CBSE Class 12 Economics Market Competition MCQs Set A

Question. Monopolist can determine:
(a) Price
(b) Output
(c) Either price or output
(d) None

Answer : C

Question. An increases in the price of mutton provides information which:
(a) Tells consumers to buy more mutton
(b) Tells consumers to buy more chicken
(c) Tells producers to produce more mutton
(d) Provides no information

Answer : C

Question. Which of the following correctly describes how price adjustments eliminate a shortage?
(a) As the price falls, the quantity demanded increases while the quantity supplied decreases.
(b) As the price rises, the quantity demanded decreases while the quantity supplied increases.
(c) As the price falls, the quantity demanded decreases while the quantity supplied increases.
(d) As the price rises, the quantity demanded increases while the quantity supplied decreases.

Answer : B

Question. The law of demand implies that if nothing else changes, there is
(a) a linear relationship between price of a good and the quantity demanded
(b) a positive relationship between the price of a good and the quantity demanded
(c) a negative relationship between the price of a good and the quantity demanded
(d) an exponential relationship between price of a good and the quantity demanded

Answer : C

Question. If the price of a substitute to good X increases, then
(a) the demand for good X will increase.
(b) the market price of good X will decrease.
(c) the demand for good X will decrease.
(d) the demand for good X will not change

Answer : A

Question. If, at the current price, there is a shortage of a good,
(a) the price is below the equilibrium price.
(b) the market can be in equilibrium.
(c) sellers are producing more than buyers wish to buy.
(d) all of the options

Answer : A

Question. In the case of free entry and exit firms, at which of the market price does the firm earns a normal profit?
(a) New market price
(b) Increased market price
(c) Prevailing market price
(d) Higher market price

Answer : C

Question. Which of the following pairs of goods are most likely substitutes?
(a) compact discs and compact disc players
(b) lettuce and salad dressing
(c) cola and lemon lime soda
(d) peanut butter and gasoline

Answer : C

Question. As the opportunity cost of a good decreases, people buy
(a) more of that good but less of its complements.
(b) less of that good and also less of its complements.
(c) less of that good but more of its complements.
(d) more of that good and also more of its complements.

Answer : D

Question. How does the government overcome the problem of excess supply?
(a) Government create demand for product
(b) Government will remove the price floor
(c) Government enable the traders to buy
(d) Government create buffer stocks

Answer : D

Question. When demand decreases and supply does not change, the equilibrium price
(a) rises and the equilibrium quantity decreases.
(b) falls and the equilibrium quantity decreases.
(c) falls and the equilibrium quantity increases.
(d) rises and the equilibrium quantity increases.

Answer : B

Question. You observe that the price of a good rises and the quantity decreases. These observations can be the result of
(a) the supply curve shifting leftward
(b) the demand curve shifting rightward
(c) the demand curve shifting leftward
(d) the supply curve shifting rightward

Answer : A

Question. Which of the following refers to market equilibrium?
(a) Demand for good is equal to its supply at a particular price
(b) Demand for good is greater than its supply at a particular price
(c) Demand for good is less than its supply at a particular price
(d) Demand for good is equal to its supply at different prices

Answer : A

Question. Wants, as opposed to demands,
(a) depend on the price.
(b) are the goods the consumer plans to acquire.
(c) are the unlimited desires of the consumer
(d) are the goods the consumer has acquired

Answer : C

Question. The law of demand implies that demand curves
(a) shift leftward whenever the price rises.
(b) shift rightward whenever the price rises.
(c) slope down.
(d) slope up.

Answer : C

Question. A change in the price of a good
(a) shifts the good’s demand curve but does not cause a movement along it.
(b) does not shift the good’s demand curve but does cause a movement along it.
(c) shifts the good’s demand curve and also causes a movement along it.
(d) neither shifts the good’s demand curve nor causes a movement along it

Answer : B

Question. On which of the following basis, the productivity of labour is calculated?
(a) Number of labourers
(b) Hours of work
(c) Place of work
(d) Quantity of work

Answer : B

Question. What will be the opportunity cost of labour’s leisure hours when the wage rate increases?
(a) Cheaper the leisure hours
(b) Costlier the leisure hours
(c) Labour’s enjoy more of leisure hours
(d) Less cost to hire labour

Answer : B

Question. If the price of a good changes but everything else influencing suppliers’ planned sales remains constant, there is a
(a) rotation of the initial supply curve around the initial price.
(b) new supply curve that is to the right of the initial supply curve.
(c) new supply curve that is to the left of the initial supply curve.
(d) movement along the supply curve.

Answer : D

Question. If good A is a normal good and income increases, the equilibrium price of A
(a) and the equilibrium quantity will increase.
(b) and the equilibrium quantity will decrease.
(c) will rise and the equilibrium quantity will decrease.
(d) will fall and the equilibrium quantity will increase.

Answer : A

Question. An increase in demand combined with no change in supply causes
(a) a decrease in demand because the supply curve does not shift.
(b) the equilibrium price to fall.
(c) a movement rightward along the demand curve.
(d) the equilibrium price to rise.

Answer : D

Question. A surplus occurs when the price is
(a) equal to the equilibrium price.
(b) greater than the equilibrium price.
(c) less than the equilibrium price.
(d) None of the above because the existence of a surplus is independent of the price of the good

Answer : B

Question. A rise in supply and demand in equal proportion will result in:
(a) Increase in equilibrium price and decrease in equilibrium quantity
(b) Decrease in equilibrium price and increase in equilibrium quantity
(c) No change in equilibrium price and increase in equilibrium quantity
(d) Increase in equilibrium price and no change in equilibrium quantity

Answer : C

Question. When price is below equilibrium level, there will be:
(a) Surplus commodity in the market
(b) Shortage of commodity in the market
(c) Supply curve will shift
(d) Demand curve will shift

Answer : B

Question. Wheat is the main input in the production of flour. If the price of wheat increases, all else equal, we would expect
(a) the supply of flour to be unaffected
(b) the supply of flour to decrease.
(c) the supply of flour to increase.
(d) the demand for flour to decrease.

