Description : If the main objective of the government is to raise revenue, it should tax commodities with (1) high elasticity of demand (2) low elasticity of supply (3) low elasticity of demand (4) high income elasticity of demand
Last Answer : (3) low elasticity of demand Explanation: The Ramsey rule states that commodities with low elasticities of demand should be taxed at higher rates than commodities with high elasticities of demand. ... the Ramsey rule may result in a regressive taxation scheme society may view as inequitable.
Description : Price elasticity of demand shows the relationship between demand for a commodity and (a) price of other commodities (b) price of that commodity © tastes and preferences of the consumer (d) income of the consumer
Last Answer : (b) price of that commodity
Description : Cross demand expresses the functional relationship between - (1) demand and prices of related commodities (2) demand and income (3) demand and prices (4) demand and supply (4)
Last Answer : (1) demand and prices of related commodities Explanation: Other things being constant, cross demand expresses the relation between demand for good A' due to change in the price of its related good 'B' ... that at different prices of good B' what different quantities of good A' will be demanded.
Description : Cross demand expresses the functional relationship between (1) demand and prices of related commodities. (2) demand and income. (3) demand and prices. (4) demand and supply,
Last Answer : demand and prices of related commodities.
Description : In a Laissez-faire economy (1) the customers take all the decisions regarding production of all the commodities (2) the Government does not interfere in the free functioning of demand and ... of various commodities produced (4) the Government controls the allocation of all the factors of production
Last Answer : the Government does not interfere in the free functioning of demand and supply forces in the market
Description : According to Engel’s Law of consumption, the following commodities are likely to have income elasticity of less than one (a) Garments (b) Motor car (c) Cosmetics (d) Wheat and Rice
Last Answer : (d) Wheat and Rice
Description : Sellers market denotes a situation where : (1) commodities are available at competitive rates (2) demand exceeds supply (3) supply exceeds demand (4) supply and demand are evenly balanced
Last Answer : (2) demand exceeds supply Explanation: Seller's market is a market which has more buyers than sellers. High prices result from this excess of demand over supply. The opposite of the seller's market is the buyer's market, where supply greatly exceeds demand.
Last Answer : demand exceeds supply
Description : The relationship between elasticity of demand (e), Average Revenue (AR) and Marginal Revenue (MR) is shown by which of the following formula ? (a) e = MR / (AR – MR) (b) e = AR/MR (c) e = MR/AR (d) e = AR / (AR – MR)
Last Answer : (d) e = AR / (AR – MR)
Description : Total revenue is maximum when elasticity of demand is (a) 3 (b) 1 © 0 (d) 0.5
Last Answer : (b) 1
Description : Agricultural income tax is a source of revenue to - (1) Central Government (2) State Government (3) Local Administration (4) Centre and State Governments
Last Answer : (2) State Government Explanation: The Constitution of India allocates the taxation of agricultural income to states. Land revenue is a major source of revenue for states in India
Description : 1. The largest source of tax revenue for the federal government is: a. the personal income tax b. the social security tax c. the property tax d. the sales tax
Last Answer : a. the personal income tax
Description : Agricultural income tax is a source of revenue to (1) Central Government (2) State Government (3) Local Administration (4) Centre and State Govern ments
Last Answer : State Government
Description : If two commodities are complements, then their crossprice elasticity is- (1) zero (2) positive (3) negative (4) imaginary number
Last Answer : (4) imaginary number Explanation: In economics, the cross elasticity of demand or cross-price elasticity of demand measures the responsiveness of the demand for a good to a change in ... denotes two products that are complements, while a positive cross elasticity denotes two substitute products.
Description : If two commodities are complements, then their cross-price elasticity is (1) zero (2) positive (3) negative (4) imaginary number
Last Answer : negative
Description : The major objective of monetary policy is to - (1) increase government's tax revenue (2) revamp the Public Distribution System (3) Promote economic growth with price stability (4) weed out corruption in the economy
Last Answer : (3) Promote economic growth with price stability Explanation: The main objective of monetary policy is to control the supply of money, often targeting an inflation rate or interest rate ... usually to contribute to lower unemployment, and to maintain predictable exchange rates with other currencies.
