Tag: foreign trade in india

Questions Related to foreign trade in india

Consumer has no consumer surplus on _______ of the commodity consumed.

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

  1. first unit

  2. second unit

  3. all units

  4. last unit

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Correct Option: D
Explanation:

Consumer has no consumer surplus on last unit of the commodity consumed. This is because consumer surplus is based on the law of diminishing marginal utility. According to this law, the Marginal utility/satisfaction of the consumer goes on decreasing with every additional consumption of the commodity. Hence, it is because of this law that the consumers willingness to pay for additional unit goes on diminishing and there is no consumer surplus on the last unit. 

When a large firm takes up advertising and grants margin to distribution, it is called.

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

  1. Technical economics.

  2. Managerial economics.

  3. Marketing economics.

  4. Financial economics.

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Correct Option: C
Explanation:

When large firm takes up advertising and grants margin to distribution its called as market economics. Market economics facilitates sale and purchase of goods and services in the open market. 

In the situation of market equilibrium:

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

  1. Market demand = Market supply.

  2. Market demand > Market supply.

  3. Market demand < Market supply.

  4. none of the above

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Correct Option: A
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. 

The minimum assured price offered by the government to the farmers for the purchase of their output is called____________.

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

  1. ceiling price.

  2. equilibrium price.

  3. support price.

  4. market price.

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Correct Option: C
Explanation:

The minimum assured price offered by the government to the farmers for the purchase of their output is called support price. This helps the farmers to get adequate remuneration for their crop yield. It saves the customers from losses. 

Supply being perfectly inelastic, what will be the effect of increase or decrease in demand on price and equilibrium quantity?

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

  1. Price increases or decreases respectively.

  2. No effect on equilibrium quantity.

  3. Both (a) and (b).

  4. None of the above

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Correct Option: C
Explanation:

In case of perfectly inelastic demand the change in price will have no effect on the quantity demanded. The consumers do not change their demand due to the change in price. This usually is seen in case of necessities. Hence, the equilibrium quantity will be same the price might increase or decrease. 

When will increase in supply bring down the price, leaving the quantity demanded unchanged?

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

  1. When the demand for the commodity is perfectly elastic.

  2. When the demand for the commodity is perfectly inelastic.

  3. When the demand for the commodity is relatively elastic.

  4. When demand for the commodity is unitary elastic.

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Correct Option: B
Explanation:

When the demand for a commodity is perfectly inelastic the change in price will have no effect on the quantity demanded. The consumers do not change their demand due to the change in price. This usually is seen in case of necessities. Hence, the equilibrium quantity will be same the price might increase or decrease. 

In a situation when productivity increases owing to improvement in technology, equilibrium price tends fall.

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

  1. True

  2. False

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Correct Option: A
Explanation:

True.
Owing to improvement in technology, supply of the good in the market will increase causing a rightward shift of the supply curve. Accordingly, equilibrium price will decrease.

Market price is always equal to or greater than the support price of a commodity.

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

  1. True

  2. False

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Correct Option: A
Explanation:

True.

In a situation of support price (which is the minimum price assured to the producers), market price ought to be equal to or greater than the support price.

In a state of increasing cost of production leading to a substantial cut in production, equilibrium price will fall.

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

  1. True

  2. False

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Correct Option: B
Explanation:

False.
With a substantial cut in production due to increase in cost of production, the supply curve shifts to the left and equilibrium price will, thus, increase.

In a situation of war when people are fearing shortage of rice, equilibrium price of rice tends to rise.

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

  1. True

  2. False

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Correct Option: A
Explanation:

True.
Fearing shortage of rice, the demand curve for rice will shift towards right, causing a rise in equilibrium price.