Economics GK Quiz-18

1. Prof Miltion Fridman was leader
(1) Ohio school
(2) Chicago school
(3) Cambridge school
(4) London school
1. (2) Milton Friedman was a leader of the Chicago school
of economics. He profoundly influenced the research
on consumption analysis, monetary history and theory,
and the complexity of stabilization policy. He was a
recipient of the 1976 Nobel Prize in Economic

(SSC CGL Tier-I Exam. 19.10.2014
TF No. 022 MH 3)
2. Who is called the ‘Father of Economics’ ?
(1) Max Muller
(2) Karl Marx
(3) Adam Smith
(4) Alfred Marshall
2. (3) Adam Smith who laid the foundations of classical
free market economic theory is known as the Father
of Modern Economics. His magnum opus, ‘An Inquiry
into the Nature and Causes of the Wealth of Nations
(1776),’ is considered the first modern work of economics.

(SSC CHSL (10+2) DEO & LDC
Exam. 16.11.2014 , Ist Sitting
TF No. 333 LO 2)
3. Who defined ‘Rent’ as that portion or produce of the earth
which is paid to the landlord for
the use of original and indestructible power of the soil ?
(1) Ricardo (2) Marshall
(3) Keynes (4) Pigou
3. (1) In his ‘The Principles of Political Economy and
Taxation (1821), David Ricardo stated: “Rent is that
portion of the produce of the earth, which is paid to
the landlord for the use of the original and indestructible powers of the soil. It is often, however, confounded with the interest and profit of capital, and,
in popular language, the term is applied to whatever
is annually paid by a farmer to his landlord.”

(SSC CHSL (10+2) DEO & LDC
Exam. 16.11.2014, IInd Sitting
TF No. 545 QP 6)
4. Economies of a firm are :
(1) An increase in its profits
(2) A reduction in its selling expenses
(3) Its dominance of the market
(4) Saving in it’s production costs
4. (4) Economics of a firm includes how it combines labour and capital so as to lower the average cost of
output, either from increasing, decreasing, or constant returns to scale for one product line or from
economies of scope for more than one product line. It
includes producing more units of a good or a service
on a larger scale, yet with (on average) less input

Police SI Exam, 21.06.2015
(Ist Sitting) TF No. 8037731)
5. The Liquidity Preference Theory
of Interest was propounded by :
(1) J.M. Keynes
(2) David Ricardo
(3) Alfred Marshall
(4) Adam Smith
5. (1) In macroeconomic theory, liquidity preference refers to the demand for money, considered as liquidity. The concept was first developed by John Maynard Keynes in his book The General Theory of Employment, Interest and Money (1936) to explain determination of the interest rate by the supply and
demand for money.

(SSC CGL Tier-I Exam, 09.08.2015
(IInd Sitting) TF No. 4239378)
6. Which of the following is not an
economic activity ?
(1) A labourer working in a factory.
(2) A CRPF jawan guarding
country’s borders.
(3) A teacher teaching his own
(4) A farmer tilling his own land.
6. (3) An activity which is done with the aim of monetary
return is called an economic activity, while an activity
which is not done with the aim of monetary return is
called a non-economic activity. The most quoted example to understand this is that of a teacher. When a
teacher teaches students in a school, he is doing economic activity. When the same teacher teaches his
son, he is doing non- economic activity.

Re-Exam, 30.08.2015)
7. J. B. Say’s Law of Market was
not accepted by :
(1) Adam Smith
(3) Malthus
(4) David Ricardo
7. (2) Malthus opposed what has come to be described
as Say’s Law: that supply creates its own demand.
He rejected the proposition that the demand for commodities will automatically provide a motive for sufficient investment and production to satisfy such demand, or that investment and production would alone
and automatically lead to an adequate demand to absorb supply. He argued that production and consumption were impelled by very different motives. Demand
adjusted slowly, according to ‘habit and tastes’ and
hence if productivity increased significantly, demand
would not necessarily match supply and gluts of commodities might result.

& PA/SA Exam, 15.11.2015
(Ist Sitting) TF No. 6636838)
8. The time element in price analysis was introduced by :
(1) J.M. Keynes
(2) Alfred Marshall
(3) J.S. Mill
(4) J.R. Hicks
8. (2) Marshall, who propounded the theory that price is
determined by both demand and supply, also gave a
great importance to the time element in the determination of price. He introduced time period analysis
into pricing process to bring out the varying influence of each of two forces over price of the product
in different time periods. He said, “as a general rate”,
“the shorter the period which one considers the greater
must be the share of our attention which is given to
the influence of demand on value, and the longer the
period more important will be the influence of cost of
production on value.”

& PA/SA Exam, 15.11.2015
(IInd Sitting) TF No. 7203752)ECONOMICS
9. Founded in the year 1886 by a
pharmacist named John
Pemberton, this product is the
second most widely understood
term in the world after “OK”.
What is its name?
(1) Aspirin (2) ENO
(3) CocaCola (4) Pepsi
9. (3) Coca-Cola is the second most widely understood
term in the world after “Ok”. It was originally intended as a patent medicine when it was invented in the
late 19th century by John Pemberton. Coca Cola is
the world’s largest soft drinks company. It is rated as
the most recognized trade mark and third most valuable brand in the world.

(SSC CPO SI, ASI Online Exam.
05.06.2016, (2nd Sitting))
10. Which of the following is done at
a Stock Exchange ?
(1) Commodities are bought and
sold at wholesale price
(2) Commodities are bought and
sold at retail price
(3) Securities are bought and
(4) None of these
10. (3) A stock exchange or bourse is an exchange where
stock brokers and traders can buy and/or sell stocks
(also called shares), bonds, and other securities. Stock
exchanges may also provide facilities for issue and
redemption of securities and other financial instruments, and capital events including the payment of
income and dividends.

(SSC CGL Tier-I (CBE) Exam.
08.09.2016 (IIIrd Sitting))
11. If the average total cost is Rs.
54, total fixed cost is Rs. 45000
and quantity produced is 2500
units, find the average variable
costs (in Rs.) of the firm :
(1) 24 (2) 18
(3) 36 (4) 60
11. (3) The standard method of calculating average variable cost is to divide total variable cost by the quantity, illustrated by this equation :
Average Variable Cost = Total Variable Cost/ Quantity of Output
An alternative specification for average variable cost
is found by subtracting average fixed cost from average total cost :
Average Variable Cost = Average Total Cost – Average
Fixed Cost
According to question,
Average Total Cost = 45000/2500 = 18
So Average Variable Cost
= 54 – 18= 36

(SSC CHSL (10+2) Tier-I (CBE)
Exam. 15.01.2017) (IInd Sitting)
12. If the fixed costs of a factory producing candles is Rs 20,000,
selling price is Rs 30 per dozen
candles and variable cost is Rs
1.5 per candle, what is the
break-even quantity?
(1) 20000 (2) 10000
(3) 15000 (4) 12000
12. (1) Breakeven quantity is the number of incremental
units that the firm needs to sell to cover the cost of a
marketing program or other type of investment. It is
given by the formula:
BEQ = FC / (P-VC)
Where BEQ = Break-even quantity
FC = Total fixed costs
P = Average price per unit, and
VC = Variable costs per unit.
According to the question, Price per unit = 30/12 =
Rs. 2.5
So 20000/ (2.5-1.5) = 20000/1= Rs. 20,000

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