Supply

1. Shift in supply curve is cause by

a. Change in citrus paribus conditions
b. Increase in price
c. Decrease in price
d. Change in consumer income

2. At a given price increase in quantity supplied can be possible if ……………

a. There is apprehension of sharp fall in prices in future
b. Refund or subsidy of statutory levy in cash is given by the Government
c. Improvement in technology led to cost saving
d. All the three

3. A supply curve parallel to X axis means the product supply is

a. Limited
b. Unlimited
c. Not available
d. None

4. Which of these is not a factor of quantity supplied

a. Price of the goods
b. Price of the related other goods
c. Cost of production
d. Consumers disposal income

5. The supply of goods means ……………

a. Quantity offered for sale at a given price and time
b. Quantity produced by the manufacturer
c. Quantity available with the supplier
d. Consumers disposal income

6. Under law of supply, ceteris paribus is

a. Cost of production
b. Production technology
c. None
d. Both

7. According to law of supply ………..

a. Higher the price higher the production of the product
b. Higher the price lower the cost of production
c. Lower the price lower the demand for the product
d. Higher the price higher the quantity the seller is prepared to supply in market

8. The quantity that an individual supplier is prepared to supply over a period of time is a
function of
a. Price of the product
b. Cost of production of the product
c. Both
d. None

9. If the supply of a product remain same with the increase in price, the possible reasons can be
a. Apprehension of further price hike
b. Limited production facility
c. Commodity being a rare commodity
d. All the three

10. ‘We can say that supply is a non-relative term’

a. True
b. False

11. Price is the most important factor influencing the supply of a commodity
a. True
b. False

12. Supply always means supply at a given

a. price
b. demand
c. both
d. none of the above

14. The demand cannot be met as per requirements of the purchaser

a. in short period supply
b. in long period supply
c. both
d. none of the above

15. If demand has been changed the supply can also be changed
a. in short period supply
b. in long period supply
c. both
d. none of the above

16. The law of supply says that the supply varies directly with the
a. demand
b. raw material
c. price
d. none of the above

17. The supply of a good refers to:

a. Stock available for sale
b. Total stock in the warehouse
c. Actual Production of the good
d. Quantity of the good offered for sale at a particular price per unit of time

18. With a given supply curve, a decrease in demand causes:

a. An overall decrease in price but an increase in equilibrium quantity,
b. An overall increase in price but a decrease in equilibrium quantity,
c. An overall decrease in price and a decrease in equilibrium quantity,
d. No change in overall price but a reduction in equilibrium quantity,

19. If price and quantity supplied change by the same magnitude, then we have
a. unit elasticity supply
b. perfectly elastic supply
c. relatively inelastic supply
d. none of the above

20. Supply is said to be…………… when a given percentage change in price causes a smaller
change in quantity supplied.
a. unit elasticity supply
b. perfectly elastic supply
c. inelastic
d. none of the above

21. The supply of every perishable goods is

a. perfectly inelastic
b. perfectly elastic
c. relatively inelastic
d. relatively elastic

22. Which of these will have highly inelastic supply curve

(a) Perishable goods
b) Consumer durables goods
(c) Items of elite class consumption
(d) All the three

23. If the stock of goods can be easily stored its supply would be
a. perfectly inelastic
b. perfectly elastic
c. relatively inelastic
d. relatively elastic

24. If 20% increase in price causes quantity supplied to increase by 50%, the price elasticity of
supply is:
a. 5/2.
b. 2/5.
c. 5/4.
d. 4/5.

Market
25. Which of the following is/are an essential feature of the market
a. Buyers
b. Sellers
c. Price
d. All the three

26. Which of these is not an essential feature of a market

a. Buyers
b. Sellers
c. Commodity
d. Building with loading and unloading facilities

27. In economic sense, market does require a physical location

a. True
b. False

28. In economic terms, market is defined as a system under which buyers and sellers negotiate
the price of a product, settle the price, and transact their business.
a. True
b. False

29. The size of market varies according to the type of product.

a. True
b. False

30. Perfect competition: Perfect competition is characterised by the following main features:
a. There are large numbers of sellers
b. Sellers and buyers are price-takers
c. Products produced are homogeneous
d. There is freedom of entry and exit.
31. Monopoly: Monopoly is characterised by the following main features:
a. There exists only one seller producing a commodity that has no close substitutes in the
market
b. The monopolist behaves as a price-maker
c. Entry is completely blocked.
d. None of the above

