Model Question Paper

COURSE: PRINCIPLES OF ECONOMICS and Markets

1. Adam Smith was the proponent of which of the following views of economics?

A. Scarcity
B. Wealth
C. Growth
D. Welfare

2. How is the loss of the highest-valued alternative termed as?

A. Entrepreneurship
B. Scarcity
C. Marginal benefit
D. Opportunity cost

3. Which theory is helpful in deciding the type of product to be produced, production levels &
pricing decisions?

A. Demand theory
B. Capital theory
C. Profit theory
D. Welfare theory

4. The law of demand states as price increases the demand of the product decreases. How do
we term those goods whose demand changes in direct proportion to their price?

A. Normal Goods
B. Inferior goods
C. Veblen Goods
D. Substitutes

5. When the income elasticity of a good is negative, what kind of good is it?

A. Superior good
B. Inferior good
C. Normal good
D. Veblen Goods
6. Demand is the desire for a commodity to satisfy human wants backed by purchasing power.
Which of the following options has a negative effect on demand?

A. Price of the product

B. Income of the Consumer
C. Advertising
D. Taste & Preferences

7. Under which of the condition the law of diminishing returns will be applicable?

A. There is increasing scarcity of factors of production.

B. The price of extra units of a factor is increasing.
C. There is at least one fixed factor of production.
D. Capital is a variable input

8. Which of the following would be an implicit cost for a firm?

A. Worker wages and salaries

B. Rent for the building
C. Payment for raw material
D. Wages foregone by the owner of the firm.

9. How can we express Variable Costs?

A. They are multiplied by fixed costs.

B. The change in total cost resulting from the production of an additional unit of output.
C. Costs that change with the level of production.
D. They are sunk costs.

10. Which of the following is true in case of a perfectly competitive market structure?

A. The firm's marginal revenue is less than the market price of its product.
B. The firm's marginal revenue decreases as the firm produces more output.
C. The firm's marginal revenue increases as the firm produces more output.
D. The firm's marginal revenue equals the market price of its product.

11. Perfect competition has many characteristics - number of sellers, type of products etc. Which
of the following is true regarding the number of sellers and buyers in a perfect competition?

A. Small number
B. One seller and buyer
C. Large number
D. Few in number
12. How do you classify a market system, where there is only one seller?

A. Monopoly
B. Monopolistic competition
C. Monopsony
D. Oligopoly

13. In an oligopolistic market, what does kink demand curve indicate?

A. Price flexibility
B. Price rigidity
C. Price Infinity
D. Price negativity

14. Which of the following does not represents the Cournot model, for a firm?

A. Assume that rival firms will keep their production constant

B. Produce the quantity where marginal revenue equals marginal cost
C. Respond to changes in production by rival firms by adjusting its production
D. Assume that rival firms will never keep their production constant

15. According to the Bertrand model, a firm will assume that rival firms will

A. Keep their rates of production constant

B. Keep their prices constant
C. Match price cuts but not price increases
D. Match price increases but not price cuts

16. The World Bank’s environmentally sustainable development division has established a new
index called:

A. Social Progress Indicator

B. Genuine Progress Indicator
C. Green Index
D. Gender-Related Development Index

17. What is the full form of GNI?

A. Gross national income

B. Gross net income
C. Green national income
D. Gross number income
18. Which of the following is not a characteristic of developing countries?

A. High unemployment
B. Low per capita income.
C. High per capita real income.
D. High percentage of people are below the poverty line.

19. Monetary policy objectives include:

A. Price stability and credit availability

B. Price stability and food availability
C. Social happiness and government spending
D. Luxury of the rich classes

20. An increase in CRR would mean:

A. Decreases credit and money supply

B. Increases credit and money supply
C. Increases credit and decreases money supply
D. Decreases credit and increases money supply

21. Monetary policy should aim primarily at:

A. Exchange rate control

B. Inflation control
C. Investment growth
D. Economic growth

22. In which of the following sectors the employment terms are fixed and regular and the
employees get assured work?

A. Unorganised sector
B. Public sector
C. Private sector
D. Organised sector

23. In which of the following sectors the employment terms are not fixed and regular and the
enterprises are not registered with the government?

A. Private sector
B. Organised sector
C. Unorganised sector
D. Public sector
24. Which of the following sectors is controlled by the government or government entities?

A. Organised sector
B. Unorganised sector
C. Public sector
D. Private sector

25. Which of the following seeks to regulate the financial system in india?

A. Commercial bank
B. The Reserve Bank of India
C. Cooperative Banks
D. Specialised banks

26. The bank has to deposit a certain percentage of the total bank deposits to be kept in the
current account with RBI. What is this ratio called?

A. Statutory Liquidity Ratio

B. Repo Rate
C. Cash reserve Ratio
D. Reverse Repo Rate

27. The Reserve Bank of India has announced that the commercial banks have to invest 5% of
their deposits in government bonds. Which monetary policy instrument is discussed above?

A. Cash reserve Ratio

B. Reverse Repo Rate
C. Open Market Operations
D. Statutory Liquidity Ratio

28. Which from these cannot be classified as Qualified Institutional Buyers?

A. Banks
B. Financial Institutions
C. Insurance Cos.
D. High Net-worth Individual

29. Which entity is responsible for getting subscription from investors for public issues?

A. Custodians
B. Merchant Bankers
C. Registrars
D. Stockbrokers
30. Without possessing this document investing in an IPO is not permitted; identify the
document

A. Passport
B. Driving License
C. Voters ID
D. PAN Card