Thursday, September 25, 2014

SSC CGL Quiz on Economics for Tier-1 Exam

SSC CGL Quiz on Economics for Tier-1 Exam

Economics Quiz

  • 1. When there is one buyer and many sellers then that situation is called

    1. Monopoly
    2. Single Buyer Right
    3. Down Right
    4. Double Buyer Right
    Answer And Explanation
    Answer: Option B
    Explanation:
    Note:In economics, a monopsony( mono: single) is a market form in which only one buyer faces many sellers. It is an example of imperfect competition similar to a monopoly, in which only one seller faces many buyers. As the only purchaser of a good or service, the monopsonist may dictate terms to its suppliers in the same manner that a monopolist controls the market for its buyers. It is also known as Single Buyer Right. A single-payer universal health care system, in which the government is the "buyer" of health care services, is an example of a monopsony. Another possible monopsony could develop in the exchange between the food industry and farmers.

Economics Quiz

  • 2.The measure of a worker's real wage is

    1. The change in his productivity over a given time
    2. His earnings after deduction at source
    3. His daily earnings
    4. The purchasing power of his earnings
    Answer And Explanation
    Answer: Option D
    Explanation:
    Note: A real wage rate is a nominal wage rate divided by the price of a good and is a transparent measure of how much of the good an hour of work buys. It provides an important indicator of the living standards of workers, and also of the productivity of workers. While differences in earnings or incomes may be misleading indicators of worker welfare, real wage rates are comparable across time and location. Nominal wages are not sufficient to tell us if workers gain since, even if wages rise, the price of one of the goods also rises when moving to free trade. The real wage represents the purchasing power of wages that is, the quantity of goods the wages will purchase.

Economics Quiz

  • 3.Average Revenue means

    1. the revenue per unit of commodity sold
    2. the revenue from all commodities sold
    3. the profit realised from the marginal unit sold
    4. the profit realised by sale of all commodities
    Answer And Explanation
    Answer: Option A
    Explanation:
    Note:Average revenue is the revenue per unit of the commodity sold. It can be obtained by dividing the TR by the number of unit sold. Then AR=TR/Q AR. In other words, it means price. Since the demand curve shows the relationship between price and the quantity demanded, it also represents the average revenue or price at which the various amounts of a commodity are sold, because the price offered by the buyer is the revenue from seller's point of view. Therefore, average revenue curve of the firm is the same as demand curve of the consumer.

Economics Quiz

  • 4. Economic Rent refers to

    1. Payment made for the use of labour
    2. Payment made for the use of capital
    3. Payment made for the use of Organization
    4. Payment made for the use of Land
    Answer And Explanation
    Answer: Option D
    Explanation:
    Note:Rent refers to that part of payment by a tenant which is made only for the use of land i.e  free gift of nature. The payment made by an agriculturist tenant to the landlord is not necessarily equals to the economic rent. A part of this payment may consist of interest on capital invested in the land by the landlord in the form of building, fences, tube wells, etc. The term "economic rent" refers to that part of payment which is made for the use of land only, and the total payment made by a tenant to the landlord is called "contract rent". Economic rent is also called surplus because it emerges without any effort on the part of a landlord.

Economics Quiz

  • 5.What is referred to as "Depository Services"?

    1. A new scheme of fixed deposits
    2. A method of regulating stock exchanges
    3. An agency for safe-keeping of securities
    4. An advisory service to investors
    Answer And Explanation
    Answer: Option C
    Explanation:
    Note:A Central Securities Depository(CSD) is an organization holding securities either in certificated or un-certificated(dematerialized) form, to enable book entry transfer of securities. In some cases, these organizations also carry out centralized comparison, and transaction processing such as clearing and settlement of securities. The physical securities may be immobilized by the depository, or securities may be dematerialized(so that they exist only as electronic records). The following are depository services: Demat Accounts; dematerialization; rematerialization; transfer of securities; and pledge services.

