Question for MH SET Economics 2026 - Quiz / Questions / MCQ

Objective Questions

Latest MH SET Economics Exam Question (Objective Questions), MCQ in English

Subjects : Economics

Question Bank MH SET Economics Exam Paper 2 - English

Back to Exam

Economics

Question 1Single Answer

Utility maximization under budget constraint is achieved when?

A
MUx + MUy is maximum
B
Px + Py = Income
C
MUx/Px = MUy/Py
D
MUx × MUy = 0

Question 2Single Answer

Indifference curve is convex to origin because of?

A
Diminishing marginal rate of substitution
B
Increasing marginal utility
C
Law of demand
D
Perfect substitution

Question 3Single Answer

Marginal Rate of Substitution (MRS) is defined as?

A
Amount of Y sacrificed for one more unit of X
B
Slope of budget line
C
Ratio of prices
D
Total utility ratio

Question 4Single Answer

A Giffen good violates the?

A
Law of diminishing utility
B
Law of demand
C
Law of supply
D
Law of substitution

Question 5Single Answer

Budget line shifts outward when?

A
Price of goods increases
B
Demand decreases
C
Utility increases
D
Income increases

Question 6Single Answer

A consumer is in equilibrium when?

A
Total utility is zero
B
Marginal utility is maximum
C
Price is zero
D
Budget is exhausted with highest satisfaction

Question 7Single Answer

Law of diminishing marginal utility states that?

A
Total utility falls immediately
B
Marginal utility increases continuously
C
Marginal utility declines with consumption
D
Utility remains constant

Question 8Single Answer

Indifference curve cannot?

A
Be downward sloping
B
Be smooth
C
Be convex
D
Intersect each other

Question 9Single Answer

Perfect substitutes have indifference curves that are?

A
L-shaped
B
Straight lines
C
Convex
D
Circular

Question 10Single Answer

Perfect complements are represented by?

A
Straight lines
B
Parallel lines
C
Upward sloping curves
D
Right angle indifference curves

Question 11Single Answer

Consumer surplus is defined as?

A
Difference between income and expenditure
B
Total utility minus marginal utility
C
Difference between willingness to pay and actual price
D
Price minus cost

Question 12Single Answer

Engel curve shows relationship between?

A
Income and quantity demanded
B
Price and demand
C
Supply and price
D
Utility and cost

Question 13Single Answer

When income increases demand for inferior goods?

A
Increases
B
Decreases
C
Remains constant
D
Becomes zero

Question 14Single Answer

Substitution effect always leads to?

A
Decrease in demand
B
Fall in price only
C
Increase in demand
D
No change in demand

Question 15Single Answer

Income effect measures change in demand due to?

A
Price change only
B
Taste change
C
Income change only
D
Substitution effect

Question 16Single Answer

Slutsky equation decomposes price effect into?

A
Income and demand effect
B
Supply and demand effect
C
Income and substitution effect
D
Cost and revenue effect

Question 17Single Answer

A higher indifference curve indicates?

A
Lower utility
B
Same utility
C
Higher utility
D
Zero utility

Question 18Single Answer

The slope of budget line depends on?

A
Income only
B
Preferences
C
Utility
D
Price ratio

Question 19Single Answer

If price of X falls, budget line?

A
Shifts inward
B
Rotates outward
C
Becomes steeper
D
Disappears

Question 20Single Answer

Utility is best defined as?

A
Money value
B
Satisfaction from consumption
C
Cost of production
D
Market price

Question 21Single Answer

Cardinal utility approach assumes utility is?

A
Ordinal only
B
Constant
C
Non-comparable
D
Measurable numerically

Question 22Single Answer

Ordinal utility approach uses?

A
Ranking of preferences
B
Exact numbers
C
Money value
D
Cost values

Question 23Single Answer

Marginal utility becomes zero when?

A
Consumption starts
B
Demand falls
C
Price increases
D
Total utility is maximum

Question 24Single Answer

Demand curve derived from price consumption curve shows?

A
Price-demand relationship
B
Income effect
C
Supply relation
D
Cost relation

Question 25Single Answer

Inferior goods are those for which income elasticity is?

A
Positive
B
Zero
C
Infinite
D
Negative

Question 26Single Answer

A normal good has income elasticity?

A
Negative
B
Undefined
C
Zero
D
Positive

Question 27Single Answer

Consumer equilibrium under indifference curve theory requires?

A
MUx = MUy
B
MRS = price ratio
C
Income = cost
D
Demand = supply

Question 28Single Answer

Giffen goods are typically?

