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

  1. Laspeyres index

  2. Fishers Ideal index

  3. Paasches index

  4. All the three

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Correct Option: B

The paradox of value means that _____________________.

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

  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.

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Correct Option: B
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.

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

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

  1. total marginal value of a product

  2. average utility of product

  3. price of product in market

  4. total utility value of product

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Correct Option: C
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. 

A capitalist economy uses_____as the principal means of allocating resources.

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

  1. Demand

  2. Supply

  3. Efficiency

  4. Prices

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Correct Option: D
Explanation:

In a capitalist economy, personal gains are given more preference than social welfare. Therefore, allocating of resources takes place on the basis of what value it will yield after production and this done through prices.

Change in the quantity supplied is caused by a change in ___________.

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

  1. price

  2. income

  3. weather

  4. energy costs

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Correct Option: A
Explanation:

Law of supply states that if the price of a commodity changes other factors remaining constant then the quantity supplied of the commodity also changes.

Prices rate is determined on the basis of demand and supply, such kind of an economy is?

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

  1. Market driven economy

  2. Closed economy

  3. Seller driven economy

  4. None of the above

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Correct Option: A
Explanation:

The demand and supply of a commodity prevails in the market, so if their are changes in the price of the commodity due to change in its demand and supply in the market then it is said that market influences the price rate in the economy.

When prices are falling continuously, the phenomenon is called ___________.

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

  1. inflation

  2. stagflation

  3. deflation

  4. reflation

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Correct Option: C
Explanation:

When prices are falling continuously, the phenomenon is called deflation.

Example of substitutes can be:

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

  1. Tea and sugar

  2. Car and petrol

  3. Pen and Ink

  4. None of the above

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Correct Option: D
Explanation:

Substitute goods are those goods which can be used in place of each other as and when required. Example- tea and coffee.

Administered prices means:

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

  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

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Correct Option: D