List of top Economics Questions

A consumer always spends 50% of his monthly income on food. Introduction of value added tax on food items has led to a 20% increase in food prices while his monthly income remained unchanged. The consumer’s price elasticity of demand for food is \_\_\_\_\_\_\_\_\_\_\_. (in integer)

The utility function of a consumer from consumption of $x_1$ and $x_2$ is given by \[ u(x_1, x_2) = x_1 + 2\sqrt{x_2}. \] At the current prices and income, the consumer’s optimal consumption bundle is given by $(x_1 = 10, x_2 = 10)$. The consumer’s optimal choice of $x_2$, if his income increases by 50% but prices remain unchanged, is \_\_\_\_\_\_\_\_\_\_\_. (in integer)

Amar has an endowment of food $F_A = 2$ and water $W_A = 5$. Barun has an endowment of food $F_B = 8$ and water $W_B = 5$. Amar’s utility function is given by \[ U_A(f_A, w_A) = f_A^2 w_A; \] where $f_A$ and $w_A$ are his consumption of food and water, respectively. Barun’s utility function is given by \[ U_B(f_B, w_B) = \min\{f_B, w_B\}; \] where $f_B$ and $w_B$ are his consumption of food and water, respectively. They exchange food and water at prices $p_f$ and $p_w$, respectively, to maximize their utilities. In the competitive equilibrium, $\dfrac{p_f{p_w}$ equals \_\_\_\_\_\_\_\_\_\_\_. (in integer)}

The supply and demand curves of a vaccine are \[ q = 14 + 5p \quad \text{and} \quad q = 329 - 5p, \] respectively, where $p$ is the price per unit of vaccine and $q$ is quantity of vaccine. The government decides that the maximum price of the vaccine would be Rs. 25 per unit. To avoid any shortage in supply at the ceiling price, the government also decides to subsidize the sellers so that the market clears. Subsidy is given on per unit basis. The total expenditure of the government in providing the subsidy is Rs. \_\_\_\_\_\_\_\_\_\_\_. (in integer)

A firm has two manufacturing plants, 1 and 2 to produce the same product. The total costs of production are given by \[ TC_1 = 500 + 30Q_1 \quad \text{and} \quad TC_2 = 1500 + 20Q_2 \] in plants 1 and 2, respectively, where $Q_1$ and $Q_2$ are the respective quantities. The demand for the product is given by $Q^d = 150 - \dfrac{P{3}$, where $P$ is the price per unit. The value of $Q_1$ that maximizes the profit of the firm is \_\_\_\_\_\_\_\_\_\_\_. (in integer)}

The following data relate to a country’s GDP in 2012–13 (in local currency).
\begin{center} \begin{tabular}{|l|r|} \hline Item & Value
\hline GDP & 59,816
Private sector investment & 17,811
Exports & 14,498
Investment expenditure by the government & 7,087
Net Factor Income from Abroad & -265
Consumption expenditure by the government & 6,620
Private sector consumption & 35,695
\hline \end{tabular} \end{center} The value of this country’s imports (in local currency) in 2012–13 is \_\_\_\_\_\_\_\_\_\_\_. (in integer)

There are two sellers, $H$ and $L$, in a second-hand goods market where product quality varies. The sellers know the quality of their own product but the buyers cannot distinguish the product quality without further information. Sellers’ valuation of their own product is based on the quality. $H$ is willing to sell his product with quality $Q_H$ at a price $P_H$ per unit and $L$ is willing to sell the product with quality $Q_L$ at a price $P_L$ per unit such that \[ Q_H>Q_L \quad \text{and} \quad P_H>P_L. \] This market will suffer from

In a small open economy, the desired domestic savings ($S^d$) and the desired domestic investment ($I^d$) are as follows, where $r^w$ is the world real interest rate. \[ S^d = 10 + 100r^w, \quad I^d = 15 - 100r^w \] If $r^w = 3%$, the current account balance in the equilibrium would be \_\_\_\_\_\_\_\_\_\_\_. (in integer)

In the context of Expectations Augmented Phillips Curve (EAPC), which of the following statements is/are correct?

The net inflow of foreign currency into a country on current account and capital account combined is negative in a particular year. The country could be following a fixed or a flexible exchange rate regime. Which of the following scenarios is/are possible for the country’s economy in that year?

If the number of employed workers in a country increases while its population does not change, then the unemployment rate in the country

Which of the following statements is/are correct about the Indian economy during the colonial period?

A monopolist is facing a downward sloping linear market demand. His variable cost of production is zero. The profit maximizing price will

An amateur singer has just recorded his first music album with a recording company. The demand for his album is given by $Q = 40000 - 800P$, where $Q$ is the number of albums sold and $P$ is the price of each album. Furthermore, per unit cost of producing each album is given by Rs. 8. A profit maximizing recording company has offered the following contract options to the singer
(i) 20% of the revenue from the sales of the album;
(ii) Rs. 2 per album sold;
(iii) A fixed fee of Rs. 32,000
Which of the following is/are correct?

According to John Maynard Keynes, which one of the following statements is correct for a closed economy operating at less than the full employment level of output?

X pays Rs. 5 lakhs to a person to transport fake currency worth Rs. 50 lakhs. The Police department pays Rs. 5 lakhs to a detective to investigate the crime. The detective’s income is taxed at 10%. If the above transactions happen in the same year and within the boundary of a country, the contribution of these transactions to GDP (in Rs. lakhs) is

The workforce participation rate of a country is 60%. This country has a population of 100 million, of which 6 million are unemployed. The unemployment rate for this country is

Which one of the following statements is NOT correct in the context of economic planning in India?

There are only two firms in an industry producing a homogeneous product and having identical production technology. The cost function of firm $i$ is \[ C_i(q_i) = q_i^2, \quad \text{for } i = 1,2; \] where $q_i$ is the quantity produced by firm $i$. The market demand for the product is $p = 100 - q$, where $p$ is the unit price and $q = q_1 + q_2$ is the aggregate quantity. Assuming the firms are price takers, the competitive equilibrium solution of $p$ and $q$ in this market is

Which one of the following statements is NOT correct regarding changes in the occupational structure of the workforce between 1951 and 1991 in India?

A monopoly canteen serves packed meals to two groups of consumers, group $X$ and group $Y$. The demand for packed meals for $X$ and $Y$ are given by, \[ Q_X = 200 - 4P \quad \text{and} \quad Q_Y = 300 - P, \] where $P$ is the uniform price per unit. The unit cost of producing each meal is Rs. 50. The value of $P$ (in Rs.) that maximizes the canteen’s profit is

The utility from wealth $(w)$ for an individual is given by $u(w) = \sqrt{w$. The individual owns a risky asset that is equally likely to yield either Rs. 400 or Rs. 900. The risk premium of the asset (in Rs.) is}

Which one of the following is NOT a feature of the New Industrial Policy, 1991?

Which one of the following is a possible reason for underestimation of the official poverty ratio in India?

Which one of the following committees is NOT associated with financial sector reforms in India?