A
Luxury goods
B
Substitute goods
C
Normal goods
D
Inferior goods

Question 29Single Answer

Price effect is combination of?

A
Supply and cost
B
Income and substitution effects
C
Demand and utility
D
Revenue and profit

Question 30Single Answer

If two goods are independent, cross elasticity is?

A
Positive
B
Zero
C
Negative
D
Infinite

Question 31Single Answer

Complementary goods have cross elasticity?

A
Positive
B
Zero
C
Negative
D
One

Question 32Single Answer

Substitutes have cross elasticity?

A
Negative
B
Positive
C
Zero
D
Undefined

Question 33Single Answer

The point where indifference curve touches budget line is?

A
Inequality point
B
Maximum cost point
C
Disequilibrium
D
Equilibrium point

Question 34Single Answer

A higher income shifts budget line?

A
Leftward
B
Becomes steeper
C
Rightward parallel
D
Horizontal

Question 35Single Answer

Consumer prefers combinations on?

A
Higher IC
B
Lower IC
C
Budget line only
D
Origin

Question 36Single Answer

Total utility is sum of?

A
Income utilities
B
Average utilities
C
Price utilities
D
Marginal utilities

Question 37Single Answer

Marginal utility curve is typically?

A
Upward sloping
B
Vertical
C
Downward sloping
D
Horizontal

Question 38Single Answer

Indifference curve analysis assumes utility is?

A
Measurable
B
Ordinal
C
Observable
D
Fixed

Question 39Single Answer

Demand curve is derived from?

A
Supply curve
B
Cost curve
C
Utility maximization
D
Production function

Question 40Single Answer

Consumer equilibrium condition fails when?

A
MRS equals price ratio
B
MRS does not equal price ratio
C
Budget is fully spent
D
Utility is maximized

Question 41Single Answer

Production function shows relationship between?

A
Price and output
B
Cost and revenue
C
Inputs and output
D
Demand and supply

Question 42Single Answer

Short run is a period when?

A
All inputs are variable
B
All inputs are fixed
C
No production occurs
D
At least one input is fixed

Question 43Single Answer

Long run production is characterized by?

A
Fixed inputs
B
Variable inputs
C
At least one fixed input
D
No input change

Question 44Single Answer

Law of variable proportions operates in?

A
Long run
B
Very long run
C
Static period
D
Short run

Question 45Single Answer

Marginal product is defined as?

A
Total output per unit cost
B
Total revenue
C
Change in total product due to one more unit of input
D
Average output

Question 46Single Answer

When marginal product is maximum, marginal cost is?

A
Minimum
B
Maximum
C
Zero
D
Constant

Question 47Single Answer

Law of diminishing returns implies?

A
Decreasing marginal product after a point
B
Increasing returns forever
C
Constant output
D
Zero production

Question 48Single Answer

Average product is?

A
Total product / variable input
B
Total product × input
C
Marginal product / cost
D
Output – input

Question 49Single Answer

Isoquant represents?

A
Equal output combinations
B
Equal cost combinations
C
Equal price levels
D
Equal revenue

Question 50Single Answer

Isoquant is similar to?

A
Demand curve
B
Indifference curve
C
Supply curve
D
Cost curve

Important Questions Package

MH SET Economics Exam Online Question Bank Package

Buy MH SET Economics Important Questions, MCQ, question answer in Hindi & English. It will help you to score high marks in MH SET Economics question bank 2026 in Online, PDF & Print study material.

+ Free Monthly Current Affairs, GK & more PDF Download

Sr.	Package Name	Amount
1.	MH SET Economics Exam Paper 2 - English Description : 1000 Question with Answer	₹101 ~~[₹500]~~
2.	MH SET Economics Exam Paper 2 - English Description : 2000 Question with Answer	₹131 ~~[₹500]~~
3.	MH SET Economics Exam Paper 2 - English Description : 3000 Question with Answer	₹161 ~~[₹500]~~
4.	MH SET Economics Exam Paper 2 - English Description : 4000 Question with Answer	₹191 ~~[₹500]~~
5.	MH SET Economics Exam Paper 2 - English Description : 5000 Question with Answer	₹221 ~~[₹500]~~
6.	MH SET Economics Exam Paper 2 - English Description : 1000 Question & Answer Download in PDF (Send by Email)	₹151 ~~[₹450]~~
7.	MH SET Economics Exam Paper 2 Question Bank Book - English Description : 1000 Question with Answer (Printed Material)	₹390 ~~[₹600]~~

Economics

Question 51Single Answer

According to the completeness axiom of consumer preferences, a consumer must be able to?

