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Objective Questions

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

Subjects : Economics

Question Bank MP SET Economics Exam - English
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Economics

Question 1Single Answer
Which is called Gossen’s second Law ?
  1. A
    Law of equi-marginal utility
  2. B
    Law of Diminishing marginal utility
  3. C
    Revealed Preference Theory
  4. D
    Indifference Curav approach                         
Question 2Single Answer
Which of the condition support long run equilibrium in monopolistic competition  ?
  1. A
    MR = MC, AR = AC
  2. B
    P = MC, AR = AC
  3. C
    MR = MC = AR = AC
  4. D
    AR = MC = AC
Question 3Single Answer
Who explained importance of time element in price determination, for the first time ?
  1. A
    Chamberlin
  2. B
    Stigler
  3. C
    Mrs. Joan Robinson
  4. D
    Marshall
Question 4Single Answer
Law of diminishing returns begins to operate when :
  1. A
    Total product begins to rise
  2. B
    Total product begins to fall
  3. C
    Marginal Product begins to rise
  4. D
    Marginal product begins to fall
Question 5Single Answer
Consider the following statements regarding Edgeworth Duopoly model :
I.      It takes as given output decision of rival.
II.    It takes as given price decision of rival
III.   It is an explanation of price rigidity of thease , the correct answer is :
  1. A
    Only Statement I is true
  2. B
    Both I & II are true
  3. C
    Both II & III  are true
  4. D
    Only III is true
Question 6Single Answer
Public goods are charactertised by :
1. Collective consumption
2. Divisibility
3. Non – exclusion
4. Rival consumption
Select the correct answer from the code given below  :
  1. A
    1 & 2 are correct
  2. B
    1 & 3 are correct
  3. C
    1 & 4 are correct
  4. D
    2 & 4 are correct
Question 7Single Answer
Among the following what causes market failure ?
1. Externality
2. Asymmetry of information
3. Perfact competition
Choose the correct answer from the code given below :
  1. A
    Codes :
    1,2 & 3 are correct
  2. B
    Only 1 is correct
  3. C
    1 & 2 are correct
  4. D
    2 & 3 are correct 
Question 8Single Answer
Assuming wages – price flexibility , the classical economists asserted that a decline in money wages And price would lead to :
  1. A
    Unemployment
  2. B
    Deflation
  3. C
    High level of employment and output
  4. D
    Unemployment and  decline in output
Question 9Single Answer
The classical theory of interest postulates that both savings and investments are a function of :
  1. A
    the level of National income
  2. B
    the level of employment and output
  3. C
    monetary and fiscal policy
  4. D
    rate of interest
Question 10Single Answer
The relative income hypothesis of Duesenberry suiggests that as income increase , consumptio function curve shifts above and therefore :
  1. A
    Average propensity to consume rises
  2. B
    Average propensity to consume falls
  3. C
    Average propensity to consume remains constant
  4. D
    Average propensity to consume is equal to 1
Question 11Single Answer
Who distinguished between value in use and value in exchange and gave the famous example of diamonds and water ?
  1. A
    Adam smith 
  2. B
    David Ricardo
  3. C
    Alfred Marshall
  4. D
    Karl Marx
Question 12Single Answer
When income effect becomes stronger than substitution effect, the labour supply curve will :
  1. A
    Slope positively 
  2. B
    Negatively sloped
  3. C
    Bend backward 
  4. D
    Slope upwards
Question 13Single Answer
Assertion (A)   : The concept  of supply curve is meaningless for the monopolist.
Reason   (R)   : Monopolists are price setters ; it does not make reuse to ask what output they will produce at various prices.