Description : The major objective of monetary policy is to (1) increase government’s tax revenue (2) revamp the Public Distribution System (3) Promote economic growth with price stability (4) weed out corruption in the economy
Last Answer : Promote economic growth with price stability
Description : X a consumer spends his entire income on two commodities A and (B) if price of A increases by 10% and his expenditure on item B remains same, then the price elasticity of item A is (a) 1 ; (b) < 1 ; (c) > 1 ; (d) ≥
Last Answer : (a) 1 ;
Description : Average Revenue means - (1) the revenue per unit of commodity sold (2) the revenue from all commodities sold (3) the profit realised from the marginal unit sold (4) the profit realised by sale of all commodities
Last Answer : (1) the revenue per unit of commodity sold Explanation: Average revenue is the revenue per unit of the commodity sold. It can be obtained by dividing the TR by the number of units sold. Then, AR = ... of view. Therefore, average revenue curve of the firm is the same as demand curve of the consumer.
Description : Average Revenue means (1) the revenue per unit of commodity sold (2) the revenue from all commodities sold (3) the profit realised from the marginal unit sold (4) the profit realised by sale of all commodities
Last Answer : the revenue per unit of commodity sold
Description : A fall in demand or rise in supply of a commodity— (1) Increases the price of that commodity (2) decreases the price of that commodity (3) neutralizes the changes in the price (4) determines" the price elasticity
Last Answer : (2) decreases the price of that commodity Explanation: The four basic laws of supply and demand are: (1) If demand increases and supply remains unchanged, a shortage occurs, leading to a higher ... (4) If demand remains unchanged and supply decreases, a shortage occurs, leading to a higher price.
Description : A fall in demand or rise in supply of a commodity– (1) Increases the price of that commodity (2) decreases the price of that commodity (3) neutralises the changes in the price (4) determines the price elasticity
Last Answer : decreases the price of that commodity
Description : If elasticity of demand is perfectly inelastic, then burden of tax will be on (a) Buyer (b) Seller (c) on both (a) and (b) (d) More on seller
Last Answer : (a) Buyer
Description : In equilibrium, a perfectly competitive firm will equate - (1) marginal social cost with marginal social benefit (2) market supply with market demand (3) marginal profit with marginal cost (4) marginal revenue with marginal cost
Last Answer : (4) marginal revenue with marginal cost Explanation: A perfectly competitive firm's supply curve is that portion of its marginal cost curve that lies above the minimum of the average variable cost ... marginal cost curve. The marginal cost curve is thus the perfectly competitive firm's supply curve.
Description : In equilibrium, a perfectly competitive firm will equate (1) marginal social cost with marginal social benefit (2) market supply with market demand (3) marginal profit with marginal cost (4) marginal revenue with marginal cost
Last Answer : marginal revenue with marginal cost
Description : If a good has negative income elasticity and positive price elasticity of demand, it is a (1) giffen good (2) normal good (3) superior good (4) an inferior good
Last Answer : (1) giffen good Explanation: A negative income elasticity of demand is associated with inferior goods. The Giffen good is an unusual type of inferior good which has positive price elasticity of demand. It ... rises, violating the law of demand. When price goes up, the quantity demanded also goes up.
Description : In the case of an inferior good, the income elasticity of demand is : (1) Zero (2) Negative (3) Infinite (4) Positive
Last Answer : (2) Negative Explanation: A negative income elasticity of demand is associated with inferior goods; an increase in income will lead to a fall in the demand and may lead to changes to more luxurious ... demand is associated with normal goods; an increase in income will lead to a rise in demand.
Description : The income elasticity of demand being greater than one, the commodity must be - (1) a necessity (2) a luxury (3) an inferior good (4) None of these
Last Answer : (2) a luxury Explanation: In economics, income elasticity of demand measures the responsiveness of the demand for a good to a change in the income of the people demanding the good, ceteris paribus. It is ... If the elasticity of demand is greater than 1, it is a luxury good or a superior good.
Last Answer : giffen good
Last Answer : Negative
Description : The income elasticity of demand being greater than one, the commodity must be (1) a necessity (2) a luxury (3) an inferior good (4) None of these
Last Answer : a luxury
Description : Cross elasticity of demand between two perfect substitutes will be A.low B.high C.zero D.infinity
Last Answer : D.infinity
Description : An increase in consumption at any given level of income will lead to (a) Higher aggregate demand. (b) An increase in exports. © A fall in taxation revenue. (d) A decrease in import spending.
Last Answer : (a) Higher aggregate demand.