A
Purchase every affordable bundle
B
Rank any two consumption bundles
C
Obtain positive utility from every good
D
Consume all available goods

Question 52Single Answer

Transitivity of preferences implies that if bundle X is preferred to Y and Y is preferred to Z, then?

A
Z must be preferred to X
B
X must be preferred to Z
C
X and Z must be indifferent
D
Y must be preferred to X

Question 53Single Answer

Strictly convex preferences imply that the consumer generally prefers?

A
Extreme bundles to averages
B
Goods in fixed proportions
C
Only corner solutions
D
Weighted averages to extreme bundles

Question 54Single Answer

If a utility function is subjected to a strictly increasing transformation, the consumer's?

A
Demand necessarily changes
B
Preference ordering remains unchanged
C
Budget constraint shifts
D
Marginal utility remains numerically unchanged

Question 55Single Answer

At an interior consumer equilibrium with differentiable preferences, which condition generally holds?

A
MRS = ratio of prices
B
MRS = income
C
MRS = total expenditure
D
Marginal utility equals zero

Question 56Single Answer

Hicksian demand minimizes?

A
Utility for given income
B
Expenditure for a given utility level
C
Income for given prices
D
Prices for a given consumption bundle

Question 57Single Answer

Marshallian demand is obtained from the problem of?

A
Expenditure minimization
B
Profit maximization
C
Utility maximization subject to a budget constraint
D
Cost minimization by firms

Question 58Single Answer

The expenditure function is homogeneous of degree one in?

A
Utility
B
Prices
C
Income
D
Quantities

Question 59Single Answer

The indirect utility function is homogeneous of degree zero in?

A
Prices alone
B
Income alone
C
Prices and income jointly
D
Quantities and utility jointly

Question 60Single Answer

Roy's identity derives Marshallian demand from the?

A
Production function
B
Social welfare function
C
Expenditure function
D
Indirect utility function

Question 61Single Answer

Shephard's lemma applied to the expenditure function yields?

A
Marshallian demand
B
Hicksian demand
C
Supply function
D
Indirect utility

Question 62Single Answer

The Slutsky equation decomposes the price effect into?

A
Scale and substitution effects
B
Wealth and production effects
C
Output and income effects
D
Income and substitution effects

Question 63Single Answer

For a normal good, a fall in its price causes the substitution and income effects to?

A
Work in opposite directions
B
Both equal zero
C
Work in the same direction
D
Become indeterminate

Question 64Single Answer

A Giffen good must necessarily be?

A
Normal
B
Inferior
C
A luxury
D
Perfectly complementary

Question 65Single Answer

For a Giffen good, when its own price rises, quantity demanded?

A
Falls
B
Remains constant
C
Rises
D
First falls and then becomes zero

Question 66Single Answer

The compensated law of demand states that compensated own-price demand generally has?

A
A positive slope
B
Infinite elasticity
C
Unit elasticity
D
A non-positive slope

Question 67Single Answer

Engel curves describe the relationship between demand and?

A
Own price
B
Income
C
Price of a substitute
D
Marginal cost

Question 68Single Answer

If the income elasticity of demand exceeds one, the good is generally classified as?

A
Inferior
B
Luxury
C
Necessity
D
Giffen good

Question 69Single Answer

Perfect substitutes are represented by indifference curves that are?

A
L-shaped
B
Vertical lines only
C
Strictly convex curves
D
Straight lines

Question 70Single Answer

Perfect complements generally have indifference curves that are?

A
L-shaped
B
Linear
C
Concave
D
Circular

Question 71Single Answer

Quasilinear preferences are important because the income effect for the non-numeraire good is often?

A
Positive and increasing
B
Always negative
C
Zero over an interior range
D
Infinite

Question 72Single Answer

The dual of the utility-maximization problem is the?

A
Revenue-maximization problem
B
Expenditure-minimization problem
C
Profit-maximization problem
D
Output-maximization problem

Question 73Single Answer

Compensating variation following a price increase measures the money required to?

A
Restore the original utility at new prices
B
Reach the new utility at old prices
C
Maximize producer surplus
D
Keep nominal expenditure unchanged

Question 74Single Answer

Equivalent variation for a price increase measures the amount of money that, at original prices, would cause?

A
The consumer to save all income
B
Zero substitution effect
C
An increase in utility
D
The same utility loss as the price increase

Question 75Single Answer

Consumer surplus is an exact welfare measure particularly when preferences are?

