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CPT: Economics

TEST PAPER-1
1. The science which tells about what it is & what ought to be is a) Normative b) Positive c) Applied 2. Which of the following means economic activity? a) Production b) Exchange c) Consumption 3. Which of the following statements is not true. a) Positive economics does not give value judgements. b) Positive economics says only about the ends. c) A normative statement includes ethical values. d) Normative economics is concerned with welfare judgements 4. In controlled economy consumers & producers determine their choices based on: a) Price and production b) Govt controls c) Demand & Supply d) Income & expenditure 5. Which of the following is a cause of economic problem? a) Scarcity of resources. b) Unlimited wants. c) Alternative uses. 6. The law of the demand operates due to a) Opportunity cost. b) Income effect. c) Substitution effect. d) All of the above. d) Both b & c. d) Negative d) All

7. Change in demand as a result of the factors other than price is known as: a) Shift in demand b) Increase & decrease in demand c) Increase in quantity demanded d) a & b
8. Two important factors which make difference in the elasticity of demand or different commodities are a) Preferences & income. b) Income & expenditure. c) Quantity & price of the commodity. d) None of the above

9. With decrease in price if total expenditure increases we get elasticity of demand. a) Equal to unit b) Greater than unit c) Less than unit d) Zero
10. What will be the slope of demand curve when it shows the cross elasticity between two complementary goods? a) Negative b) Positive c) Horizontal d) None

11. The marginal utility curve is. a) Horizontal to y axis c) Vertical to x axis 12. At the equilibrium pt on IC we get a) MRSXY =MUX /MUY < PX / PY c) MRSX,Y = MUX / MUY = PX / PY

b) The demand curve of that commodity d) None b) MRSXY < MUX /MUY = PX / PY d) None

13. What will be the marginal utility of frootie, if the prices of frootie & kurkure are Rs. 10 & Rs .20 respectively, & MU of kurkure is 50, assuming that the consumer is at equilibrium. a) Rs.1000 b) Rs.25 c) Rs.250 d) Rs.4 14. If the supply of the commodity is perfectly elastic, an increase in dd will result in a) Decrease in both price & quantity at equilibrium. b) Increase in both price & quantity at equilibrium. c) Increase in equilibrium quantity, equilibrium price, remaining constant. d) Increase in equilibrium price, equilibrium quantity remaining constant

15. Which of the following factors will not result in the shifting of supply curve for software packages?

a) Increase the wages of the computer professionals. b) Govt. tariffs on software exports & imports. c) Fall in the prices of software packages. d) All of the above result in the shifting of the curve. 16. Assumptions which operates under Law of variable proportion are: a) The State of technology is constant b) Quantities of some inputs is kept fixed
c) Economic profitability in monetary terms is not considered. d) All of these

17. When average product is at max pt.? a) When AP intersects MP. c) At the Point of inflexion 18. A rational producer intends to work in a) Stage of constant returns. c) Stage of diminishing returns.

b) When AP intersects TP. d) None b) Stage of increasing returns. d) Stage of negative returns.

19. Which of the following is / are an outcome for a technological change? a) A downward shift in the production function. b) Same output with fewer inputs or more output with same inputs. c) Invention of a product or production process. d) Both (b) & (c) above. 20. Economic cost includes a) Accounting cost + Explicit cost. c) Explict cost + Implicit cost. b) Accounting cost + Implict cost d) Accounting cost + Opportunity cost.

21. A firm producing 7 units of output has an average total cost of Rs. 150 & has to pay Rs. 350 to its fixed factors of production whether it produces or not. How much of the ATC is made up of variable costs? a) Rs.200 b) Rs.50 c) Rs.300 d) Rs.100 22. A firms AFC is Rs. 20 at 6 units of output. What will be at 4 units of output. a) Rs.60 b) Rs.30 c) Rs.40 d) Rs.20 23. When a factory is working at 70% capacity, increasing of variable inputs, lead to a) Increasing of output b) Decreasing of output according to the law of diminishing returns c) Increasing of output up to full capacity & later decreasing of the marginal product according to the law of diminishing returns. d) Decreasing of output upto full capacity & later increasing of the output.
24. What should firm do if total revenue from its product does not equate or exceed its total variable cost?