32. Which of the following markets come closest to perfect market?

a. Wheat market
b. Cigarette market
c. cold drinks market
d. Stock market

Monopolistic Competition
33. Which of the following is/are the characteristic of a monopolistically competitive market
a. No restriction on exit and entry
b. Many sellers
c. Product differentiation
d. All the three

34. The market state that satisfy all the essential features of a perfect competitive market except
identity of product is known as
a. Oligopoly
b. Duopoly
c. Monopoly
d. Monopolistic competition

35. Which of these is associated with a monopolistic competitive market –

a. Product differentiation
b. Homogeneous Product
c. Normal in short run;
d. Single buyer

36. In short run a monopolistic competition firm will be in equilibrium where

a. MR = curve intersect SMC curve from above
b. MR curve intersect SMC curve from below
c. MC = AR ;
d. MR curve intersect SMC from below and P is equal to or more than AVC

37. The product under monopolistic competition are

a. differentiated with close substitute
b. perfect substitute
c. differentiated without close substitute
d. homogeneous

38. Product differentiation is the important feature of

a. monopoly
b. perfect competition
c. monopolistic competition
d. monophony

39. The architect of the theory of monopolistic competition

a. Rosenstein Roden
b. JR Hicks
c. Karl Marx
d. Chamberlin

40. Which is/are the salient features of monopolistic competition?

a. Large number of sellers
b. Normal profit
c. Free entry and exit of firms in industry
d. All of these

41. Which of the following is not a feature of monopolistic completion?

a. Large number of producers
b. Free entry and exit
c. More elastic demand
d. Price competition

42. Who wrote the book ‘Economics of Imperfect Competition?’

a. Mrs. Joan Robinson
b. Prof. E. H. Chamberlin
c. Prof. J.R. Hicks
d. None of the above

43. Who wrote the book ‘Theory of Monopolistic Competition?’

a. Mrs. Joan Robinson
b. Prof. E. H. Chamberlin
c. Prof. J.R. Hicks
d. None of the above

44. Due to large number of sellers with close substitute products, the level of competition is very
low in the market.
a. True
b. False

45. The concept of monopolistic competition was put-forth by an American economist Prof.
E.H. Chamberlin in his popular book, “The Theory of Monopolistic Competition” published
in
a. 1933.
b. 1934
c. 1935
d. 1932

46. We can say that monopolistic competition is a market situation which lies between monopoly
and perfect competition.
a. True
b. False

47. The firm is earning super-normal profits or abnormal profits since average revenue is greater
than average cost, i.e.,
a. AR > AC.
b. AR = AC
c. AR < AC
d. None of the above

48. If under monopolistic competition, the price of product is equal to ‘AC’, the firm will be
earning
a. normal profit
b. super normal profit
c. loss
d. None of the above
Perfect competition
49. In the long run a firm in perfect competition earns
a. Normal profit only
b. Abnormal profit
c. Average profit of past five years
d.12.33% profit on capital employed

50. The practice of selling same product to different persons at different price is called
a. Price discrimination
b. Price rigging
c. Price manipulation
d. Price Justification

51. Which of these is not a cause of price discrimination

a. Ignorance of consumer
b. Place differentiation
c. Variation in quality
d Tax differentiation

52. Super normal profits occurs when

a. Average revenue is more than average cost
b. Total revenue is maximum
c. Total cost is minimum
d. MC is equal to MR

53. In a competitive market ………. is the price maker

a. Firm
b. Industry
c. Consumer
d. Trade association

54. Under perfect market conditions an Industry is said to be in equilibrium where

a. Total output is equal to total demand
b. Profit is maximum
c. Where the total revenue is maximum
d. Where total average cost is the minimum

55. Under perfect market conditions the supply curve of a firm is represented by
a. MC curve
b. MR curve
c. AR curve ;
d. AC curve

56. Long-term equilibrium of an Industry under a perfectly market conditions in achieved when
a. All the firms are earning normal profit
b. All the firms are in equilibrium
c. There is no further entry or exit of firms from the industry
d. All the three

57. Which of the following statement is true

a. In perfect competition Average and Marginal revenue are identical
b. In perfect competition Average and Marginal cost are identical
c. In perfect competition Average price and Marginal cost are identical
d. In perfect competition only normal profit can be earned by a firm

