CUET Economics - Micro - Market Equilibrium | Free Questions - Page 3

Q1:

2025: 28 May Shift 2

Micro

>

Market Equilibrium

Medium

Arrange the statements to define the relationship between elasticity and expenditure of a commodity.

(A) The percentage increase in quantity demanded is greater than the percentage decline in the price.

(B) The impact on expenditure depends on how responsive the demand for the good is to the price change.

(C) The nature of price elasticity of demand is elastic.

(D) Expenditure on the goods will increase.

Choose the correct answer from the options given below:

(A), (C), (B), (D)

(A), (B), (C), (D)

(B), (A), (D), (C)

(C), (B), (D), (A)

Correct Answer

Option 3

Correct Answer

Explanation

Q2:

2025: 28 May Shift 2

Micro

>

Market Equilibrium

Easy

In the determination of a particular variable, the assumption of "ceteris paribus" stands for.

Other variables remain constant.

One variable remain constant.

Other variables remain flexible.

One variable remain flexible.

Correct Answer

Option 1

Correct Answer

Explanation

Q3:

2025: 28 May Shift 2

Micro

>

Market Equilibrium

Medium

If supply curve shifts leftward and demand curve shifts rightward then how it will affect the pricing?

Increase the price.

Decrease the price.

Price remain constant.

Price may increase or decrease.

Correct Answer

Option 1

Correct Answer

Explanation

Q4:

2025: 28 May Shift 1

Micro

>

Market Equilibrium

Medium

Match List-I with List-II

List-I	List-II
(A) Price elasticity of demand will be equal to1	(I) When expenditure increases with a rise in price.
(B) Price elasticity of demand will be equal to 0	(II) When expenditure decreases with a rise in price.
(C) Price elasticity of demand will be more than 1	(III) When the quantity demanded doesn't change with the change in price.
(D) Price elasticity of demand will be less than1	(IV) When expenditure doesn't change with the change in price.

Choose the correct answer from the options given below:

(A) - (I), (B) - (II), (C) - (III), (D) - (IV)
(A) - (III), (B) - (IV), (C) - (II), (D) - (I)
(A) - (IV), (B) - (III), (C) - (II), (D) - (I)
(A) - (IV), (B) - (III), (C) - (I), (D) - (II)

(A) - (I), (B) - (II), (C) - (III), (D) - (IV)

(A) - (III), (B) - (IV), (C) - (II), (D) - (I)

(A) - (IV), (B) - (III), (C) - (II), (D) - (I)

(A) - (IV), (B) - (III), (C) - (I), (D) - (II)

Correct Answer

Option 3

Correct Answer

Explanation

Q5:

2025: 27 May Shift 2

Micro

>

Market Equilibrium

Medium

Arrange the following statement of government intervention in the form of price control.

(A) The government sets floors or minimum prices for these goods and services.

(B) A fall in price below a particular level is not desirable.

(C) The price charged for a particular good or service is called the price floor.

(D) The government imposed a lower limit on the price.

Choose the correct answer from the options given below:

(A), (B), (C), (D)

(A), (C), (B), (D)

(B), (A), (D), (C)

(C), (B), (D), (A)

Correct Answer

Option 3

Correct Answer

Explanation

Q6:

2025: 27 May Shift 2

Micro

>

Market Equilibrium

Medium

Arrange the following statement when the market demand curve shifts rightward with the supply curve remaining unchanged.

(A) The shift indicates that at any price the quantity demanded is more than before.

(B) Some individuals will be willing to pay higher price and the price would tend to rise.

(C) There is excess demand.

(D) At the new equilibrium, quantity and price will be greater than before.

Choose the correct answer from the options given below:

(A), (B), (C), (D)

(A), (C), (B), (D)

(B), (A), (D), (C)

(C), (B), (D), (A)

Correct Answer

Option 2

Correct Answer

Explanation

Q7:

2025: 27 May Shift 2

Micro

>

Market Equilibrium

Hard

Let us consider a linear demand curve $q = a - bp$ . On the same demand curve, arrange the elasticity in ascending order.

(A) $|e_D| = 1$ .

(B) $|e_D| < 1$ .

(C) $|e_D| > 1$ .

(D) $|e_D| = 0$ .

Choose the correct answer from the options given below:

(A), (B), (C), (D)

(D), (B), (A), (C)

(B), (A), (D), (C)

(C), (B), (D), (A)

Correct Answer

Option 2

Correct Answer

Explanation

Q8:

2025: 26 May Shift 2

Micro

>

Market Equilibrium

Medium

Match List-I with List-II

List-I	List-II
(A) Increase in demand > Increase in Supply	(I) Increase in both equilibrium price and quantity.
(B) Increase in demand < Increase in Supply	(II) Decrease in both equilibrium price and quantity.
(C) Increase in demand = Increase in Supply	(III) Decrease in equilibrium price but increase in equilibrium quantity.
(D) Decrease in demand < Decrease in supply	(IV) Increase in equilibrium quantity but no change in equilibrium price.

