Ph.

D Entrance Test, July 2021

Micro Economics

1. Which of the following is not an example of public good?

A. Possession of atom bomb by a country.
B. A highway constructed linking two states, which is tool-free
C. Plantation of trees on both sides of the road
D. Railway services run by the government
ANSWER: D

2. Which of the following is true in the context of Indian economy?

A. It lies on the production-possibility frontier.
B. The current consumption in India is less than the capital investment.
C. The markets for all commodities, are efficient.
D. In the mass and goods transportation industry, the Indian railways has a near
monopoly.

ANSWER: D

3. General equilibrium analysis is concerned with the analysis of the

A. Effect of changes in an individual market holding other things equal
B. Equilibrium state for the economy as a whole in which the markets for all goods
and Services are simultaneously in equilibrium
C. Effect of change in the equilibrium point when the demand is kept constant and
supply is changed
D. Effect of change in the equilibrium point when the supply is kept constant and
demand is changed
ANSWER: B

4. Which of the following has the lowest elasticity of supply?

A. Luxury items.
B. Necessities.
C. Perishable goods.
D. Items that have the least budgetary allocation.
ANSWER: C

5. Increase in the population of India will

A. Increase the supply of housing
B. Increase the quantity supplied of housing
C. Increase the demand for housing
D. Increase the quantity demanded of housing
ANSWER: C

6. You have planned to spend Rs.100 for a month on browsing the Internet. Your
demand for Net browsing can be said to be
A. Perfectly elastic
B. Perfectly inelastic
C. Relatively elastic
D. Unit-elastic.
ANSWER: D

7. At a local supermarket, the price of Simla apples varies every week. Mr. Mishra,
who is a regular buyer of apples, spends exactly Rs.50 on apples every week,
irrespective of the price. For Mishra, the price elasticity of demand for apples is
A. Perfectly elastic
B. Perfectly inelastic
C. Unit elastic
D. Relatively elastic
ANSWER: C

8. When the Government increases tax on cigarettes, cigarette manufacturers pass

much of the additional tax on to consumers in the form of higher prices. This
implies that the demand for cigarettes is
A. Relatively less elastic than supply
B. Relatively more elastic than supply
C. As elastic as the supply
D. Perfectly inelastic
ANSWER: A

9. The demand for which of the following goods best illustrates derived demand?
A. Rice
B. Motor car
C. Machinery
D. Book
ANSWER: C

10.The cross price elasticity of demand for the products Rolex and Bollix is 10. It
implies that Rolex and Bollix are
A. Substitutes
B. Complements
C. Independent
D. Inferior goods
ANSWER: A

11.The demand for most products varies directly with the change in consumer
income. Such products are known as
A. Normal goods
B. Prestigious goods
C. Complementary goods
D. Inferior goods
ANSWER: A
 12.The difference between the prices for an abundant but most essential good and a
scarce but not-so-essential good can be explained by
A. The concept of consumer surplus
B. Ordinal utility theory
C. Equi-marginal utility principle
D. Substitution and income effects
ANSWER: C

13.The difference between the price an individual is willing to pay and the price he
or she actually pays is
A. Producer cost
B. Monopolist profit
C. Economic profit
D. Consumer surplus.
ANSWER: D

14.If a change in all inputs leads to a proportional change in the output, it is a case of
A. Increasing returns to scale
B. Constant returns to scale
C. Diminishing returns to scale
D. Variable returns to scale
ANSWER: B

15.To manufacture a PC, you require a keyboard and a monitor. If you measure
keyboard on the X-axis and monitor on the Y-axis, the shape of the Iso quant will
be
A. Convex to the origin
B. Concave to the origin
C. Downward sloping straight line
D. L-shaped.
ANSWER: D

16. The average total cost will be minimum at a point where

A. Marginal cost and average fixed cost curves intersect
B. Marginal cost and average variable cost curves intersect
C. Marginal cost and average cost curves intersect
D. Marginal cost is minimum
ANSWER: C

17. Average fixed cost

A. Always declines as the output increases
B. Is U-shaped, if there are increasing returns to scale
C. Is U-shaped, if there are decreasing returns to scale
D. Is intersected by marginal cost at its minimum point

ANSWER: A