Economics (Part – I) - Mock Test 365

Total Questions: 50

31. In the general Keynesian model, equilibrium is characterized by the similarity of [C.P.O. S.I. 5.06.2016 (Shift-I)]

(a) Planned saving and Planned investment
(b) Available savings and planned investment
(c) Available savings and available investments
(d) Planned savings and available investments

Correct Answer: (a) Planned saving and Planned investment

Solution:

According to Keynes, "The equilibrium point of national income can be determined alternatively where the planned investment (I) is equal to the planned saving (S).

32. For a certain shoe factory the fixed costs are Rs. 200,000, selling price is Rs. 2000 per pair of shoes and variable cost is Rs. 1200 per pair, what is the break even quantity? [S.S.C. Online CHSL (T-I) 16.01.2017 (Shift-III)]

(a) 100
(b) 62.5
(c) 167
(d) 250

Correct Answer: (d) 250

Solution:Breakeven-point is the point where the firm after meeting all the costs is in a position of zero profit i.e

Total cost = Total profit

33. If for the year a country's GDP was $ 1315 million, consumer spending was $900 million, investment by businesses was $180 million, exports were $85million and imports were $100 million, calculate government spending. [S.S.C. Online CHSL (T-I) 19.01.2017(Shift-I) S.S.C. Online CHSL (T-I) 25.01.2017 (Shift-III)]

(a) $220 million
(b) $250 million
(c) $280 million
(d) $610 million

Correct Answer: (b) $250 million

Solution:Gross Domestic Product (GDP) is the market value of all final goods and services produced within a nation's borders in a financial year.

Gross Domestic Product (GDP) = Consumption + Gross Investment + Government Spending + (Exports Imports)

or GDP = C+I+G+(X-M)

1315 = 900+180+G+(85-100)

or 1315 = 1080+G-15

or 1315 = 1065+G

or Government spending (G) = 1315-1065 = $250 million

34. Calculate a country's GDP if for the year, consumer spending is $900 million, government spending is $250 million, investment by businesses is $180 ________. [S.S.C. Online CHSL (T-I) 27.01.2017 (Shift-II)]

(a) $1345 million
(b) $1315 million
(c) $955 million
(d) $815 million

Correct Answer: (b) $1315 million

Solution:Gross Domestic Product (GDP) is the market value of all final goods and services within a national limit in a financial year.

Gross Domestic Product (GDP) = Consumption + Gross Investment + Government Expenditure + (Exports - Imports)

or GDP = C +I+G+(X-M)

⇒ [900+250+180+(85-100)]

⇒ 1330-15= $1315 million

35. If hiring an extra worker increases a brick making unit's output from 2000 to 2250 units per day, but the factory has to reduce the price of its brick from Rs. 15 to Rs. 14 per brick to sell the additional output, the marginal revenue product of the last worker is ________. [S.S.C. Online CHSL (T-I) 20.01.2017 (Shift-II)]

(a) Rs. 1500
(b) Rs. 250
(c) Rs. 3000
(d) Rs. 100

Correct Answer: (a) Rs. 1500

Solution:Marginal Income Product (MRP)n = Total Income from n Units (TRn) - Total Income from (n-1) Units (TRn - 1)

Here TRn and TRn-1 are the total income related to n and n - 1 unit of production respectively.

→ Total revenue from the sale of 2000 units at Rs 15 per unit 15 x 2000 = Rs 30000

→Total units produced due to addition of one additional worker = 2250

Hence, the total revenue from the sale of 2250 units at Rs 14 per unit = 14 x 2250 = Rs 31500

→Thus increase in total revenue due to one additional labor 31500-30000 = Rs 1500 Hence, marginal revenue product (MRP) of the last

worker = Rs.1500.

36. If a person's income increases from Rs. 10 lakhs per year to Rs. 11 lakhs per year and tax increases from Rs. 80,000 to Rs. 92,500 the marginal tax rate is ________. [S.S.C. Online CHSL (T-I) 16.01.2017 (Shift-II)]

(a) 12.50%
(b) 8%
(c) 10%
(d) 15%

Correct Answer: (a) 12.50%

Solution:Income tax on Rs.1000000 = Rs.80000

Income tax increases on Rs.1100000 = Rs.92500

Tax increase per lakh = Rs 12500

marginal tax rate is

= 12500×100/100000 ⇒ 12.5%

37. If the average total cost is Rs 54, the total fixed cost is Rs. 45000 and the quantity produced is 2500 units, find the average variable costs (in Rs) of the firm. [S.S.C. Online CHSL (T-I) 15.01.2017 (Shift-III)]

(a) 24
(b) 18
(c) 36
(d) 60

Correct Answer: (c) 36

Solution:Total Cost (TC) = Average Cost (AC) × Number of units produced (Q)