Description : Which one of the following taxes is collected and utilized by the State Governments? (1) Personal income tax (2) Corporation tax (3) Land revenue (4) Custom duties
Last Answer : (3) Land revenue Explanation: The Constitution allocates the taxation of agricultural income to states. Lan revenue is a major source of revenue for states in India. For purpose of ... Commissioner, also known as Collector indicating his responsibility for the realization of all Government revenues.
Description : Laffer curve is related to (a) Tax rate and tax revenue. (b) Aggregate tax and aggregate non-tax revenue. (c) Total tax burden and total payment burden. (d) Total income and total expenditure.
Last Answer : (c) Total tax burden and total payment burden.
Description : Which one of the following taxes is collected and utilized by the State Governments ? (1) Personal income tax (2) Corporation tax (3) Land revenue (4) Custom duties
Last Answer : Land revenue
Description : Sellers market denotes a situation where (1) Commodities are available at competitive rates (2) Demand exceeds supply (3) Supply exceeds demand (4) Supply and demand are equal
Last Answer : (2) Demand exceeds supply
Description : Cost push inflation arises due to (a) Persistent rise in factor cost ; (b) Mismatch between demand and supply of commodities (c) Combine phenomena of demand pull and cost-push inflation. ; (d) Increase in price of precious metal
Last Answer : (a) Persistent rise in factor cost ;
Description : Demand pull inflation rises due to (a) Persistent rise in factor cost ; (b) Mismatch between demand and supply of commodities (c) Combine phenomena of demand pull and cost-push inflation. ; (d) Increase in Price of precious metal
Last Answer : ; (b) Mismatch between demand and supply of commodities
Description : If he Central Bank wants to encourage an increase in the supply of money and decrease in the cost of borrowing money, it should - (1) lower cash reserve ratio (2) raise discount rates (3) sell government securities (4) All of the above
Last Answer : (1) lower cash reserve ratio Explanation: When the Central Bank of a country intends to increase money supply, it should lower the Cash Reserve Ratio. A decrease in CRR helps the commercial banks to ... the amount of Bank deposits and they will lend more as they have more amount as their reserve.
Description : If the Central Bank wants to encourage an increase in the supply of money and decrease in the cost of borrowing money, it should (1) lower cash reserve ratio (2) raise discount rates (3) sell government securities (4) All of the above
Last Answer : lower cash reserve ratio
Description : At elasticity of one, marginal revenue is equal to A.one B.zero C.infinity D.none
Last Answer : B.zero
Description : An indifference curve measures the same level of - (1) Output from two factors (2) Satisfaction from two commodities (3) Satisfaction from Income and Capital (4) Satisfaction from expenditure and savings
Last Answer : (2) Satisfaction from two commodities Explanation: An indifference curve is a locus of combinations of goods which derive the same level of satisfaction. so that the consumer is indifferent ... of various points showing different combinations of two goods providing equal utility to the consumer
Description : What will be the effect on inferior commodities when income of the consumer rises? (1) Negative effect (2) Positive effect (3) No effect (4) First increase then decrease
Last Answer : (1) Negative effect Explanation: In economics, an inferior good is a good that decreases in demand when consumer income rises (or rises in demand when consumer income decreases), unlike ... consumers' demand increases when their income increases. Cheaper cars are examples of the inferior goods.
Description : An indifference curve measures the same level of (1) Output from two factors (2) Satisfaction from two commodities (3) Satisfaction from Income and Capital (4) Satisfaction from expenditure and savings
Last Answer : Satisfaction from two commodities
Last Answer : Negative effect
Description : Which one of the following is not included in current revenue of the Union Government? (1) Tax revenue (2) Non-tax revenue (3) Loans (4) interest payments
Last Answer : (3) Loans Explanation: Loans are not included in the current revenue of the Union Government.
Description : Which one of the following is not included in current revenue of the Union Government ? (1) Tax revenue (2) Non-tax revenue (3) Loans (4) Interest payments
Last Answer : Loans
Description : The functional relationship between income and consumption expenditure is explained by - (1) Consumer' Surplus (2) Law of Demand (3) Law of Supply (4) Keynes's psychological law of consumption
Last Answer : (4) Keynes's psychological law of consumption Explanation: Keynes defined Psychological Law of Consumption in terms of, "The fundamental psychological law, upon which we are entitled to depend with great ... consumption as their income increases but not by as much as the increase in the income."
Description : Milton Friedman gave emphasis in his quantity theory of money on (a) Production and Income (b) Price level (c) Supply of Money (d) Demand for Money
Last Answer : (d) Demand for Money