CUET Economics Sample Paper Set 01

Question: When there is an increase in the Marginal cost:
a) The production possibility curve is concave to the origin
b) The production possibility curve is convex to the origin
c) The production possibility curve is similar to the origin
d) None of the above

Answer: a

Question: Which of the following statements is true:
a) When the marginal opportunity cost remains constant, the production possibility frontier is a downward sloping straight line
b) When the marginal opportunity cost remains constant, the production possibility frontier is an upward sloping straight line
c) When the marginal opportunity cost remains constant, the production possibility frontier is a central sloping straight line
d) There is no relation between the marginal opportunity cost and the production possibility frontier

Answer: a

Question: Which of the following is a part of microeconomics?
a) Factor pricing
b) National income
c) Both a and b are correct
d) Both a and b are incorrect

Answer: a

Question: ‘Economics is the study of mankind in the ordinary business of life’. This definition was given by: –
a) Adam Smith
b) Lord Robbins
c) Alfred Marshall
d) Samuelson

Answer: c

Question: In which type of economy do consumers and producers make their choices based on the market forces of demand and supply?
a) Open Economy
b) Controlled Economy
c) Command Economy
d) Market Economy

Answer: a

Question: Under Inductive method, the logic proceeds from:
a) General to particulars
b) Particular to general
c) Both (a) and (b)
d) None

Answer: b

Question: Economic problem arises because
a) Wants are unlimited
b) Resources are scarce
c) Alternative use of resources
d) All of the above

Answer: d

Question: Theory of production studies the problem of
a) What goods to produce and how much to produce
b) How to produce
c) For whom to produce
d) All of the above

Answer: d

Question: PP shifts rightward to P1P1. It shows:
a) Improvement in technology in good X
b) Improvement in technology in good Y
c) Improvement in technology in both good X and Y
d) Stagnation

Answer: c

Question: Due to scarcity people must do which of the following:
a) Trade
b) Cooperate
c) Make choices
d) Competition

Answer: c

Question: Which of the following are types of economic systems?
a) Market economy
b) Planned economy
c) Mixed economy
d) All of these

Answer: d

Question: How many central problems exist in an economy?
a) Two
b) Three
c) Four
d) None of these

Answer: b

Question: In free market economy allocation of resources is determined by
a) Votes taken by consumers
b) Central planning authority
c) Consumer preferences
d) The level of profits of firm

Answer: c

Question: Which of the following statement is true?
a) Human wants are infinite
b) Resources are limited
c) Scarcity gives birth to choices
d) All of these

Answer: d

Question: Indian economy is:
a) Centrally planned
b) Mixed economy
c) Market economy 

Answer: b

Question: The reason for downward shape of production possibility curve is:
a) Increasing opportunity cost
b) Decreasing opportunity cost
c) Same opportunity cost
d) Negative opportunity cost

Answer: b

Question: The locus of all points representing bundles among which consumer is indifferent
a) Budget line
b) Consumer equilibrium
c) Indifference curve
d) Indifference map

Answer: c

Question: In case of normal goods, the demand curve is
a) Downward sloping
b) Upward sloping
c) Horizontal
d) Vertically straight

Answer: a

Question: What is the elasticity when the demand curve is Vertical and parallel to Y axis
a) 0
b) 1
c) Less than one
d) More than one

Answer: a

Question: Petrol and car is a classic example of
a) Substitute goods
b) Complementary good
c) Inferior goods
d) Article of distinction

Answer: b

Question: In case of substitute good the demand for a good usually move in the ---- direction of its price of its substitutes
a) Opposite
b) Similar
c) Random
d) None of the above

Answer: b

Question: Which of these is not true about the shape of indifference curve
a) Concave to origin
b) Downward sloping
c) Never touch the X axis
d) Never touch the Y axis

Answer: a

Question: The bundles available to a consumer is called
a) Budget set
b) Budget constraint
c) Demand of the consumer
d) Preferences of the consumer

Answer: a

Question: A decrease in the price of X axis product will make the budget line
a) Flatter
b) Steeper
c) Parallel
d) None of the above

Answer: a

Question: In the demand curve which is the dependent variable
a) Quantity
b) Price
c) Quality
d) Demand