58. Total profit of a firm in a perfect competitive market is –

a. Total revenue less total cost
b. Marginal revenue less marginal cost
c. Total revenue less marginal cost
d. Total revenue less variable cost

59. In a perfectly competitive market, individual firm

a. cannot influence the price of its product
b. can influence the price of its product
c. can fix the price of its product
d. can influence the market force

60. Perfect competition is characterized by

a. large number of buyers and sellers
b. homogeneous product
c. free entry and exit of firms
d. all the above

61. The condition for the long run equilibrium of a perfectly competitive firm
a. Price=MC=AC
b. Price=TC
c. MC=AVC
d. MC=MR

62. Which is the feature of perfect competition?

a. Large number of buyers and sellers
b. Freedom of entry and exit
c. Normal profit in the long run
d. All of these

63. In …………. there shall be many firms in the industry and each firm shall be small in size,
producing only a very small portion of the total output.
a. monopolistic competition
b. imperfect competition
c. perfect competition
d. None of the above

64. Super normal profits are the minimum to induce the entrepreneur to remain and work in an
industry
a. True
b. False

65. Super normal or excess profit, is any return above the normal profits.
a. True
b. False
 Monopoly
66. The ideal level of operation for a pure monopoly firm is the level where
a. TR and STC curve are parallel to each other
b. TR = TC
c. TR = Total variable cost
d. TR is less than STC

67. When the Demand curve of a pure monopoly firm is elastic, MR will be
a. Negative
b. Positive
c. Zero
d. None of the above

68. In a pure monopoly firm a firm can make abnormal profit at the long run equilibrium level
due to
a. Price discrimination
b. Cost effectiveness
c. Banned entry of new firms
d. Sales promotion

69. Which of them is a characteristic of a price taker

a. MR = Price
b. AR = MR
c. TR = PXQ
d. All the three

70. For a monopoly firm market demand curve is

a. Marginal revenue curve itself
b. Average Revenue curve itself
c. Marginal cost curve
d. None

71. Which of the following statement is true

a. For a monopoly firm AR can be zero
b. For a monopoly firm MR can be zero or even negative
c. For monopoly firm MR and AR are identical
d. For a monopoly firm MR and AR are positive sloped

72. For a monopoly firm the MR Curve

a. Overlaps AR curve
b. Is above the AR curve
c. Lies half way between AR curve and the Y axis
d. Is same as AR curve

73. A monopoly is characterized by

(a) Limited entry and exit opportunity
(b) Single supplier
(c) Few customers
(d) All the three

74. Average Revenue of a monopolist firm is

(a) Always more than the Marginal revenue
(b) Always less than the Marginal revenue
(c) Equal to marginal revenue
(d) Any of the above three possible

75. …………… it is the form of the market in which the only seller of a commodity has fully
control over the prices
(a) Monopoly
(b) Pure monopoly
(c) Simple monopoly
(d) All the three

76. ‘The market with a single producer’

a) Perfect Competition
b) Monopolistic Competition
c) Oligopoly
d) Monopoly

77. Which are the characteristics of monopoly?

a) Single seller or producer
b) No close substitutes
c) Inelastic demand curve
d) All of these

78. The monopoly can be controlled by:

a) Social boycott
b) Antimonopoly legislation
c) Public ownership
d) All of these

79. There is a strict restriction, i.e. barrier on the entry of new firms in the market.
a) Perfect Competition
b) Monopolistic Competition
c) Oligopoly
d) Monopoly

80. There exists close substitute of available output of a monopoly firm in the market.
a. True
b. False

81. The larger the gap between price and marginal cost, the greater is the monopoly power.
a. True
b. False

82. The Govt. cannot regulate monopoly through taxation

a. True
b. False

83. Profits of a monopolist are maximised at the output at which his short- period marginal cost
(SMC) equals his marginal revenue (MR).
a. True
b. False

84. In which of the following market structure is the degree of control over the price of its
product by a firm very large?
a. Imperfect competition
b. Perfect competition
c. Monopoly
d. In A and B both

85. Which of the following is a characteristic of pure monopoly?

a. one seller of the product
b. low barriers to entry
c. close substitute products
d. perfect information