a) Firm should carry production. b) Firm should stop the production. c) Firm should carry production & at least try to get revenues equal to fixed cost. d) None. 25. Which of the following market will never suffer losses in longer? a) Pure competition b) Oligopoly c) Monopoly 26. Amounts of the following soaps which has the biggest elasticity. a) Lux b) Rexona c) Johnson & Johnson 27. Which of the following is not the characteristic of monopoly? a) Many buyers. b) Heterogeneous product. c) Free entry of new firms. 28. In oligopoly why it is difficult to determine the equilibrium price & output? d) None d) Dove d) Both b& c.

a) All the firms take their independent decisions. b) Firms are interdependent making it difficult to specify the particular reaction of the rivals. c) Very few firms exists in the mkt. d) A large no of firms exist in the mkt. 29. To measure the inequality of income & wealth generally which of the following under issued a) Human Development Index. b) Gini Index. c) Per capita Income. d) National Income 30. India as road network has been worlds __________ largest a) First b) Second c) Third d) Fourth.

31. A Gini Index of zero represents perfect ________ while an index of one represents perfect a) Equality, inequality b) Inequality equality c) Loss, profit d) Profit, loss 32. Which of the following group is most important in our agricultural exports a) Cotton, Jute, Tea b) Coffee, Jute, Tea c) Jute, Tea, Tobacco d) All

33. A ________is one with the investment upto 25 lakh in plant & machinery for manufacturing unit. a) Small scale industry. b) Cottage industry. c) Tiny Unit. d) Micro enterprises. 34. 34. India has largest scientific V& technical manpower in the world. a) First b) Second c) Third 35. The maximum rate of custom duty presently is a) 30% b) 15% c) 10% d) Fourth. d) 50% d) 16

36. The Cenvat consisted of only one basic duty which was a)30 b) 15 c) 20 37. Sales tax is more in case of_____________ items & less in case of_____________ a) Luxury, necessities. b) Comforts, consumer goods. c) Luxury, defence goods. d) Producer goods, necessities. 38. The ratio of direct to indirect tax in 1990-91 was a) 20:80 b) 40:60 c) 50:50 d) 34:66

39. The black money is usually generated @ _________ % of the countrys GDP. a) 25% b) 50% c) 75% d) 40% 40. GNP will increase due to a) A rise in the market price c) An increase in investment. 41. Which is not a major source of govt. savings a) Taxes c) Transfer payments 42. Corporate tax is on the basis of a) Total turnover of the company. c) Profit before distribution. b) A surplus in budget d) A deficit in budget b) Surplus of public enterprises d) None b) Profit after distribution of dividend. d) None

43. Abolition of intermediaries & tenancy reforms are both parts of a) Industrial reforms in India. b) External sector reforms in India. c) Land reforms in India. d) Banking reforms in India.

44. Net value added is equal to

a) Payments accruing to factors of production. c) Wages plus rent plus profit.

b) Compensation to employees. d) Value of output minus depreciation.

45. A sick industrial unit is one a) Where most of the employees are sick. b) Which is unable to perform its normal functions & activities of production of goods & services at a reasonable profit on a sustained basis. c) Which is unable to make profits more than 10% of its capital employed. d) Which borrows money from bank for its fixed assets. 46. In the theory of demographic transition in the first stage. a) Birth rate rises, death rate rises. b) Birth rate falls, death rate falls. c) Birth rate falls, death rate rises. d) Birth rate falls, death rate falls. 47. The ______ is defined as the number of persons in the labour force per 1000 a) WPR b) LFPR c) CWS d) CDS 48. _______ measures the operational efficiency of a thermal plant a) CWS b) PLF c) LDS d)KWH 49. The full form of SSA a) Sarra Shiksha Abhiyan c) Suyash Shekshanik Abhiyan b) Sulabh Shiksha Accademy d) None d) 15.0%

50. In Eleventh plan targeted growth rate is a) 8.0% b) 5.0% c) 9.0.%