  1. A
    Codes :
    Both (A) and (R) are correct and (R) is the correct explanation of (A)
  2. B
    (A) is correct , but (R)  is not correct 
  3. C
    Both (A) and (R) are correct , but (R) is not correct explanation of (A)
  4. D
    (R) is correct, but (A) is incorrect 
Question 14Single Answer
Predatory pricing policy is designed to :
  1. A
    drive competitors out of business
  2. B
    maximum profits
  3. C
    encourage entrants into the market
  4. D
    atain least cost output
Question 15Single Answer
Match items in List-I with items in List-II and select the correct answer from the code given below :
            List-I                                               List-II
a. The screening Hypothesis             1. George  A. Akerlof
b. Job Market signaling                     2. K. J  Arrow
c. The problem of moral                    3. M. Spencer
 hazard in the case  
 of medical insura
d. The market for lemons                4. Paul W. Miller and Paul A.
                                                       Vplcker 
  1. A
    Codes :
    (a)           (b)          (c)           (d)
    3              2              4              1
  2. B
    2              3              4              1
  3. C
    4              3              2              1
  4. D
    2              4              3              1
Question 16Single Answer
An industry whose long run supply curve is horizontal is called :
  1. A
    Constant cost industry
  2. B
    Increasing cost industry
  3. C
    Decreasing Cost Industry
  4. D
    Effisient  Industry
Question 17Single Answer
The practice of charging each consumer the reservation price is called :
  1. A
    Peak load pricing
  2. B
    Inter –tem poral  price discrimination
  3. C
    Third degree price discrimination
  4. D
    None if these
Question 18Single Answer
Frictional unemployment is also known as :
  1. A
    Disguised unemployed
  2. B
    Turnover unemployed
  3. C
    Cyclical unemployed
  4. D
    Structural  unemployment 
Question 19Single Answer
Arrange in ascending chronological order the following consumption hypotheses in which they appeared in the economics literature  :
1. Absolute increase hypothesis
2. Permanent increase hypothesis
3. Life cycle hypothesis
4. Relative increase hypothesis
  1. A
    Codes :
    1, 3, 4, 2 
  2. B
    1, 2, 4, 3
  3. C
    1, 4, 3, 2
  4. D
    1, 3, 2, 4
Question 20Single Answer
Which of the following components of aggregate demand  is self termination and self – financing  ?
  1. A
    Investment expenditure
  2. B
    Durable consumption expenditure
  3. C
    Non- durable consumption  expenditure
  4. D
    Government expenditure
Question 21Single Answer
The cost incurred by the firm in hiring labour is called as :
  1. A
    Explicit cost   
  2. B
    Implicit Cost
  3. C
    Marginal Cost
  4. D
    Total Cost
Question 22Single Answer
The locus of Pareto optimality in production and consumption is given by :
  1. A
    The social Welfare Function
  2. B
    The Utility Possibility Curve
  3. C
    The Transformation Curve
  4. D
    The Grand Utility possibility Curve 
Question 23Single Answer
Match items given in List-1 with those in List-II :
    List-I                                      List_II
a. Tea and coffee           1. Veblen goods
b. Car and petrol            2. Substitutes
c. Gold and               3. Giffen goods
    Diamonds              
d. Ragi and Bajra       4. Complementary
  1. A
    Codes  :
    a              b             c              d
    2              1              3              4
  2. B
    2              4              1              3
  3. C
    4              1              2              3
  4. D
    4              3              1              2
Question 24Single Answer
Assertion (A)  : In the short run under perfect competition, given the market demand and market supply the industry is in equilibrium at that price which clears the market.
Reason (R)        : In the long run all the firms in the industry earn profit .
  1. A
    Codes :
    Both (A) and (R) are true and (R) is the correct explanations of (A)
  2. B
    Both (A) and (R) are true , but (R) is not correct explanation of (A)
  3. C
    (A) is true , but (R) is false
  4. D
    (A) is false , but (R) is true 
Question 25Single Answer
Put the following in chronological order on the basis of development :
I. Law of demand
II.Revealed Preference Analysis
III. IIndifference Curve Analysis
IV. Law of Diminishing Marginal Utility
  1. A
    I, II, III, IV 
  2. B
    I, IV, III, II
  3. C
    I, II, IV,III  
  4. D
    I, III, IV, II
Question 26Single Answer
If the monopolist incurs loss in the short run , then in the long run :
a. he will go out of business.
b. he will stay in business
c. he will break even
d. any of the above is possible
  1. A
    (A) and (B) 
  2. B
    (A) and (C)
  3. C
    (A) only    
  4. D
    (D) only
Question 27Single Answer
The condition of Pareto Optimality holds correct under.
