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Friday, March 2, 2012

Economics Quiz - 18 (Civil Services Economics)

1. When marginal utility is negative, total utility is
[A]Increasing
[B]At a minimum
[C]Equal to zero
[D]Decreasing



2. Which of the following represents the marginal rate of technical substitution (MRTS)?
[A]Slope of the isocost curve
[B]Slope of the indifference curve
[C]Slope of the isoquant curve
[D]Slope of the budget line



3. Which of the following is true if marginal cost of a firm is increasing, but is less than the average cost?
[A]Average fixed cost is increasing
[B]Average cost is decreasing
[C]Average cost is increasing
[D]Average variable cost is increasing



4. Sugar is an important ingredient in the preparation of ice cream. Which of the following is/are true, ceteris peribus, if price of sugar falls?
I. Demand for ice cream will decrease.
II. Supply of ice cream will increase.
III. Price of ice cream will increase.
IV. Price of ice cream will decrease.
[A]Only (I) above
[B]Only (II) above
[C]Only (III) above
[D]Both (II) and (IV) above



5. Which of the following better resembles the demand curve of a consumer?
[A]Indifference curve
[B]Marginal utility curve
[C]Budget line
[D]Total utility curve



6. Law of diminishing returns is not relevant when
[A]All labors are equally efficient
[B]The time period is short
[C]All factor inputs are increased by the same proportion
[D]Technology remains constant



7. Which of the following statements is true?
[A]Capital enhances the productivity of labor
[B]Labor enhances the productivity of capital
[C]An increase in the market wage rate for labor would induce firms to adopt more capital-intensive technologies
[D]All of the above



8. The management of a company has finally agreed to increase the wages of the laborers by 10% after hard negotiations with labor union. Which of the following would not be affected by this decision?
[A]Economic costs
[B]Accounting profits
[C]Direct costs
[D]Implicit costs



9. Which of the following statements is true with regard to price elasticity of demand?
[A]Elasticity remains constant throughout the demand curve
[B]Elasticity increases with increase in quantity demanded
[C]Elasticity increases as the price decreases
[D]Higher the elasticity, more responsive the demand is for a given change in price



10. GDP at factor cost exceeds GDP at market price
[A]When the net factor income from abroad is negative
[B]When the net factor income from abroad is positive
[C]When depreciation of fixed capital exceeds gross investment
[D]When subsidies exceed indirect taxes



11. Which of the following is not an instrument of monetary policy?
[A]Bank rate
[B]Reserve requirement
[C]Open market operations
[D]Tax rate



12. Usually marginal propensity to consume (MPC) is
[A]> Zero
[B]> 1
[C]< 1
[D]Both (a) and (c) above



13. Which of the following variables is a flow variable?
[A]Capital stock
[B]A firm’s assets
[C]Gross fixed investment
[D]Price index



14. If the Average Propensity to Consume (APC) in an economy is 1.05, Average Propensity to Save (APS) in the economy would be
[A]– 0.05
[B]– 0.95
[C]1
[D]1.05



15. Monetary policy will be more effective when
[A]The economy is facing recession
[B]The private investment is more sensitive to interest rate
[C]The private investment is less sensitive to interest rate
[D]The economy is suffering from liquidity trap



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