221. A minimum wage _____.

1. is the price floor below which workers may sell their labor
2. is set at a price below the equilibrium wage
3. creates a price ceiling below which the wage cannot legally go
4. decreases unemployment

Option “C” is correct
A minimum wage is creates a price ceiling below which the wage cannot legally go
222. If quantity of good X demanded increases from 4000 units to 5000 units when price of good Y increases from Rs 75 to Rs 90, find Arc Cross elasticity of demand?

1. 0.55
2. 1.66
3. 0.25
4. 1.28

Option “D” is correct
The arc elasticity of demand can be calculated as:
Arc Elasticity = [(Qd2 – Qd1) / midpoint Qd] ÷ [(P2 – P1) / midpoint P]
Midpoint Qd = (Qd1 + Qd2)/2 = (4000 + 5000)/2 = 4500
Midpoint Price = (P1 + P2)/2 = (75 + 90)/2 = 82.5
% change in quantity demanded = (5000 – 4000)/4500 = 0.23
% change in price = (90-75)/82.5 = 0.18
Arc Elasticity of demand = 0.23/0.18 = 1.28.
223. Which among the following is the Biggest Borrower in India?

1. Indian Government
2. Reserve Bank of India
3. Indian Railways
4. State Governments

Option “A” is correct
Indian government is the biggest borrower in India and its prime lender is RBI.
224. The existence of a parallel economy (black money) ___________.

1. Makes economy more competitive
2. Makes the monetary policies less effective
3. Ensures a better distribution of income and wealth
4. Ensures increasing productive investment

Option “B” is correct
The Parallel Economy (black money) will ruin the entire economic development of the country and adversely affect the monetary policy.
225. Economic liberalization in India started with ___________.

1. Substantial changes in industrial licensing policy
2. Convertibility of Indian rupee
3. Doing away with procedural formalities for foreign direct investment
4. Significant reduction in tax rates

Option “A” is correct
The economic liberalisation in India refers to the economic liberalisation, initiated in 1991, of the country’s economic policies, with the goal of making the economy more market and service-oriented and expanding the role of private and foreign investment. It ends licensing raj in Industrial policy.
226. If the average total cost are Rs 54, average variable cost is Rs 36 and quantity produced is 2500 units, find the total fixed costs (in Rs) of the firm?

1. 30000
2. 15000
3. 45000
4. 60000

Option “C” is correct
Total fixed cost =(54-36)×2500
=45000.
227. If the breakeven quantity for a factory whose variable cost of manufacturing a cell is Rs. 15 and selling price is Rs. 24 is 2,400 units, find the fixed cost of the factory?

1. Rs. 21600
2. Rs. 36000
3. Rs. 57600
4. Rs. 14400

Option “A” is correct
Fixed cost=(24-15)×2400
= Rs. 21600.
228. At the equilibrium price –

1. quantity demanded is equal to quantity supplied
2. quantity demanded is greater than quantity supplied
3. elasticity of demand equals elasticity of supply
4. price elasticity of demand is unity

Option “A” is correct
At the equilibrium, price demand is equal to supply.
229. If a person’s income increases from Rs. 10 lakhs per year to Rs. 11 lakhs per year and tax increases from Rs. 80,000 to Rs. 92,500 the marginal tax rate is –

1. 12.50%
2. 8%
3. 10%
4. 15%

Option “A” is correct
Marginal tax=(1250/100000)×100
=12.50%
230. If price of an article decreases from Rs 40 to Rs 30, quantity demanded increases from Q1 units to 7500 units. If point elasticity of demand is -1 find Q1?

1. 9000 units
2. 4500 units
3. 10500 units
4. 6000 units

Option “D” is correct
Point Elasticity of demand=(% change in quantity)/(% change in price)
-1 ={(Q1-7500)/Q1}/(10/40)
Q1= 6000.
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