86. In pure monopoly, what is the relation between the price and the marginal revenue?
a. the price is greater than the marginal revenue
b. the price is less than the marginal revenue
c. there is no relation
d. they are equal

87. In order to maximize profits, a monopoly company will produce that quantity at which the:
a. marginal revenue equals average total cost
b. price equals marginal revenue
c. marginal revenue equals marginal cost
d. total revenue equals total cost
88. Compared to the case of perfect competition, a monopolist is more likely to:
a. charge a higher price
b. produce a lower quantity of the product
c. make a greater amount of economic profit
d. all of the above

89. The short run supply curve of the monopolist is:

a. The rising portion of the MC curve
b. The rising portion of the Mc curve above AVC
c. The rising portion of MC curve above AC
d. None of the above

90. The best level of output for the monopolist is the output at which:
a. MR equals AC
b. MR equals MC
c. MR exceeds MC
d. MR is less than MC

Oligopoly

91. In the short run an oligopolistic firm will

(a) Make profits
(b) Incur losses
(c) Just breakeven
(d) Any of these three are possible

92. Oligopoly market is known for ……………..

(a) Price flexibility
(b) Price rigidity
(c) Price discrimination
(d) All the three

93. Demand curve of an Oligopoly firm is characterized by

(a) Horizontal to X axis
(b) Kink at the price
(c) U shaped curve
(d) A liner line

94. In the oligopoly market there are

a) large no. of firms
b) a few firms
c) a single firm
d) an infinite no. of firms

95. Under oligopoly a single seller cannot influence significantly

a) market price
b) quantity supplied
c) advertisement cost
d) all the above

96. The no. of firms under oligopoly is

a) 1
b) 2
c) many
d) few

97. The implication of the kinked demand curve is reflected in a discontinuity in the:
a) Marginal revenue curve
b) Marginal cost curve
c) Total revenue curve
d) Total cost curve

98. Which are not the features of oligopoly?

a) Few sellers
b) Advertising and sales promotion
c) One firm
d) Conflicting attitudes of firms

99. Oligopoly is that from of imperfect competition where there are few firms in the market,
producing either a homogenous product or a producing products which are close but not perfect
substitutes of each other.
a. True
b. False

Revenue
100. …….. Measures the differences between the new total revenue and existing total revenue
a. Average revenue
b. Total revenue
c. Marginal revenue
d. Incremental revenue
102 .………. means the total receipts from sales divided by the number of unit sold.
a. Average revenue
b. Total revenue
c. Marginal revenue
d. Incremental revenue

103. So long as Average Revenue is falling, Marginal Revenue will be …………. Average
Revenue
a. Less than
b. More than
c. Equal to
d. None of these

104. Where Marginal revenue is negative, TR will be …………..

a. Rising
b. Falling
c. Zero
d. One

105. Total Revenue will be maximum at the point where Marginal Revenue is
a. One
b. Zero
c. <1
d. >1

106.…….. is the change in total revenue irrespective of changes in price or due to the effect of
managerial decision on revenue
a. Average revenue
b. Total revenue
c. Marginal revenue
d. Incremental revenue

107. Which of the following concepts represents the extra revenue a firm receives from an
additional unit of a factor of production?
a. total revenue
b. marginal physical product
c. marginal revenue
d. none of the above
1. The concept of ‘quasi-rent’ means
the rent of land
the return to a factor of production which is fixed in supply in the short run
half the rent land
the return to a factor of production which is not fixed in supply

2. Which one of the following denotes the concept of marginal in the Ricardian theory of rent?
It is the poorest quality land
It is no-rent land, as it produces not surplus over cost of production
It is that land whose surplus determines rent of other land
it is that land whose rent changes with change in the margin of cultivation.