Economics Quiz

  • 6.If the price of an inferior good falls, its demand

    1. rises
    2. falls
    3. remains constant
    4. can be any of the above
    Answer And Explanation
    Answer: Option A
    Explanation:
    Note:Some goods are known as inferior goods. With inferior goods, there is an inverse relationship between real income and the demand for the good in question. If real incomes rise, the demand for an inferior good will fall. If real incomes fall( in a recession, for instance), the demand for an inferior good will rise. Example- Bus travel. As people get richer, they are more likely to buy themselves a car, or use a taxi, rather than rely on the more inferior bus. So the demand for bus travel falls as real income rises.

Economics Quiz

  • 7.The Marginal Utility Curve slopes downward from left to right indicating

    1. A direct relationship between marginal utility and the stock of commodity
    2. A constant relationship between marginal utility and the stock of commodity
    3. A proportionate relationship between marginal utility and the stock of commodity
    4. An inverse relationship between marginal utility and the stock of commodity
    Answer And Explanation
    Answer: Option D
    Explanation:
    Note: The Marginal Utility Curve is a curve illustrating the relation between the marginal utility obtained from consuming an additional unit of good and the quantity of the good consumed. The negative slope of the marginal utility curve reflects the law of diminishing marginal utility. The marginal utility curve also can be used to derive the demand curve. Marginal Utility is the utility derived from the last unit of a commodity purchased. One of the earliest explanations of the inverse relationship between price and quantity demanded is the law of diminishing marginal utility. This law suggests that as more of a product is consumed the marginal(additional) benefit to the consumer falls; hence consumers are prepared to pay less.

Economics Quiz

  • 8.Capital Output ratio of a commodity measures

    1. its per unit cost of production
    2. the amount of capital invested per unit of output
    3. the ratio of capital depreciation to quantity of output
    4. the ratio of working capital employed to quantity of output
    Answer And Explanation
    Answer: Option B
    Explanation:
    Note: Capital Output Ratio is the ratio of capital used to produce an output over a period of time. This ratio has a tendency to be high when capital is cheap as compared to other inputs. For instance, a country with abundant natural resources can use its resources in lieu of capital to boost its output; hence the resulting capital output ratio is low. The capital output ratio tends to increase if the capital available in a country is cheaper than the other inputs. Therefore, the countries that are rich in natural resources have a low capital output ratio. This is because they can easily substitute the capital with natural resources in order to increase the output. When countries use their natural resources instead of capital then COR reduces.

Economics Quiz

  • 9.In equilibrium, a perfectly competitive firm will equate

    1. marginal social cost with marginal social benefit
    2. market supply with market demand
    3. marginal profit with marginal cost
    4. marginal revenue with marginal cost
    Answer And Explanation
    Answer: Option D
    Explanation:
    Note:A perfectly competitive firm's supply curve is that portion of its marginal cost curve that lies above the minimum of the average variable cost curve.A perfectly competitive firm maximizes profit by producing the quantity of output that equates price and marginal cost. In other words, the firm produces by moving up and down along its marginal cost curve. The marginal cost curve is thus the perfectly competitive firm's supply curve.

Economics Quiz

  • The existence of a Parallel Economy or Black Money

    1. Makes the economy more competitive
    2. makes the monetary policies less effective
    3. ensures a better distribution of income and wealth
    4. ensures increasing productive investment
    Answer And Explanation
    Answer: Option B
    Explanation:
    Note:In India, Black money refers to funds earned on the black market, on which income and other taxes has not been paid. Black money leads to black liquidity which is immune to any monetary-fiscal policy. It can move around in the economy creating excess demand in several vulnerable sectors of the economy. Of particular relevance in this context is a policy dominated by sector-wise credit rationing in order to maintain inter-sectoral balances. The cost of credit is one part of such a policy. So, in a nutshell, the existence of parallel economy erodes the effectiveness of monetary Policies.

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