CUET Economics Chapter-Market equilibrium

Important MCQ Questions on CUET Economics Chapter-Market equilibrium with Detailed explanation

HT having an expert teacher of Economics prepared Important MCQ Questions on the CUET Economics Chapter-Market equilibrium with Detailed explanations. All the Chapters in the syllabus of CUET Economics are covered with coverage of the entire syllabus. This page is prepared for Chapter-Market equilibrium and covers all important topics of the competitive exam CUET for domain subject test. Check out the chapter-wise CUET Economics MCQ questions. 

MCQ Questions for CUET Economics Chapter-Market equilibrium Set-1

Macroeconomic Economics - MCQ on Market Equilibrium

Class XII

Q.1.Where the plans of all consumers and firms in the market match and the market clear is called

I. Maximum satisfaction level

II. Minimum satisfaction level

III. Equilibrium level

IV. Safety Level

Answer:

III.Equilibrium level

Explanation: The aggregate quantity that all firms wish to sell equals the quantity that all the consumers in the market wish to buy; in other words, market supply equals market demand.

Q.2. Market supply is greater than market demand then it is called

I. Excess Demand

II. Excess Supply

III. Deficient Demand

IV. Deficient Supply

Answer:

II.Excess Supply

Explanation: If at a price, market supply is greater than market demand it is called excess supply in the market

Q.3. What is Market Equilibrium

I. Quantity demanded is more than quantity supplied

II. Quantity demanded is less than quantity supplied

III. Equality between quantity demanded and quality supplied

IV. None

Answer:

III. Equality between quantity demanded and quality supplied

Explanation: It is defined by equality between quantity demanded and quality supplied in the market. Market equilibrium occurs when quantity demanded matches quantity supplied.

Q.4.Equillibrium is determined by

I. Sellers

II. Buyers

III. Market Forces

IV. Government

Answer:

III.Market Forces

Explanation: Under perfect competition price of a commodity is determined by the general interaction of market forces of demand and supply in the industry.

Q.5 Both supply and demand curves shift rightwards then the shift is known as

I. Same shift

II. Equilibrium shift

III. Simultaneous shift

IV. Synchronized Shift

Answer:

Simultaneous shift

Explanation: The simultaneous shifts can happen in four possible ways:

a) Both supply and demand curves shift rightwards.

b) Both supply and demand curves shift leftwards.

c) Supply curve shifts leftward and demand curve shifts rightward.

d) Supply curve shifts rightward and demand curve shifts leftward.

Q.6 A government-imposed limit on how high a price can be charged on a product is called

I. price determination

II. Price Ceiling

III. Price mechanism

IV. Market price

Answer:

II. Price Ceiling

Explanation: A price ceiling is a government-imposed limit on how high a price can be charged on a product. For a price ceiling to be effective, it must differ from the free market price. A price ceiling can be set above or below the free-market equilibrium price. Price ceilings are often intended to protect consumers from certain conditions that could make necessities unattainable

Q.7. What is Price Floor?

I. Government limit of how high a price can be charged

II. Government limit of how low a price can be charged

III. Government limit of how equally a price can be charged

IV. None

Answer:

I.Government limit of how high a price can be charge

Explanation: A price floor is a government-imposed limit on how low a price can be charged for a product. For a price floor to be effective, it must be greater than the equilibrium price. A price floor can be set above or below the free-market equilibrium price.

Q.8.The extra revenue that an additional unit of product will bring to a firm called?

I. Average Revenue

II. Total Revenue

III. Marginal Revenue

IV. All

Answer:

III.Marginal Revenue

Explanation: Marginal Revenue (MR) is the extra revenue that an additional unit of product will bring to a firm. It can also be described as the change in total revenue/change in number of units sold.

Q.9.When demand increases and supply is perfectly elastic

I. Price will increase

II. Price will decrease

III. Price will not change

IV. Price will fluctuate

Answer:

III.Price will not change

Explanation: When demand increase and supply is perfectly elastic, there will be no change in price but the quantity demanded increases.

Q.10. Market demand and supply schedule of Toys are given below

Price (per Kg.)

10

5

5

3

2

Determine: equilibrium quantity

I. Rs 2

II. Rs 4

III. Rs 5

IV. Rs 6

Answer:

III.5

Explanation: Equilibrium price = 10+5+5+3+2 / 5 = Rs 5

Q.11.When demand and supply increase so the price will

I. Increase

II. Decrease

III. No Change

IV. Fluctuate

Answer:

III. No change

Explanation: When demand increases in equal proportion to increase in supply, then there is no change in equilibrium price, or price remains constant.

Q.12.What are the factors that determine the price equilibrium under perfect competition?

