Economics: CUET Mock Test - 9 - Commerce MCQ

The correct answer is (A) - (IV), (B) - (III), (C) - (I), (D) - (II).
Key Points

• India is on the cusp of a major transformational change as it transitions towards a low-carbon economy. ⇒ Less emission of carbon dioxide.
• The Government of India regulates the prices of ethanol derived from various sources and procures it through Oil Marketing Companies at pre-determined prices. However, ethanol primarily derived from molasses and sugarcane juice can ignite a fuel vs food security debate, ⇒ Derived from sugarcane juice and molasses.
• Methanol, on the other hand, can be derived from different sources such as natural gas, coal, naphtha, biomass, etc. ⇒ Derived from biomass, naphtha, etc.
• The Government of India regulates the prices of ethanol derived from various sources and procures it through Oil Marketing Companies at pre-determined prices. ⇒ Procure ethanol for the government.

Answer is Option D [(B), (D), (E)]

Methanol is preferred over ethanol because:
- (B) It does not create a fuel vs. food security debate, unlike ethanol, which uses sugarcane.
- (D) It can be produced from coal, which is abundantly available in India.
- (E) It is a relatively cleaner fuel than gasoline, especially with Carbon Capture and Storage (CCS).
Options (A) and (C) are incorrect, as methanol enhances energy security and is not a polluting source when deployed sustainably.

The correct answer is 15 percent.
Key Points

India meets 85% of its crude oil requirement, 53% of its natural gas requirement, and 25% of its coal requirement through imports.

So, India meets its crude oil requirements through domestic sources of 15%.

The correct answer is the Sustainable use of cleaner fuels.
Key Points

'Presence of the sentence 'The energy policies of the country and those on the anvil demonstrate and focus on the country's transition toward cleaner fuels in a sustainable manner.' in the aforementioned paragraph states that new energy policies of the country aimed at promoting sustainable use of cleaner fuels.

The correct answer is Non-conventional energy sources.
Key Points

• 'Alternative fuels' can be defined as sources of energy or fuels that can partially or completely replace fossil oil sources in the transportation sector.
• 'Alternate fuels' refer to non-conventional sources of energy that can replace conventional fossil fuels like coal, oil, and natural gas. In this case study, Ethanol and Methanol are mentioned as alternate fuels.

Hence, alternative fuel refers to Non-conventional energy sources.

Key Points

• Indifference curves are generally convex to the origin. This convexity implies that as a consumer substitutes one good for another, the amount of the substituted good required to maintain the same level of utility increases. This reflects the principle of diminishing marginal rate of substitution, where the consumer needs increasingly more of one good to compensate for giving up units of another good, maintaining the same level of overall satisfaction.

The correct answer is Bundles which are considered indifferent by the consumer

Key PointsAn indifference curve represents a series of combinations of two goods between which a consumer is indifferent, meaning that each combination offers the same level of utility or satisfaction. Thus, the consumer has no preference for one combination over another along the same curve, as all provide equivalent satisfaction.

The correct answer is Monotonic preference.

Key PointsA rational consumer is the one who has Monotonic preference. Monotonic preference
A rational consumer with monotonic preferences always prefers more of at least one good, holding other factors constant, without being worse off in terms of consumption of other goods. This preference indicates that more of a good is better, which aligns with the typical assumption in economic theory that consumers always prefer more of a good to less, assuming all else remains equal. This property helps define the consumer's rationality in decision-making by aligning with the goal of maximizing utility.

Correct answer is option 3) Tea and Coffee.

Key PointsTea and coffee are classic examples of substitute goods. They both fulfill a similar need (i.e., a caffeinated beverage) and can be replaced with one another depending on availability, preference, or price changes. When the price of one increases, consumers might switch to the other, demonstrating their substitutability.

The correct answer is Option 4) Same

Key Points

• When the budget line is tangent to an indifference curve at a point, the slope of the budget line (which represents the price ratio of the two goods) equals the absolute value of the MRS at that point. The MRS represents the rate at which a consumer is willing to trade off one good for another while maintaining the same level of utility. This equality of slopes signifies that the consumer is optimizing their utility given their budget constraints.

Answer: C [(A), (C), and (D) only]

(A) is correct: The consumer aims to maximize satisfaction within budget constraints.
(B) is incorrect: Indifference curves slope downwards, not upwards.
(C) is correct: A budget line shows all affordable combinations of two goods.
(D) is correct: The Law of Diminishing Marginal Rate of Substitution suggests that as more of one good is consumed, the consumer sacrifices less of the other good.

(B) is correct: Cardinal Utility Analysis assumes utility can be measured numerically.
(C) is correct: The Law of Diminishing Marginal Utility explains why demand curves slope downwards.
(A) is incorrect: Total utility typically increases at a diminishing rate.
(D) is incorrect: Marginal utility generally decreases as more of a commodity is consumed.