3. According to Frank Knight profit is

a part of the cost of production
a reward for uncertainty bearing
equal to (total Revenue-Total Costs)
none of the above

Sometimes the supply curve of labour ends:

Downward
Upward
Backward
Firstly upward and then downward

The minimum wage is an example of:

Price floor
Price ceiling
Equilibrium wage
Efficiency of labour

25. Under loanable funds theory of interest, which of the following

are included in the supply of loanable funds?
1. Current savings.
2. Funds released from embodiment in working capital.
3. Bank loans.
Select the correct answer using the code given below
(a) 1 and2
(b) 2and3
(c) l and 3
(d)1,2and3
42. According to Keynes, which one of the following is meant by
liquidity preference?
(a) Refraining from saving
(b) Desire to hold cash
(c) A preference to hold assets like bonds and securities which are liquid
(d) Increasing savings in terms of precious metals

37. In the theory of kinked demand curve, the lower segment of the demand curve is?
(A) Perfectly inelastic
(B) Perfectly elastic
(C) Highly elastic
(D) Less elastic

A firm is in equilibrium when:

a. AR=MR
b. MR=AR
c. AC=MC
d. MR=MC

Risk bearing theory of profit is developed by:

a. F.B. Hawley
b. Prof. Knight
c. Schumpeter
d. Marx

In Ricardian theory of rent, the marginal land is called

a. No rent land
b. Surplus land
c. ‘C grade land’
d. Fertile land

Under Monopoly the slope of the average revenue curve is :

a. Upward sloping
b. Downward sloping
c. Horizontal
d. None of these

The uncertainty theory of profit is given by :

a. Marshall
b. knight
b. Schumpeter
d. Keynes

Quasi rent is a short run phenomenon. Who said it?

a. Ricardo
c. Malthus
b. Joan
d. Marshall

Supply in general is related to price:

a. Negatively
b. Positively
c. Indirectly
d. All the above

Normal profit is
a. Minimum profit
b. Alternative cost
c. Economic profit
d. Any of the above
1. The Bank of England, for instance, was founded in
a. 1695
b.1693
c.1794
d.1694

2. Which one of the following is the special drawing right given by the International Monetary Fund
to its member countries?
a. Cold money
b. Hot money
c. Paper gold
d. None of these

3. Which of the following is the Federal regulatory agency that charters and supervises Federal credit
unions?
a. AIRCSC
b. ARC
c. CAG
d. NCUA
NCUA stands for National Credit Union Administration.

4. The Federal Reserve system was

a. created to provide the nation with a stable monetary system
b. signed into law by President Theodore Roosevelt
c. not legislated by Congress
d. all of the above

5. The Federal Reserve banks

a. are not motivated by profit
b. charge commercial banks for check collection and other services
c. receive no funding from the government
d. all of the above

6. The Federal Reserve banks are owned by

a. the banks that are members of the federal reserve system
b. the U.S. Treasury
c. all citizens of the U.S.
d. state and local governments

7. The most important function of the Federal Reserve is

a. the control of the nation’s money supply
b. the issuing of checks for the federal government
c. lender of funds to U.S. stock brokers
d. providing of a means of check clearance for banks

8. Economists widely agree that the Fed’s monetary policy is

a. equally effective in combating inflation and recession
b. not effective in combating inflation and recession
c. better at combating inflation than recession
d. better at combating recession than inflation

9. When did economic and monetary union become an objective of the EC?
a.1957
b.1969
c. 1985
d. 1992

10. How did the French and German positions on monetary union differ?
a. Germany wanted a highly independent European Central Bank and strong monetary
discipline
b. Germany wanted the European Central Bank to coordinate closely with national finance ministers
c. France preferred the name 'euro' for the new currency, while Germany preferred 'ecu'
d. France favoured a rigid application of the budget deficit limits

11. Which four member states did not participate in the Euro when it was launched in 1999?
a. Britain, Denmark, Portugal and Greece
b. Britain, Portugal, Sweden and Greece
c. Britain, Denmark, Sweden and Portugal
d.Britain, Denmark, Sweden and Greece

12. Which of these is not the function of IMF?

a. It provides mechanism for orderly adjustment of exchange rate
b. It provides mechanism for international consultation
c. It provides forum for settlement of international trade disputes
d. It is a reservoir of the currencies of all the member countries

13. Which of these is not the function of World Bank?

a. To arbitrate on international trade disputes.
b. To help the member countries in the reconstruction and development of their countries.
c. To encourage private foreign investment and credit by guaranteeing repayment.
d. To promote long term balanced growth of international trade.

14. Which of the following is not the function of World Trade Organization?
a. To settle border disputes of member countries. ;
b. To handle trade disputes.
c. To provide technical assistance and training to developing countries.
d. To provide forum for trade negotiation between the member countries

15. Banks of BRICS nations have agreed to establish credit lines in _________ currencies.
a. Legal
b. Plastic
c. Cryptocurrency
d. National