Answer: a

Question: Coarse cereal is a type of ______ good
a) Superior good
b) Inferior good
c) Giffen good
d) Normal good

Answer: b

Question: The demand for food is---- if there is no close substitute
a) Elastic
b) Inelastic
c) Perfectly elastic
d) None of the above

Answer: b

Question: Which of the following is a complement product to peanut butter?
a) tea
b) Bread
c) Mustard
d) cream

Answer: b

Question: Long-run production function is related to:
a) Law of Demand
b) Law of Variable Proportion
c) Laws of Returns to Scale
d) Elasticity of Demand

Answer: c

Question: Production function is expressed as:
a) Q^x = P^x
b) Q^x = f(A, B, C, d)
c) Q^x = D^x
d) None of these

Answer: b

Question: Law of variable proportion is related to:
a) Both short-run and long run
b) Long-run
c) Short-run
d) Very Long-run

Answer: c

Question: Which of the following is not fixed cost?
a) Insurance Premium
b) Interest
c) Cost of Raw Material
d) Rent of the Factory

Answer: c

Question: The alternative name of opportunity cost is:
a) Economic Cost
b) Equilibrium Price
c) Marginal Cost
d) Average Cost

Answer: a

Question: The shape of average cost curve is:
a) U-shaped
b) Reactangular Hyperbola shaped
c) Line parallel to x-axis
d) None of these

Answer: a

Question: With increase in output, the difference between total cost and total variable cost:
a) Decreases
b) Increases
c) Remains Constant
d) None of the above 

Answer: c

Question: In which market AR = MR?
a) Monopoly
b) Monopolistic Competition
c) Both (a) and (b)
d) Perfect Competition

Answer: c

Question: In perfect competition, which of the following remains constant ?
a) AR
b) MR
c) Both AR and MR
d) None of the both

Answer: c

Question: AR is shown as:
a) TRQ
b) ΔQP
c) ΔTRΔQ
d) None of these

Answer: a

Question: In final equilibrium of firm:
a) MC cuts MR from above
b) MC cuts MR from below
c) Both (a) and (b) are
d) None of the above is true

Answer: b

Question: On which assumption, the law of supply depends?
a) There should be no change in income levels of buyers and sellers in the market.
b) Prices of factors of production remain stable
c) Technological level remains constant
d) All the above

Answer: d

Question: The quantity of a goods which the seller is ready to sell in the market at fixed price and time is called ?
a) Supply
b) Demand
c) Elasticity of supply
d) Elasticity of Demand

Answer: a

Question: Which of the following function shows the laws of supply?
a) S = f(P)
b) S = f(a/p)
c) S = f(Q)
d) None of the above

Answer: a

Question: If the price of goods rises by 60% but supply increases by only 5%, the supply of goods will be:
a) Highly Elastic
b) Elastic
c) Inelastic
d) Perfectly Inelastic

Answer: c

Question: If the price of the goods rises by 60% and supply increases by only 5%, the supply of goods will be:
a) Highly Elastic
b) Elastic
c) Inelastic
d) Perfectly Inelastic

Answer: c

Question: Supply falls on the same price when:
a) Where there is decrease in supply
b) When there is contraction in supply
c) When supply increases
d) When there is expansion in supply

Answer: a

Question: The time period in which the capacity of a plant can be varied:
a) Short period
b) Market period
c) Long period
d) All of the above

Answer: a

Question:  The amount of output given the amount of input through the production function is:
a) Maximum
b) Minimum
c) Constant
d) Varies

Answer:

Question: The rate at which Total Product increases as input increases is:
a) Constant
b) Not constant
c) Diminishing
d) Increasing

Answer: a

Question: In which stage of production are the Average Product and Marginal Product decreasing with the Marginal Product above zero (positive)?
a) In the stage of Constant Returns
b) In the stage of Decreasing Returns
c) In the stage of Increasing Returns
d) Both (a) and (c)

Answer: b

Question: In which stage of production would a rational entrepreneur like to operate?
a) Stage 1 where MP is maximum
b) Stage 2 where both MP and AP are decreasing, but both are positive
c) Stage 3 where MP is negative
d) Either Stage 2 or 3

Answer: b