(C) is correct: The optimum bundle is at the tangent point of the budget line and an indifference curve.
(D) is correct: If MRS is greater than the price ratio, the consumer prefers more of the commodity.
(A) is incorrect: Indifference curves for perfect substitutes are straight lines, not curved.
(B) is incorrect: An increase in income shifts the budget line outward, not inward.

(B) is correct: The budget set includes all combinations that the consumer can afford.
(C) is correct: The budget line is determined by the equation p1x1 + p2x2 = M.
(A) is incorrect: The Law of Diminishing Marginal Utility states that marginal utility decreases with each additional unit consumed.
(D) is incorrect: A price change causes a movement along the demand curve, not a shift in the entire curve.

[(B) only] 
- (A) Incorrect: The marginal utility curve slopes downward due to diminishing marginal utility.
- (B) Correct: Ordinal utility analysis ranks bundles without assigning numerical utility values.
- (C) Incorrect: Total utility and marginal utility are not inversely related; marginal utility decreases as total utility increases at a diminishing rate.
- (D) Incorrect: The Law of Demand states that demand decreases as price rises.

**Scoring**: Correct: 5, Incorrect: -1

(A) Private Ownership: In a capitalist economy, individuals and firms own resources like land and capital, distinguishing it from state ownership. This matches (IV).
(B) Profit Motive: Firms operate with the goal of maximizing profits, driving efficiency and innovation. This matches (II).
(C) Wage Labour: Workers offer their labor to employers in exchange for wages, a key feature of capitalism. This matches (III).
(D) Market Economy: Resource allocation and prices are determined by the forces of supply and demand in a capitalist system. This matches (I).
Thus, the correct pairing is (A) - (IV), (B) - (II), (C) - (III), (D) - (I), which corresponds to option d).

It was based on minimum daily requirement of 2,400 and 2,100 calories for an adult in rural and urban areas, respectively.

Valmiki Ambedkar Awas Yojana (VAMBAY) is a centrally sponsored scheme for the benefit of Slum Dwellers. The objective of Valmiki Ambedkar Awas Yojana (VAMBAY) is primarily to provide shelter or upgrade the existing shelter for people living Below Poverty Line in Urban Slums, with a view to achieve the goal of “Shelter for All”.

The poverty line in rural areas is defined as the consumption worth rupees 328 per person each month.

The poverty line is a specific point in a distribution that separates the population into those considered poor and non-poor.

There is a large gap between the conceptual understanding of poverty and its measurement in both rural and urban areas. Poverty is understood to encompass many different aspects including inadequate consumption, inadequate income and asset base, and inadequate access to basic infrastructure and services. For urban poverty, at the very least it should reflect the income needed not only to purchase sufficient food but also to obtain a secure shelter with adequate quality water, sanitation and garbage collection, to pay for transport and for keeping children at school, and to afford health care and medicines when needed. The ‘non-food’ monetary costs of avoiding poverty are generally higher in urban areas than in rural areas, as access to housing, resources and services are monetized – and usually particularly expensive in larger or more prosperous cities.

The question concerns the distribution of national income in India between low and high-income groups.

• The low-income group's share is 20%.
• The high-income group's share is 45.3%.

The correct answer is option C, which states that 80% of the population is in the low-income group, while 20% comprises the high-income group.

The scheme started in 2000 for indigent senior citizens is:

• APS (Annapurna Scheme)

This scheme was designed to provide food security to older individuals who are below the poverty line and not receiving a pension.

Churning poor is a sub category of poor, in which a person keeps on struggling to stay above the poverty line. In this type they regularly move in and out of poverty.

Antyodaya Anna Yojana i.e AAY provides food grains to poor people at cheap price. it is supported by the government.

Swarn Jayanti Shahri Rozgar Yojana (SJSRY), launched in 1997, includes the Urban Self-Employment Program (USEP) and Urban Wage Employment Program (UWSP), replacing earlier urban poverty alleviation programs.

The poverty line expenditure is the level of spending at which a person's basic food needs are met. This concept is essential for understanding poverty thresholds.

• It represents the minimum amount required to meet essential food needs.
• Helps in determining the poverty line for policy-making and social welfare.
• Acts as a benchmark to assess economic support for those in need.

Jawahar Gram Samridhi Yojana (JGSY), launched on April 1, 1999, is a restructured version of Jawahar Rozgar Yojana, aimed at providing employment and improving the quality of life for the rural poor.

The Planning Commission has defined the poverty line based on nutritional needs.

• The requirement is 2100 calories per person per day for urban areas.

The poverty line is set on the basis of monthly spending on food, education, health, electricity and transport. According to this estimate, in year 2000 a person who earns below Rs. 15.14 in urban areas in a day are defined as living below the poverty line which makes it 454 per month.