Question 1

Consider the following statements about a joint-stock company: 1. It has a legal existence. 2. There is limited liability of shareholders. 3. It has a democratic management. 4. It has a collective ownership. Which of the statements given above are c…

Accepted Answer

Joint stock company is a voluntary association of individuals for profit, having a capital divided into transferable shares, the ownership of which is the condition of membership. The definition of a joint stock company highlights the following features of a company. Separate legal entity:From the day of its incorporation, a company acquires an identity, distinct from its members. Its assets and liabilities are separate from those of its owners. The law does not recognise the business and owners to be one and the same. The management and control of the affairs of the company is undertaken by the Board of Directors, which appoints the top management officials for running the business. The directors hold a position of immense significance as they are directly accountable to the shareholders for the working of the company. The shareholders, however, do not have the right to be involved in the day-to-day running of the business. The liability of the members is limited to the extent of the capital contributed by them in a company The risk of losses in a company is borne by all the shareholders. This is unlike the case of sole proprietorship or partnership firm where one or few persons respectively bear the losses.

Question 2

When some goods or productive factors are completely fixed in amount, regardless of price, the supply curve is

Accepted Answer

Although demand curves are typically downward sloping to reflect that consumers’ utility for a good diminishes with increased consumption, firm supply curves are generally upward sloping.The upward sloping character reflects that firms will be willing to increase production in response to a higher market price because the higher price may make additional production profitable.

Question 3

When some goods or productive factors are completely fixed in amount, regardless of price, the supply curve is

Accepted Answer

Although demand curves are typically downward sloping to reflect that consumers’ utility for a good diminishes with increased consumption, firm supply curves are generally upward sloping.The upward sloping character reflects that firms will be willing to increase production in response to a higher market price because the higher price may make additional production profitable.

Question 4

A market situation when firms sell similar but not identical products is termed as

Accepted Answer

Monopolistic competition is a type of imperfect competition such that many producers sell products that are differentiated from one another (e.g. by branding or quality) and hence are not perfect substitutes. In other words, large sellers selling the products that are similar, but not identical and compete with each other on other factors besides price.

Question 5

Which one of the following hypotheses postulates that individual's consumption in any time period depends upon resources available to the individual, rate of return on his capital and age of the individual?

Accepted Answer

The life-cycle theory of consumption, popularly known as life-cycle hypothesis,' was developed by Ando and Modigliani" in the early 1960s. The life-cycle hypothesis postulates that individual consumption in any time period depends on (i) resources available to the individual, (ii) the rate of return on his capital, and (iii) the age of the individual. The resources available to an individual consist of his existing net wealth and the present value of all his current and future labour incomes. According to the life-cycle hypothesis, a rational consumer plans consumption on the basis of all his resources and allocates his income to consumption over time so that he maximizes his total utility over his life time.

Question 6

National Income of India is compiled by

Accepted Answer

Central Statistical Organization

Question 7

Backward bending supply curve belongs to which market?

Accepted Answer

Money

Question 8

If a budget is defeated in the legislature of a state then

Accepted Answer

The council of Ministers along with the Chief Minister has to resign

Question 9

In terms of economics, if it is possible to make someone betteroff without making someone worseoff, then the situation is

Accepted Answer

Paretosuperior

Question 10

Which of the following is not true about a Demand Draft?

Accepted Answer

It may be dishonoured for lack of funds.

Question 11

The innovation theory of profit was proposed by

Accepted Answer

Schumpeter

Question 12

Which one of the following statements about Exchange-Traded Fund (ETF) is not correct?

Accepted Answer

An ETF, or exchange-traded fund, is a marketable security that tracks an index, a commodity, bonds, or a basket of assets like an index fund. •Unlike mutual funds, an ETF trades like a common stock on a stock exchange. •ETFs experience price changes throughout the day as they are bought and sold. •ETFs typically have higher daily liquidity and lower fees than mutual fund shares, making them an attractive alternative for individual investors.

Question 13

Consider the following statements about impact of tax : 1. A tax is shifted forward to consumers if the demand is inelastic relative to supply. 2. A tax is shifted backward to producers if the supply is relatively more inelastic than demand. Which o…

Accepted Answer

Only if either demand or supply was either completely elastic or inelastic will the tax burden fall entirely on either the buyer or the seller. Between these 2 extremes, tax incidence varies continuously from a perfectly inelastic supply or perfectly elastic demand, where the sellers assumes the entire burden of the tax to the perfectly elastic supply or perfectly inelastic demand where the buyers bear the entire burden. To better see how the elasticity of supply and demand affects tax incidence, consider a 20% tax on a can of soda. Suppose the government decides that the buyer should pay the 20% tax. Does this mean that the buyers will be paying 20% more, or will sellers have to share some of the tax burden? Since higher prices decrease demand, regardless of the reason for the higher prices, sellers will share some of the burden. How much of the burden will be determined by the elasticity of supply and demand for the product?

Question 14

According to the law of diminishing marginal utility, as the amount of a good consumed increases, the marginal utility of that good tends to

Accepted Answer

Economists use the concept of marginal utility to measure happiness and pleasure and how that affects consumer decision making. They have also identified the law of diminishing marginal utility, which means that the first unit of consumption of a good or service has more utility than the next units of consumption.Hence, the marginal utility of the good diminishes as the amount of good consumed increases.

Question 15

Which one of the following is also regarded as Disguised unemployment?

Accepted Answer

Underemployment

Question 16

When there is only one buyer and one seller of product, it is called _____ situation.

Accepted Answer

Bilateral monopoly

Question 17

Which among the following is not an account under Balance of Payment?

Accepted Answer

Official Reserves Account

Question 18

Which one of the following is not an instrument of credit control in India?

Accepted Answer

Variable cost reserve ratios

Question 19

Which among the following is an example of micro-economic variable?

Accepted Answer

Consumer's Equilibrium

Question 20

Which of the following taxes is levied by the State Government only?

Accepted Answer

Entertainment tax

Indian Economy Questions