A
Leontief
B
Quasilinear
C
Lexicographic
D
Non-convex

Question 76Single Answer

The weak axiom of revealed preference rules out a situation in which?

A
Every good is normal
B
Income rises proportionately with prices
C
Prices remain constant
D
Direct revealed preference is contradicted by another choice

Question 77Single Answer

The strong axiom of revealed preference extends consistency requirements to?

A
Only two bundles
B
Production possibilities
C
Chains of revealed preferences
D
Market supply

Question 78Single Answer

Homothetic preferences imply that income expansion paths are generally?

A
Parallel to the budget line
B
Backward bending
C
Horizontal
D
Rays from the origin

Question 79Single Answer

Under homothetic preferences, income elasticities of demands are generally?

A
One
B
Zero
C
Negative
D
Infinite

Question 80Single Answer

A price-consumption curve traces optimal bundles as?

A
One price varies
B
Income varies
C
Utility remains zero
D
All prices vary proportionately

Question 81Single Answer

The income-consumption curve traces optimal bundles as?

A
Income changes with prices fixed
B
Own price changes with income fixed
C
Technology changes
D
Factor prices change

Question 82Single Answer

If preferences are locally nonsatiated, an optimizing consumer generally?

A
Leaves part of income unspent
B
Chooses zero consumption
C
Exhausts the budget
D
Has zero marginal utility

Question 83Single Answer

A corner solution occurs when?

A
Tangency is necessarily satisfied
B
Both goods are perfect complements only
C
Income equals zero
D
The optimum contains zero consumption of at least one good

Question 84Single Answer

The Slutsky substitution effect holds purchasing power constant so that?

A
Real income becomes zero
B
Original utility is necessarily maintained exactly
C
New bundle remains unaffordable
D
Original bundle remains affordable

Question 85Single Answer

Hicks substitution effect holds constant the consumer's?

A
Nominal income
B
Quantity of every good
C
Utility level
D
Marginal income

Question 86Single Answer

An inferior good has, over the relevant range, an income elasticity that is?

A
Negative
B
Positive
C
Exactly one
D
Infinite

Question 87Single Answer

The substitution matrix associated with compensated demand is generally?

A
Positive semidefinite
B
Asymmetric by necessity
C
Strictly positive
D
Negative semidefinite

Question 88Single Answer

Symmetry of the Slutsky matrix follows from?

A
Equality of mixed partial derivatives of the expenditure function
B
Increasing marginal utility
C
Constant returns to scale
D
Profit maximization

Question 89Single Answer

Walras' law for consumer demand implies that the value of excess demand is?

A
Always positive
B
Zero
C
Always negative
D
Equal to utility

Question 90Single Answer

A monotonic transformation of a utility function preserves?

A
Cardinal utility differences
B
Marginal utility values
C
Ordinal preference rankings
D
Utility units

Question 91Single Answer

If preferences are strictly convex, the utility-maximizing bundle on a convex budget set is generally?

A
Unique
B
Infinite in number
C
Necessarily a corner
D
Independent of prices

Question 92Single Answer

Lexicographic preferences violate which standard assumption required for representation by a continuous utility function?

A
Completeness
B
Transitivity
C
Continuity
D
Monotonicity

Question 93Single Answer

The elasticity of substitution between perfect complements is?

A
One
B
Zero
C
Infinite
D
Negative one

Question 94Single Answer

The elasticity of substitution between perfect substitutes is?

A
Zero
B
Infinite
C
One
D
One-half

Question 95Single Answer

A Cobb-Douglas utility function normally exhibits an elasticity of substitution equal to?

A
One
B
Zero
C
Two
D
Infinity

Question 96Single Answer

If all prices and income double simultaneously, Marshallian demand is unchanged because it is?

A
Concave in income
B
Homogeneous of degree one
C
Homogeneous of degree zero
D
Linear in utility

Question 97Single Answer

The expenditure function is generally concave in?

A
Utility
B
Prices
C
Quantities
D
Income

Question 98Single Answer

Hicksian demand depends directly on?

A
Prices and nominal income
B
Prices and target utility
C
Income and profits
D
Technology and wages

Question 99Single Answer

Roy's identity involves the ratio of derivatives of indirect utility with respect to a price and?

A
Output
B
Quantity supplied
C
Technology
D
Income

Question 100Single Answer

An isoquant represents combinations of inputs producing?

A
Equal cost
B
Equal profit
C
Equal revenue
D
Equal output

Back to Exam

Latest MH SET Economics Exam Question (Objective Questions), MCQ in English

Economics

MH SET Economics Exam Online Question Bank Package

Economics

Quick View