  1. A
    Perfect Competition
  2. B
    Monopolistic Competition
  3. C
    Oligopoly
  4. D
    Monopoly
Question 28Single Answer
Assertion (A)  : Compared to the individual supply curve is more elastic .
Reason (R)      : There is the possibility of moving between being out of the labour force and being in the labour force.
Choose amongst the following  the correct answer .
  1. A
    Codes :
    (A) is correct , but (R) I not the correct explanation of (A)
  2. B
    (A) is correct and (R)  is the correct explanation of (A)
  3. C
    (A) is correct , but (R) is incorrect
  4. D
    (A) is incorrect , but (R) Is correct 
Question 29Single Answer
With reference to demand for money, match List-I with List-II :
       List-I                                     List-II
a. Demand for money                1. J.M. Keynes
    is stable
b. Liquidity preference               2. W. Baumol
    as behaviour  towards
    risk
c. Inventory Theoretic               3. James Tobin
    Approach
d. No portfolio                              4. Milton Friedman
   diversification
  1. A
    Codes:
    A             b             c              d
    4              3              1              2
  2. B
    3              4              1              2
  3. C
    2              1              3              1
  4. D
    4              3              2              1
Question 30Single Answer
The negative relationship between the gap between  actual GDP and its trend value and the difference between actual  unemployment rate and its equilibrium value is called :
  1. A
    The Aggregate supply curve
  2. B
    The Phillips curve
  3. C
    The Natural Rate of Unemployment Hypothesis
  4. D
    Okun’s Law
Question 31Single Answer
Fiscal deficit less interest payments is called
  1. A
    Net fiscal deficit
  2. B
    Monetised deficit
  3. C
    Primary deficit
  4. D
    Budgetary deficit
Question 32Single Answer
How many countries are the members of European Union ?
  1. A
    25 
  2. B
    28
  3. C
    26   
  4. D
    15
Question 33Single Answer
If the mean and variance of a given distribution is 8 and 0.25, then the coefficient of variation will be
  1. A
    4 percent
  2. B
    8 percent
  3. C
    12 percent
  4. D
    16 percent
Question 34Single Answer
The doctrine of unbalanced growth was propounded by
I. Hirschman
II. Robert Solow
III. Singer
IV. Ragnar Nurkse
Codes :
  1. A
    I and II are correct
  2. B
    II and III are correct
  3. C
    III and IV are correct
  4. D
    I and III are correct
Question 35Single Answer
Match List-I with List-II and show the relation between trade cycle and profit by selecting correct codes given below
         List-I                      List-II
a. Recession                   I. Low
b. Boom                           II. Positive
c. Recovery                     III. Highest level
d. Depression                IV. Negative
  1. A
    Codes :
    a              b             c              d
    III            IV            I               II
  2. B
    I               III            II             IV
  3. C
    IV            III            II             I
  4. D
    I               II             III            IV
Question 36Single Answer
The sequencing process of Schumpeter model of development is
  1. A
    Swarm like Clusters, Innovation, Bank credit, Breaking circular flow
  2. B
    Breaking circular flow, Innovation, Bank credit, Swarm like Clusters
  3. C
    Innovation, Bank credit, Breaking circular flow, Swarm like Clusters
  4. D
    Bank credit, Innovation, Swarm like Clusters, Breaking circular flow
Question 37Single Answer
Harrod-Domar model of economic growth is based upon
I. Warranted growth rate
II. Investment growth rate
III. Productivity growth rate
IV. Natural growth rate
Codes :
  1. A
    I and II are correct
  2. B
    II and III are correct
  3. C
    III and IV are correct
  4. D
    I and IV are correct
Question 38Single Answer
Endogenous technological change is not caused by
  1. A
    FDI
  2. B
    Population size
  3. C
    Population density
  4. D
    Educational level
Question 39Single Answer
According to Keynes the aggregate supply curve during depression
  1. A
    is Horizontal
  2. B
    is Vertical
  3. C
    tilts downwards to the right
  4. D
    tilts upward to the right 
Question 40Single Answer
Identify the transfer payments in the following and answer from codes below :
a. Annual increment in salary
b. payments of bonus to employess
c. Interest payment on public debt
d. Pension payment
  1. A
    Codes :
    a. c  and   b
  2. B
    b,  c  and  d
  3. C
    a  and  b  
  4. D
    a  and  c
Question 41Single Answer
Under Cournot Model of Duopoly, each duopolist will produce :
  1. A
    half the output
  2. B
    one-fourth of the output
  3. C
    one-six of the output
  4. D
    one-third of the total output
Question 42Single Answer
As long as the substitution effect dominates the income effect, the labour supply curve is :
  1. A
    negatively sloped
  2. B
    positively sloped
  3. C
    bend backward
  4. D
    shifting towards left 
Question 43Single Answer
Assertion (A)     :  Monopoly is Pareto inefficient .
