Test: Introduction To Economics - 1 | 10 Questions MCQ Test

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This mock test of Test: Introduction To Economics - 1 for UPSC helps you for every UPSC entrance exam. This contains 10 Multiple Choice Questions for UPSC Test: Introduction To Economics - 1 (mcq) to study with solutions a complete question bank. The solved questions answers in this Test: Introduction To Economics - 1 quiz give you a good mix of easy questions and tough questions. UPSC students definitely take this Test: Introduction To Economics - 1 exercise for a better result in the exam. You can find other Test: Introduction To Economics - 1 extra questions, long questions & short questions for UPSC on EduRev as well by searching above.

QUESTION: 1

In Economics, a good is something which

A.
Satisfies wants and needs
B.
Is a service
C.
Appears appealing
D.
Can be a service

Solution:

In economics, goods are materials that satisfy human wants and provide utility, for example, to a consumer making a purchase of a satisfying product.

QUESTION: 2

A resource is a

A.
Service only
B.
Good only
C.
Good or a service
D.
Not a good or a service

Solution:

A resource is good or a service because we can extract the resources from nature which can be used as a good .
Example: cotton is obtained from nature which we wear as a cloth so it is a good.

QUESTION: 3

The central problems of an economy are due to

A.
Limited choice
B.
Unlimited choice
C.
Unlimited resources
D.
Scarce resources

Solution:

Central problems arise in an economy due to scarcity of resources having alternative uses in relation to unlimited wants.
The Central Problem of all economies is scarcity.
Limited Resources + Unlimited Wants = Scarcity

\Scarcity forces individuals, firms governments and societies to make choices.

QUESTION: 4

One or more persons living together and having a common budget is called:

A.
A family
B.
Organisation
C.
Household
D.
All commodities in a house

Solution:

A household is a place where al people are living on a common budget and share the resources.

QUESTION: 5

The law of diminishing (marginal) returns states that as more of a variable factor is added to a certain amount of a fixed factor, beyond some point:

A.
Total physical product begins to fall
B.
The marginal physical product rises
C.
The marginal physical product falls
D.
The average physical product falls

Solution:

The law of diminishing marginal returns states that, at some point, adding an additional factor of production results in smaller increases in output. With other production factors constant, adding additional workers beyond this optimal level will result in less efficient operations.

QUESTION: 6

Interest received on investment will be __________

A.
Added (Investing activities)
B.
Added (Financing Activities)
C.
Deducted (Investing activities)
D.
Deducted (Financing Activities)

Solution:

Interest received on investment is added in investing activities while preparing cash flow statement.

QUESTION: 7

Calculate Purchase on Investment. The information is Opening balance of Investment – Rs. 2,50,000, closing balance Investment – Rs. 5,00,000, Sale – Rs.1,37,500, Profit on sale – Rs.12,500.

A.
Rs. 3,75,000
B.
Rs. 2,75,000
C.
Rs. 3,50,000
D.
Rs. 2,50,000

Solution:

Purchase of investment during the year Rs.3,75,000 i.e. 5,00,000 + 1,37,500 – 2,50,000 – 12,500 = 3,75,000

QUESTION: 8

Under which type of activity will you classify the sale of shares of another company while preparing cash flow statement?

A.
Investing and Financing
B.
Investing Activity
C.
Financing Activity
D.
Operating Activity

Solution:

Sale of shares of other company are part of investment which is now sold by the company. It is sale of investment, so it will take place in investing activity.

QUESTION: 9

Loose tools and Stores and spares are the part of --------------

A.
Cash and Cash Equivalents
B.
Inventory
C.
Other Current Assets
D.
Investment

Solution:

Loose tools and Stores and spares are the part of inventories.

QUESTION: 10

Which among the following statement is INCORRECT?

A.
On a linear demand curve, all the five forms of elasticity can be depicted’
B.
If two demand curves are linear and intersecting each other then coefficient of elasticity would be same on different demand curves at the point of intersection.
C.
If two demand curves are linear, and parallel to each other then at a particular price the coefficient of elasticity would be different on different demand curves.
D.
The price elasticity of demand is expressed in terms of relative not absolute, changes in Price and quantity demanded’

Solution:

The percentage change in the quantity demanded divided by the percentage change in price is coefficient of elasticity.

So two linear and parallel demand curves will have same coefficient of elasticity and the changes in price w.r.t changes in quantity demanded will be the same.