= 54 x 2500 → 135000

Total Fixed Cost (TFC) = 45000

Total Cost (TC) = Total variable cost (TVC)

+ Total fixed cost (TFC)

or TVC=TC - TFC

= 135000-45000 → 90000

Again, Average Variable Cost (AVC)

= TVC / No. of units produced

= 90000 / 2500 ⇒ 36

38. A ceramic pottery unit hires 8 craftsmen by paying each of them Rs 900 per day. The 9th craftsman demands Rs 950 per day. If this craftsman is hired then all other craftsmen must be paid Rs 950. The marginal resource (labour) cost of the 9th craftsman is _________. [S.S.C. Online CHSL (T-I) 7.02.2017 (Shift-III) S.S.C. Online CHSL (T-I) 8.02.2017 (Shift-III)]

(a) Rs. 1530
(b) Rs. 1050
(c) Rs. 50
(d) Rs. 1350

Correct Answer: (d) Rs. 1350

Solution:Marginal cost refers to the amount of change in total cost that is obtained as a result of producing one additional unit of-

MCn = TCn - TCn - 1

Here MCn = cost of production of one additional unit, TCn and TCn - 1 are the costs related to n and (n - 1) units respectively -

Total cost (TCn - 1) of 8 artisans at Rs.900 per artisan,

⇒ 900 x 8 = Rs 7200

With the addition of one additional artisan,

⇒ total number of artisans = 9

9 and cost of production per artisan = Rs. 950.

Hence the total cost of production (TCn) of 9 artisans at Rs. 950 per artisan

⇒ 950 x 9 = Rs 8550

Thus, marginal cost (MCn) of 9th artisan = TCn - TCn - 1

⇒ 8550 - 7200 = Rs 1350

39. A beedi making workshop can hire 5 women by paying them Rs. 300 per day. The 6th woman demands Rs. 350 per day. If this woman is hired then all other women must be paid Rs. 350. The marginal resource (labour) cost of the 6th woman is ________. [S.S.C. Online CHSL (T-I) 10.01.2017 (Shift-I) S.S.C. Online CHSL (T-I) 22.01.2017 (Shift-II)]

(a) Rs. 600
(b) Rs. 50
(c) Rs. 300
(d) Rs. 100

Correct Answer: (a) Rs. 600

Solution:MCn = TCn - TCn - 1

Here TCn and TCn - 1 are the costs associated with n and (n - 1) units of production, respectively.

Total cost of 5 women at the rate of Rs. 300 per woman 300 x 5 = Rs. 1500

Addition of one female, total number of females = 6 And cost of production per woman = Rs.350 Hence the total cost of 6 women at Rs 350 per woman is

⇒ 350×6 = Rs. 2100

Thus, marginal cost (MCn) of sixth woman = TCn - TCn - 1

⇒ 2100 - 1500 = Rs. 600

40. If the quantity of goods X demanded increases from 4000 units to 5000 units when price of goods Y increases from Rs. 75 to Rs. 90, find Arc Cross elasticity of demand _______. [S.S.C. Online CHSL (T-I) 23.01.2017 (Shift-III) S.S.C. Online CHSL (T-I) 29.01.2017 (Shift-II) S.S.C. Online CHSL (T-I) 19.01.2017 (Shift-III) S.S.C. Online CHSL (T-I) 18.01.2017 (Shift-III)]

(a) 0.55
(b) 1.66
(c) 0.25
(d) 1.22

Correct Answer: (d) 1.22

Solution:

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Economics (Part – I)

31. In the general Keynesian model, equilibrium is characterized by the similarity of [C.P.O. S.I. 5.06.2016 (Shift-I)]

32. For a certain shoe factory the fixed costs are Rs. 200,000, selling price is Rs. 2000 per pair of shoes and variable cost is Rs. 1200 per pair, what is the break even quantity? [S.S.C. Online CHSL (T-I) 16.01.2017 (Shift-III)]

34. Calculate a country's GDP if for the year, consumer spending is $900 million, government spending is $250 million, investment by businesses is $180 ________. [S.S.C. Online CHSL (T-I) 27.01.2017 (Shift-II)]

36. If a person's income increases from Rs. 10 lakhs per year to Rs. 11 lakhs per year and tax increases from Rs. 80,000 to Rs. 92,500 the marginal tax rate is ________. [S.S.C. Online CHSL (T-I) 16.01.2017 (Shift-II)]

37. If the average total cost is Rs 54, the total fixed cost is Rs. 45000 and the quantity produced is 2500 units, find the average variable costs (in Rs) of the firm. [S.S.C. Online CHSL (T-I) 15.01.2017 (Shift-III)]

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