Economics (Part – I) - Mock Test 365

Total Questions: 50

41. If average total cost is Rs. 1700, total fixed cost is Rs. 52500 and the quantity produced is 75 units, then find the average variable cost of the firm. [S.S.C. Online CHSL (T-I) 27.01.2017 (Shift-III)]

(a) 1000
(b) 2400
(c) 1800
(d) 600

Correct Answer: (a) 1000

Solution:

42. If the break even-quantity for a factory whose variable cost of manufacturing a cell is Rs. 15 and selling price is Rs. 24 is 2,400 units, find the fixed cost of the factory? [S.S.C. Online CHSL (T-I) 16.01.2017 (Shift-I)]

(a) ₹21600
(b) ₹36000
(c) ₹57600
(d) ₹14400

Correct Answer: (a) ₹21600

Solution:The Variable cost of one unit = Rs.15

Variable cost of 2400 units = Price × Units produced 15 x 2400 = Rs 36000

Selling price of one unit = Rs.24

Selling price of 2400 units = 2400 × 24 = Rs 57600

In NO profit-loss situation, total selling price = total cost price

or Total Cost (TC) = Total Variable Cost (TVC) +

Total Fixed Cost (TFC)

or TFC = TC - TVC

⇒ 57600 - 36000 = Rs 21600

43. Reema wants to buy a certain designer party dress. The shop is offering a discount of 20% on that dress which is marked at Rs. 5000. If Reema was willing to pay even Rs. 7000 for that dress, Reema's consumer surplus is ______. [S.S.C. Online CHSL (T-I) 21.01.2017 (Shift-I)]

(a) ₹3000
(b) ₹2000
(c) ₹1000
(d) ₹7000

Correct Answer: (a) ₹3000

Solution:According to Marshall, "The difference between the price that a person is willing to pay for the good before the acquisition of a commodity and the price he pays is called consumer's savings."

Consumer's saving (in the form of price) = amount of money that the consumer is ready to give the total amount of money spent on the purchase of the commodity .

⇒ Cost of dress = Rs. 5000

Discount on Dress = 20%

Hence, the actual cost of the dress

= 5000 - 1000 = Rs. 4000

Reema was ready to pay Rs.7000 for the dress.

So Reema's savings = 7000 - 4000 = Rs.3000

44. Irfaan loves black coffee. A roadside stall selling a cup of black coffee at Rs. 120, offered 25% discount to Irfaan. If Irfaan was willing to pay even Rs.200 for this cup of black coffee, Irfaan's consumer surplus is ________. [S.S.C. Online CHSL (T-I) 10.01.2017 (Shift-I)]

(a) 90
(b) 80
(c) 30
(d) 110

Correct Answer: (d) 110

Solution:Consumer's saving (in the form of price) = amount of money that the consumer is ready to give the total amount of money spent on the purchase of the commodity

⇒ Price of coffee = Rs. 120

Discount on coffee = 25%

Hence, the actual cost of the coffee = 120 - 30 = Rs. 90

Since Irfan was ready to pay Rs. 200 for coffee.

Hence, Irfan's savings = 200 - 90 = Rs. 110

45. If a person's income increases from Rs 20 lakhs per year to Rs 24 lakhs per year and tax increases from Rs 3,50,000 to Rs 4,00,000 the marginal tax rate is _______. [S.S.C. Online CHSL (T-I) 24.01.2017( Shift-I)]

(a) 8 per cent
(b) 12.5 per cent
(c) 10 per cent
(d) 15 per cent

Correct Answer: (b) 12.5 per cent

Solution:Tax payable on the income of Rs. 20 lakh = Rs. 350000 and increase the tax payable on the income of Rs. 24 lakh = Rs. 400000

Thus increase in tax on income increase of Rs. 4 lakh = Rs. 50000

⇒ Percentage increase of marginal tax

= 50000 * 100/400000 = 50/4 ⇒ 12.5%

46. In 2015, the real rate of interest in a country was 6% and the inflation rate then was 3%. So the nominal rate of interest in 2015 was________ . [S.S.C. Online CHSL (T-I) 24.01.2017 (Shift-I)]

(a) 3%
(b) 6%
(c) 9%
(d) 12%

Correct Answer: (c) 9%

Solution:⇒ The nominal rate of interest = real rate of interest + inflation rate

Hence, according to the formula, nominal rate of interest = 6 +3 ⇒ 9%

47. In 2015, the nominal rate of interest in a country was 8% and the inflation rate then was 2.5%. So real rate of interest in 2015 was________. [S.S.C. Online CHSL (T-I) 24.01.2017 (Shift-III) S.S.C. Online CHSL (T-I) 9.01.2017 (Shift-I)]

(a) 3.2 per cent
(b) 10.5 per cent
(c) 8 per cent
(d) 5.5 per cent

Correct Answer: (d) 5.5 per cent

Solution:⇒ The real rate of interest nominal rate of interest - inflation rate

Hence, according to the formula, nominal rate of interest = 8 - 2.5 ⇒ 5.5%

48. If price of an article decreases from Rs 600 to Rs 500, when quantity demanded increases from 10000 units to 12000 units. Find point elasticity of demand? [S.S.C. Online CHSL (T-I) 31.01.2017 (Shift-I) S.S.C. Online CHSL (T-I) 30.01.2017 (Shift-II) S.S.C. Online CHSL (T-I) 21.01.2017 (Shift-II) S.S.C. Online CHSL (T-I) 8.02.2017 (Shift-II) S.S.C. Online CHSL (T-I) 2.02.2017 (Shift-I)]

(a)-1.2
(b) 1.2
(c)-1.5
(d) 1.5

Correct Answer: (a)-1.2

Solution:

49. A manufacturer faces price elasticity of demand of a -2 for its product. If it lowers its price by 5%, the increase in quantity sold will be: [S.S.C .Online CHSL (T-I) 9.01.2017 (Shift-III) S.S.C. Online CHSL (T-I) 21.01.2017 (Shift-III) S.S.C. Online CHSL (T-I) 8.01.2017 (Shift-I) S.S.C. Online CHSL (T-I) 22.01.2017 (Shift-III)]

(a) 3%
(b) 10%
(c) 2.50%
(d) 7%

Correct Answer: (b) 10%

Solution:Price elasticity of demand (eₚ)

= Proportional change in quantity demanded/ Proportional change in price

Here = - 2, proportional change in price = 5%

So, proportional change in quantity demanded = price elasticity of demand * proportional change in price ⇒ - 2 * 5 = - 10%

(Note The negative sign is not taken into account in the elasticity of demand, as negativity or positivity signifies the nature of the commodity.)

50. If price of an article decreases from P₁ to Rs 25, quantity demanded increases from 900 units to 1200 units. If point elasticity of demand is 2, find P₁ ? [S.S.C. Online CHSL (T-I) 7.01.2017 (Shift-III)]

(a) Rs. 20
(b) Rs. 30
(c) Rs. 35
(d) Rs. 15

Correct Answer: (b) Rs. 30

Solution:Elasticity of demand is the measure of the relative response to the quantity demanded of a commodity as a result of a relative change in the price of a commodity.

Price elasticity of demand (eₚ)

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Economics (Part – I)