Answer : B

Question. Which of the following can lead to an increase in the supply for good X?
(a) a decrease in the number of sellers of good X.
(b) an increase in the price of inputs used to make good X.
(c) an increase in consumers’ income, assuming good X is a normal.
(d) an improvement in technology used in production of good X.

Answer : D

Question. On which type of good the government fixes the price floor?
(a) Industrial goods
(b) Electronic goods
(c) Mechanical goods
(d) Agricultural goods

Answer : D

Question. What should firm do when Marginal revenue is greater than marginal cost?
(a) Firm should expand output
(b) Effect should be made to make them equal
(c) Prices should be covered down
(d) All of the options

Answer : A

Question. Which of the following refers to wage rate (w)?
(a) Additional cost of hiring one more unit of technology
(b) Extra cost of hiring one more unit of labour
(c) Marginal cost of hiring one more unit of technology
(d) Average cost of hiring one more unit of labour

Answer : B

Question. What is the impact of a shift in supply curve on the equilibrium price and quantity?
(a) Both the price and quantity changes
(b) Changes in price and quantity are opposite
(c) Only when price increase
(d) Only when quantity increase

Answer : B

Question. How does the government overcome with a problem of shortage of supply or unequal distribution?
(a) Increased production level
(b) Increased supply of good
(c) Decreased the demand for good
(d) Ensured through fair price shops

Answer : D

Question. Holding all else constant, a higher price for ski lift tickets would be expected to
(a) increase the number of skiers.
(b) decrease demand for skis.
(c) decrease the demand for other winter recreational activities.
(d) decrease the supply of ski resorts.

Answer : B

Question. When the price of a good or service changes,
(a) there is a movement along a stable demand curve.
(b) demand shifts in the opposite direction.
(c) demand shifts in the same direction.
(d) supply shifts in the opposite direction.

Answer : A

Question. Because of increasing marginal cost, most supply curves
(a) are horizontal.
(b) have a negative slope.
(c) are vertical.
(d) have a positive slope.

Answer : D

Question. An increase in the number of fast-food restaurants
(a) increases the demand for substitutes for fast-food meals.
(b) raises the price of fast-food meals.
(c) increases the supply of fast-food meals.
(d) increases the demand for fast-food meals.

Answer : C

Question. When the price is higher than the equilibrium price,
(a) a shortage will exist.
(b) buyers desire to purchase more than is produced
(c) sellers desire to produce and sell more than buyers wish to purchase.
(d) quantity demanded equals quantity supplied

Answer : C

Question. The law of demand states that, other things remaining the same, the higher the price of a good, the
(a) smaller is the demand for the good
(b) smaller is the quantity of the good demanded
(c) larger is the quantity of the good demanded
(d) larger is the demand for the good

Answer : B

Question. When we say demand increases, we mean that there is a
(a) movement to the right along a demand curve.
(b) movement to the left along a demand curve.
(c) leftward shift of the demand curve.
(d) rightward shift of the demand curve.

Answer : D

Question. The quantity supplied of a good is
(a) equal to the difference between the quantity available and the quantity desired by all consumers and producers.
(b) the same thing as the quantity demanded at each price.
(c) the amount that the producers are planning to sell at a particular price during a given time period
(d) the amount the firm would sell if it faced no resource constraints.

Answer : C

Question. What is the result of adverse consequences on the consumers because of the function of fair price shops?
(a) Surplus production
(b) Creation of shortage
(c) Excess supply
(d) Creation of black market

Answer : D

Question. A decrease in the quantity supplied is represented by a
(a) rightward shift in the supply curve.
(b) movement down the supply curve.
(c) leftward shift in the supply curve.
(d) movement up the supply curve.

Answer : B

Question. The interaction of supply and demand explains
(a) both the prices and the quantities of goods and services.
(b) the quantities of goods and services but not their prices.
(c) the prices of goods and services but not their quantities.
(d) neither the prices nor the quantities of goods and services.

Answer : A

Question. When are the new firms attracted to enter the market?
(a) Market price less than the average cost
(b) Market price less than the total cost
(c) Market price equal to the minimum average cost
(d) Market price less than the marginal cost

Answer : C

Question. The quantity at the equilibrium price where the sellers are willing to sell and consumers are willing to buy
(a) Equilibrium quantity
(b) Equilibrium price
(c) Equilibrium period
(d) Equilibrium place

Answer : A

Question. Normal goods are those for which demand decreases as
(a) the price of a substitute falls.
(b) the price of a complement falls.
(c) the good’s own price rises.
(d) income decreases.

Answer : D

Question. Inferior goods are those for which demand increases as
(a) income decreases.
(b) income increases.
(c) the price of a substitute rises.
(d) the price of a substitute falls.

Answer : A

Question. Which of the following is not an essential condition of pure competition?
(a) Large number of buyers and sellers
(b) Homogeneous product
(c) Freedom of entry
(d) Absence of transport cost

Answer : D

Question. Which of the following is a determinant of demand?
(a) the price of a substitute good
(b) the price of a complement good
(c) the price of the good next month
(d) all of the options

Answer : D