Reason (R)         :  It would be possible to change the allocation of resources to make the amount of Income he would be prepared to pay in exchange of the reduction in price
  1. A
    Codes:
    Both (A) and (R) are correct and (R) is the correct explanation of (A)
  2. B
    (A) is correct, but (R) is not correct
  3. C
    Both (A) and (R) are correct, but (R) is incorrect explanation of (A)
  4. D
    (R) is correct, but (A) is incorrect 
Question 44Single Answer
If MPk/MPk does not change with any proportionate change in labour and capital then the production function  is :
  1. A
    Linear
  2. B
    Non-Linear
  3. C
    Homogeneous
  4. D
    Homothetic
Question 45Single Answer
Match the items in the List-I with items in List-II select the correct answer from the code given below :
  List-I                                      List-II
I. Agency Theory of        1. O.E. Williamson 
   Firm
II. X-inefficiency              2. M.C. Jenson and W. J. Meckling
III. The Utility                 3. Wilfredo Pareto
    Maximisation
     Model
IV. Edgeworth box         4. Harvey Leibenstein
      Diagram first
      Used by
  1. A
    Codes:
    I               II             III            IV
    3              2              1              4
  2. B
    2              4              1              3      
  3. C
    2              3              4              1
  4. D
    3              4              1              2
Question 46Single Answer
At the point of tangency between short-run average total cost and long-run average cost, the short-run average cost, the short-run marginal cost :
  1. A
    greater than long-run cost
  2. B
    less than long-run marginal cost
  3. C
    is far above long-run marginal cost
  4. D
    equals long-run marginal cost 
Question 47Single Answer
The equilibrium in a market is incomplete with increasing returns to scale only in the case of :
  1. A
    imperfectly competitive market
  2. B
    monopolistic market
  3. C
    perfectly competitive market
  4. D
    none of the above 
Question 48Single Answer
If 1 = Involuntary unemployment
2 = Disguised   unemployment
3 = Frictional unemployment; and
4 = Structural unemployment, then full
Employment is consistent with
  1. A
    1 & 2
  2. B
    2 & 3
  3. C
    3 & 4
  4. D
    1 & 4
Question 49Single Answer
Which of the following statements is false ?
  1. A
    The balanced budget multiplier is unity when taxes are ad volorem taxes .
  2. B
    The balanced budget multiplier is less than unity when taxes are ad valorem taxes
  3. C
    Tax multiplier is less than government expenditure multiplier.
  4. D
    tax multiplier is more than government expenditure multiplier 
Question 50Single Answer
Match the theory / criterion of investment determination as given below in List – II with their Propounders  gives below in List-I :
        List-I                                      List-II
I. Dale Jorgenson                       a. Q- Theory
II. J.M. keyens                             b. Neo-Classical Theory
III. James Cohin                          c. Accelerator Theory
IV. James Clark                             d. Present Value Criterion
  1. A
    Codes :
    I               II             III            IV
    a              d             b             c
  2. B
    b             d             a              c
  3. C
    c              d             a              b
  4. D
    c              a              d             b
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