Economics Quiz: MCQ Hardest Trivia! Test

The moon appears white in color. This is because it reflects the sunlight that falls on it, and since sunlight is composed of all colors, the reflected light appears white to our eyes. Additionally, the moon's surface is covered in a layer of dust and rocks, which also contribute to its white appearance.

The aviation industry is an example of an oligopoly because it is dominated by a few large airlines that have significant control over the market. These airlines have the power to influence prices, set standards, and make decisions that affect the entire industry. Additionally, barriers to entry, such as high capital requirements and government regulations, make it difficult for new competitors to enter the market. This concentration of power and limited competition are key characteristics of an oligopoly market structure.

Opportunity cost refers to the value of the next best alternative that is foregone when making a decision. It takes into account both implicit costs, which are the opportunity costs of using resources that have alternative uses, and explicit costs, which are the actual monetary costs incurred. Therefore, the statement that opportunity cost is an addition of implicit and explicit costs when the next best alternative is considered is true.

If there is a shortage of 'Avtaar' movie tickets, it indicates that there is high demand for the tickets. In such a situation, the price of the tickets is likely to rise as sellers will try to take advantage of the scarcity and increase the price to maximize their profits. This is a common economic principle known as supply and demand, where limited supply and high demand lead to an increase in price.

Microeconomics is the branch of economics that focuses on the study of individual industries and the behavior of individual decision-making units, such as households and firms. It analyzes how these units make decisions regarding the allocation of limited resources and how their choices impact the overall market. Microeconomics helps in understanding the supply and demand dynamics, price determination, market structures, and individual consumer and producer behavior.

The base year for calculating GDP in India is 2011-12. This means that the economic data and statistics are measured and compared to the economic conditions of that particular year. The choice of base year is important as it provides a reference point for measuring economic growth and changes in the economy over time. The base year is usually selected based on its representativeness of the overall economy and availability of reliable data.

The Central Bank of India is not known as the Federal Bank. The Central Bank of India is the Reserve Bank of India, which is the country's central banking institution. The Federal Bank, on the other hand, is a commercial bank in India. Therefore, the statement is false.

The circular flow of economic activity is a model that illustrates how goods, resources, payments, and expenditures circulate among different sectors in the economy. It shows how households provide resources (such as labor) to businesses, and in return, businesses produce goods and services that are purchased by households. This model also demonstrates how businesses pay wages and salaries to households, who in turn use that income to purchase goods and services. Additionally, it highlights the flow of payments between businesses and other sectors, such as the government and foreign entities.

Fiscal policies refer to the government's decisions regarding taxation and spending. These policies are used to influence the overall economy by managing the levels of aggregate demand and controlling inflation. By adjusting tax rates and government spending, fiscal policies aim to stabilize the economy, promote economic growth, and address issues such as unemployment and inflation.

Depreciation is subtracted from GDP to arrive at NDP because depreciation refers to the decrease in the value of fixed assets over time due to wear and tear, obsolescence, or other factors. Since GDP includes the total value of goods and services produced within a country's borders, it does not account for the loss in value of fixed assets. By subtracting depreciation from GDP, we can calculate Net Domestic Product (NDP), which represents the value of goods and services produced after accounting for the wear and tear on fixed assets.

The statement is false because depression does not necessarily come before a recession in a business cycle. A recession is a period of economic decline characterized by a significant decline in economic activity, while a depression is a severe and prolonged recession. While a depression can occur after a recession, it is not a necessary outcome. In fact, not all recessions lead to a depression, as governments and central banks often take measures to prevent the economy from entering into a depression.

Wool and cotton are a substitute pair because they are both natural fibers that can be used to make clothing and textiles. They have similar properties and can be used interchangeably in many situations. Mobile phone and charger, salt and pepper, and tea and sugar are not substitutes as they serve different purposes and cannot be used interchangeably.

When a firm's input increases by a certain percentage and its output increases by a higher percentage, it indicates increasing returns to scale. In this case, the firm's input increased by 10% but its output increased by 15%, which means that the firm is able to achieve greater output with relatively less input. This suggests that the firm is experiencing increasing returns to scale, where the increase in input leads to a proportionally larger increase in output.

The statement is false because a break-even point occurs when a firm's total revenue equals its total costs, resulting in zero profits. It is the point at which a company neither makes a profit nor incurs a loss. Therefore, it does not indicate that a firm earns huge profits.

The correct answer is iPhone 7. Price elasticity of demand measures the responsiveness of demand to a change in price. Goods and services that have a higher proportion of income spent on them tend to have a higher price elasticity of demand. Since an iPhone 7 is a relatively expensive item compared to a haircut, toothbrush, or curry powder, it is likely to have a higher price elasticity of demand. This means that a small change in price is likely to have a larger impact on the demand for iPhone 7 compared to the other options.

