Business Economics

JKPSC Assistant Professor (Commerce) · Commerce · 54 practice questions with answers and explanations: 12 Easy, 39 Medium, 3 Hard.

Sample questions

Sample Easy question 1

Fiscal policy works through:

  1. Interest rates only
  2. Government spending and taxation
  3. Exchange controls only
  4. The money supply only
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Answer: B. Monetary policy works through money and credit.

Sample Easy question 2

Monetary policy in India is conducted by the:

  1. The Ministry of Finance
  2. Reserve Bank of India
  3. SEBI
  4. NITI Aayog
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Answer: B. The Monetary Policy Committee sets the repo rate.

Sample Easy question 3

The law of demand states that, other things equal, the quantity demanded:

  1. Falls when income rises
  2. Falls when the price rises
  3. Rises when the price rises
  4. Does not depend on price
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Answer: B. There is an inverse relation between price and quantity demanded.

Sample Medium question 4

An indifference curve is:

  1. Vertical
  2. Upward-sloping
  3. Concave to the origin
  4. Convex to the origin
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Answer: D. This follows from the diminishing marginal rate of substitution.

Sample Medium question 5

Two indifference curves of the same consumer:

  1. Always intersect
  2. Always coincide
  3. Are always parallel
  4. Cannot intersect
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Answer: D. Intersection would be inconsistent.

Sample Medium question 6

The marginal rate of substitution diminishes along an indifference curve because:

  1. Prices rise
  2. Income rises
  3. Tastes are fixed
  4. The consumer is willing to give up less of one good for each extra unit of the other
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Answer: D. The goods are imperfect substitutes.

Sample Hard question 7

Monopolistic competition is characterised by:

  1. Many sellers and identical products
  2. Many sellers and differentiated products
  3. A single seller and no close substitutes
  4. Few sellers and homogeneous products
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Answer: B. Firms have some control over price through differentiation.

Sample Hard question 8

Average cost is at its minimum where it equals:

  1. Marginal cost
  2. Marginal revenue
  3. Average fixed cost
  4. Total cost
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Answer: A. The marginal cost curve cuts the average cost curve at its lowest point.

Sample Hard question 9

A Cobb–Douglas function Q = L^0.6 K^0.4 shows:

  1. Decreasing returns to scale
  2. Increasing returns to scale
  3. Constant returns to scale
  4. Negative returns to scale
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Answer: C. The exponents add up to 1.

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