Economics (Part – I) - Mock Test 365

Total Questions: 50

11. Lorenz curve shows- [S.S.C. Online C.G.L.(T-I) 10.09.2016 (Shift-III)]

(a) Inflation
(b) Unemployment
(c) Income distribution
(d) Poverty

Correct Answer: (c) Income distribution

Solution:Lorenz curve is used to study income distribution, wealth, wages, profit, capital, output, etc. American economist Dr. Max O' Lorenz propounded it to study the inequality of wealth and income. It is a point-line measure of the deviation of the true distribution from the uniform distribution line.

12. What does the Lorenz Curve indicate? [S.S.C. Online C.G.L. (T-I) 7.06.2019(Shift-III)]

(a) Rate of employment
(b) Taxable income elasticity
(c) Relationship between the price of a certain commodity and its demand
(d) Income distribution

Correct Answer: (d) Income distribution

13. An indifference curve measures _______ level of satisfaction derived from different combinations of commodity X and Y. [S.S.C. Online C.G.L.(T-I) 11.09.2016 (Shift-II)]

(a) Same
(b) Higher
(c) Lower
(d) Minimum

Correct Answer: (a) Same

Solution:An indifference curve measures the same level of satisfaction derived from different combinations of commodity X and Y. An indifference curve shows a combination of two goods that give a consumer equal satisfaction and utility thereby making the consumer indifferent.

14. An indifference curve measures the same level of _________. [S.S.C. Online C.G.L.(T-I) 9.09.2016 (Shift-III)]

(a) Output from two factors
(b) Satisfaction from two commodities
(c) Satisfaction from Income and Capital
(d) Satisfaction from expenditure and savings

Correct Answer: (b) Satisfaction from two commodities

Solution:

An indifference curve measures the same level of satisfaction from two commodities.

15. What are the two variables whose relationship is given by the environmental Kuznets curve? [S.S.C. Online CGL (T-I) 23.08.2021 (Shift-III)]

(a) Inequality and tax revenue
(b) Inequality and per capita income
(c) Environmental degradation and tax revenue
(d) Environmental degradation and per capita income

Correct Answer: (d) Environmental degradation and per capita income

Solution:Simon Kuznets described the relationship between per capita income and income inequality as an inverted-U or what later became known as the Kuznets curve (for which he won the Nobel Prize in 1971). This curve was modified to represent the work done by Grossman and Krueger on NAFTA and its effects on the environment, known as the Environmental Kuznets Curve (EKC).

16. The problem of choice between relatively scarce commodities due to limited productive resources within society can be illustrated with the help of a _______. [S.S.C. Online C.G.L. (T-I) 20.08.2021 (Shift-I)]

(a) marginal utility curve
(b) budget line
(c) production possibility curve
(d) demand curve

Correct Answer: (c) production possibility curve

Solution:The problem of choice between relatively scarce commodities due to limited productive resources within the society can be illustrated with the help of a production possibility curve.

17. Demand curve is inelastic under which market structure? [S.S.C. Online C.P.O. S.I. 5.06.2016 (Shift-I)]

(a) Duopoly
(b) Monopoly
(c) Perfect competition
(d) Oligopoly

Correct Answer: (d) Oligopoly

Solution:

Since the quantity of a commodity to be sold at a particular price in an oligopoly is itself uncertain, the demand curve is also uncertain. Due to the interaction, action-reaction, andinteraction between the firms in an oligopoly, no firm can observe the possible results of its price and production policy beforehand with certainty. That is, no firm can predict how much its sales will increase if the price is cut by a certain percentage. For this reason the demand curve or average revenue curve of the firm in oligopoly is uncertain.

18. What would happen to the demand curve when there is an increase in the price of substitute products? [S.S.C. Online C.G.L. (T-I) 13.06.2019 (Shift-I)]

(a) Outward shift
(b) Initially inward and then after a period of outward shift
(c) Inward shift
(d) Remains constant

Correct Answer: (a) Outward shift

Solution:When the price of substitute products rises, the demand curve will shift outwards.

19. Which of the following is NOT a central econom-ic problem, solved by the Production Possibility Curve (PPC)? [S.S.C. Online CHSL (T-I) 16.10.2020 (Shift-III)]

(a) Full utilisation of resources
(b) Economic growth
(c) Sustainable consumption
(d) Economic efficiency

Correct Answer: (c) Sustainable consumption

Solution:Sustainable consumption is not a central economic problem, it is solved by the production possibility curve (PPC). Sustainable consumption and production refer to "the use of services and related products, which respond to basic needs and bring a better quality of life while minimizing the use of natural resources and toxic materials as well as the emissions of waste and pollutants over the life cycle of the service or product so as not to jeopardize the needs of future generations".

20. The supply-side economics lays greater emphasis on ________. [S.S.C. Online C.G.L.(T-I) 30.09.20 (Shift-I)]

(a) Producer
(b) Global Economy
(c) Consumer
(d) Middle Man

Correct Answer: (a) Producer

Solution:Supply-side economics is a macroeconomic theory that argues that economic growth can be most effectively created by investing in capital and by lowering barriers to the production of goods and services. It lays a huge emphasis on producers.

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Economics (Part – I)