I. Market demand’

II. Market Supply

III. Equilibrium in demand and supply

IV. All

Answer:

IV.All

Explanation: Market Demand refers to the sum total of demand of commodity by all the buyers in the market. Market supply refers to the total supply of a commodity by all the firms in the market. In a perfectly competitive market, price is determined by interaction of market forces of demand and supply in the industry.

Q.13.When market supply is more than market demand then it is called

I. Excess Demand

II. Excess Supply

III. Deficient Demand

IV. Deficient Supply

Answer:

II.Excess Supply

Explanation:Excess supply of a product means that consumers want less than what producers are willing to supply.

Q.14.Which force demand or supply plays a large role in the determination of price in the very short period

I. Demand

II. Supply

III. Demand and supply

IV. All

Answer:

I.Demand

Explanation:The demand rules in the determination of price wherbn the period is short

Q.15.What will happen to the price if the demand curve shifts to the right and the supply curve shifts to left?

I. Price will Fall

II. Price will rise

III. Price will remain constant

IV. None

Answer:

II.Price will rise

Explanation:Price will rise when demand curve shifts to the right and supply curve shifts to left

Q.16.Price control price is fixed

I. Above Equilibrium price

II. Same as equilibrium price

III. Below Equilibrium price

IV. By market forces

Answer:

III. Below Equillibrium price

Explanation: Price control is a form of governmet interfernce with the price mechanism under which price is fixed below equillibrium price

MCQ Questions for CUET Economics Chapter-Market equilibrium Set-2

Q.17.In the union budget the excise duty on coffee was reduced from Rs 3 to Rs2 per kg. All other things remain unchanged.How will affect the market price of coffee

I. Increase the market price

II. Reduce market price

III. Constant market price

IV. None

Answer:

II.Reduce market price

Explanation:Reduction of excise duty from Rs 3 to Rs 2 will reduce the market price of tea because lesser excise duty will shift the supply curve to right.

Q.18.How does an increase in input affect the equilibrium quantity exchanged in a thwe product market?

I. Increase the market price

II. Reduce market price

III. Constant market price

IV. None

Answer:

I.Increase market price

Explanation: an increase in input price leads to higher price and less quantity exchanged in the product market

Q.19.The price at which the government procure the specified goods from suppliers is called

I. Maximum support price

II. Minimum support price

III. Constant support price

IV. None

Answer:

II.Minimum support price

Explanation:Minimum support price is guarenteed minimum price at which governmet procures the specified goods from the suppliers

Q.20 Prices fixed by the government to regulate the price mechanism is

I. Maximum support price

II. Minimum support price

III. Constant support price

IV. Administered price

Answer:

IV. Administered price

Explanation:Administered prices are the prices fixed by the government to regulate the price mechanism

Q.21.Black market is

I. Legal

II. Illegal

III. Private

IV. None

Answer:

II. Illegal

Explanation:Black Market is illegal as it is selling the commodity at a higher price than fixed by the government

Q.22.Distribution of essential commodities among consumers is called

I. Essential items

II. Ration

III. Necessity Items

IV. All

Answer:

II.Ration

Explanation:Rationing is a system of distributing essential commodities in limited quantuities among all commodities at a control and price

Q.23.Which among the following is Indirect intervention

I. Income Tax

II. Price control

III. Perfect Market

IV. Sales Tax

Answer:

IV.Sales Tax

Explanation:The indirect intervention is known as Sales Tax

Q.24.Support Price helps

I. Firm

II. Farmers

III. Industry

IV. Trade

Answer:

II.Farmers

Explanation:The objective of support price is to insulate farmers from income.

Q.25.Shops which sells goods at controlled price is called

I. One Dollar shop

II. Fair Price Shop

III. Real Price Shop

IV. Minimum Price Shop

Answer:

II.Fair price Shop

Explanation:Fair price shop is a shop which sells goods at controlled prices

Q.26.What is the relation between the support price and equilibrium price

I. Support price is less than equilibrium price

II. Support price is higher than equilibrium price

III. Support price is equal to equilibrium price

IV. Equilibrium price is less than the Support price

Answer:

II. Support price is higher than equillibrium price

Explanation:The relationship between them is that support price is higher than equillibrium price.

Q.27.What is the non- viable industry?

I. Supply curve intersects with demand curve

II. Both curves do not intersect

III. Both curves shift to the right

IV. None

Answer:

II.Both the curves do not intersect

Explanation:A non viableindustry is one in which the demand and supply curves do not intersect at a any positive level of output.

Q.28.How does an increase in income affect the price and quantity transacted of an inferior good?

I. Higher

II. Lower

III. Medium

IV. None

Answer:

II.Lower

Explanation: An increase in income results in a lower price and quantity transacted of an inferior good.