Business cycles are a natural part of any economy and cannot be completely prevented by any individual, including the Finance Minister. Business cycles refer to the fluctuations in economic activity, including periods of expansion and contraction. These cycles are influenced by various factors such as consumer spending, investment, government policies, and global economic conditions. While the Finance Minister can implement policies to mitigate the impact of business cycles and promote stability, they cannot completely prevent them from occurring. Therefore, the statement that the Finance Minister can prevent business cycles is false.

Fixed costs do not undergo changes as production expands. Fixed costs are costs that do not vary with the level of production, such as rent, insurance, or salaries. These costs remain constant regardless of the volume of output. Therefore, the statement is false.

An isoquant curve reflects all the possible combinations of two inputs that give the same level of output. This means that any point on the isoquant curve represents a specific combination of inputs that will result in the same level of output. The curve allows producers to visualize and analyze different input combinations that will yield the desired output level. It helps in determining the optimal input mix and understanding the relationship between inputs and output in production.

In the short run, at least one resource is fixed, meaning it cannot be easily changed or adjusted. This limitation on resources restricts the ability to make significant changes or adjustments to production levels. On the other hand, in the long run, all resources are variable, meaning they can be adjusted or changed as needed. This flexibility in resource allocation allows for more freedom in decision making and the ability to make significant changes to production levels. This main difference between the short run and the long run is crucial in understanding the impact on decision making and production planning.

Demand refers to the consumer's ability and willingness to pay for a good or service. It is the quantity of a product or service that consumers are willing and able to purchase at a given price within a specific time period. In this context, demand signifies the consumer's desire for a product or service, coupled with their ability to afford it.

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When the price of sugar rises, it becomes more expensive for consumers to purchase sugar. As a result, they may choose to substitute sugar with honey in their recipes. This increase in the substitution of sugar with honey leads to an increase in the demand for honey. Therefore, the correct answer is that the demand for honey is expected to increase when the price of sugar rises.

When the units of a variable factor are increased on a fixed factor, the marginal product of the variable factor initially increases due to the principle of diminishing marginal returns. However, after a certain point, the additional units of the variable factor become less productive, causing the marginal product to diminish. This occurs because the fixed factor, such as machinery or space, becomes a limiting factor in the production process, leading to diminishing returns and a decrease in the marginal product of the variable factor.

The statement is false because price elasticity of demand measures the responsiveness of quantity demanded to a change in price. Salt is a necessity and has a relatively inelastic demand, meaning that even if the price increases, the quantity demanded will not decrease significantly. On the other hand, diamonds are a luxury and have a relatively elastic demand, meaning that even a small change in price can greatly affect the quantity demanded. Therefore, price elasticity of demand for diamonds is greater than for salt.

If there is a shortage of a product, it means that the demand for the product exceeds the available supply. This indicates that the price of the product is lower than the equilibrium level, as the quantity supplied is not enough to meet the quantity demanded. To restore equilibrium, the price of the product would need to increase, which implies that the price is currently below the equilibrium level. Therefore, the correct answer is that the price is above the equilibrium level.

To convert GNP at factor cost to GNP at market price, it is necessary to add indirect taxes and subtract subsidies. This is because indirect taxes increase the market price of goods and services, so they need to be added to factor cost to reflect the full market value. Conversely, subsidies decrease the market price, so they need to be subtracted to accurately calculate GNP at market price. Including expenditure on imports, gross trading profits of companies, or exports is not necessary for this conversion.

If a firm decides to produce no output in the short run, its variable cost will be zero. Variable costs are costs that vary with the level of production, such as raw materials or labor. Since no output is being produced, there is no need for these variable costs, resulting in a cost of zero. However, fixed costs, which do not vary with the level of production, such as rent or insurance, will still need to be paid even if no output is being produced. Total cost is the sum of both fixed and variable costs, so it will also not be zero. Average cost is the total cost divided by the quantity of output, so it will also not be zero.

Implicit costs are the opportunity costs that arise from using resources in a particular way. In this case, the forgone payment in terms of salaries and wages to the owners of the firm represents an implicit cost because it is the income that the owners could have earned if they had chosen to work for another firm instead of their own. This cost is not directly visible or accounted for in the firm's financial statements, but it is still a real cost that should be considered when evaluating the profitability of the firm.

The correct answer is "Profits paid for capital." This is because profits are not considered an income received by factors of production. Profits are the residual income left after deducting all expenses, including wages and rents, from the total revenue. Factors of production, such as land, labor, and capital, receive incomes in the form of rents, wages, and dividends respectively, but not profits.

As the price decreases, sellers would offer less of the product for sale, resulting in a decrease in the quantity supplied. This is because lower prices may not be profitable for sellers, so they reduce the amount they are willing to supply. Therefore, the supply curve is upward sloping, indicating that as the price decreases, the quantity supplied decreases.