Choose the correct answer from the options given below:

(A) - (I), (B) - (II), (C) - (IV), (D) - (III)

(A) - (I), (B) - (III), (C) - (IV), (D) - (II)

(A) - (II), (B) - (I), (C) - (IV), (D) - (III)

(A) - (III), (B) - (I), (C) - (IV), (D) - (II)

Correct Answer

Option 2

Correct Answer

Explanation

Q9:

2025: 26 May Shift 2

Micro

>

Market Equilibrium

Easy

Comprehension:

Read the passage carefully and answer the questions based on the passage:

Concept of Price Ceiling

It is not very uncommon to come across instances where the government fixes a maximum allowable price for certain goods. The government-imposed upper limit on the price of a good or service is called a price ceiling. A price ceiling is generally imposed on necessary items like wheat, rice, kerosene, sugar etc. The objective of the price ceiling is to restrict the price of a good so that it becomes affordable for consumers to buy. However, it does not always generate the desired results. Most of the time, intervention by the government in the form of a price ceiling leads to various socio-problems.

Imposition of price ceilings usually results into?

Excess demand for the good in the market.

Excess supply of the good in the market.

Surplus availability of the good in the market.

No effect on the market.

Correct Answer

Option 1

Correct Answer

Explanation

Q10:

2025: 26 May Shift 2

Micro

>

Market Equilibrium

Easy

Comprehension:

Read the passage carefully and answer the questions based on the passage:

Concept of Price Ceiling

It is not very uncommon to come across instances where the government fixes a maximum allowable price for certain goods. The government-imposed upper limit on the price of a good or service is called a price ceiling. A price ceiling is generally imposed on necessary items like wheat, rice, kerosene, sugar etc. The objective of the price ceiling is to restrict the price of a good so that it becomes affordable for consumers to buy. However, it does not always generate the desired results. Most of the time, intervention by the government in the form of a price ceiling leads to various socio-problems.

Suppose the market determined rent for apartments is $200 per month. The government intervenes and sets the rent control at $250 per month. What is the likely impact of this intervention on market of apartments?

There will now be excess supply of apartments

There will now be excess demand for apartments

The market determined rent will now rise above 200 per month

There will be no impact of this intervention on the market of apartments

Correct Answer

Option 4

Correct Answer

Explanation

Q11:

2025: 26 May Shift 2

Micro

>

Market Equilibrium

Easy

Comprehension:

Read the passage carefully and answer the questions based on the passage:

Concept of Price Ceiling

It is not very uncommon to come across instances where the government fixes a maximum allowable price for certain goods. The government-imposed upper limit on the price of a good or service is called a price ceiling. A price ceiling is generally imposed on necessary items like wheat, rice, kerosene, sugar etc. The objective of the price ceiling is to restrict the price of a good so that it becomes affordable for consumers to buy. However, it does not always generate the desired results. Most of the time, intervention by the government in the form of a price ceiling leads to various socio-problems.

Price ceilings are also known as............

Price floor.

Random price fixation.

Maximum price fixation.

Minium Support price.

Correct Answer

Option 3

Correct Answer

Explanation

Q12:

2025: 26 May Shift 2

Micro

>

Market Equilibrium

Easy

Comprehension:

Read the passage carefully and answer the questions based on the passage:

Concept of Price Ceiling

It is not very uncommon to come across instances where the government fixes a maximum allowable price for certain goods. The government-imposed upper limit on the price of a good or service is called a price ceiling. A price ceiling is generally imposed on necessary items like wheat, rice, kerosene, sugar etc. The objective of the price ceiling is to restrict the price of a good so that it becomes affordable for consumers to buy. However, it does not always generate the desired results. Most of the time, intervention by the government in the form of a price ceiling leads to various socio-problems.

The market determined price of a good is Rs. 40.The government determines the price ceiling on the good as Rs. 25. Calculate the excess demand/excess supply it will cause if the demand and supply functions are Qd= 200 – p and Qs=120+ p respectively.

Excess demand of 25 units.

Excess supply of 25 units.

Excess demand for 30 units.

Excess supply of 30 units.

Correct Answer

Option 3

Correct Answer

Explanation

Q13:

2025: 26 May Shift 2

Micro

>

Market Equilibrium

Easy

Comprehension:

Read the passage carefully and answer the questions based on the passage:

Concept of Price Ceiling

It is not very uncommon to come across instances where the government fixes a maximum allowable price for certain goods. The government-imposed upper limit on the price of a good or service is called a price ceiling. A price ceiling is generally imposed on necessary items like wheat, rice, kerosene, sugar etc. The objective of the price ceiling is to restrict the price of a good so that it becomes affordable for consumers to buy. However, it does not always generate the desired results. Most of the time, intervention by the government in the form of a price ceiling leads to various socio-problems.

In order to be effective, the price ceiling should be determined _______.

Below the market determined price.

Above the market determined price.

At the same level as of the market determined price.

Either above or below the market determined price.

Correct Answer

Option 1

Correct Answer

Explanation

Q14:

2025: 22 May Shift 2

Micro

>

Market Equilibrium

Medium

Arrange the following in correct sequence, to correct the problem of mismatch between supply and demand forces:

(A) There is excess demand in the market.

(B) All other things remain the same as price rises, quantity demanded falls and quantity supplied increases.

(C) Some consumers who are either unable to obtain the commodity at all or obtain it in insufficient quantity will be willing to pay more than the prevailing prices.

(D) The market moves towards the point where the quantity that the firms want to sell is equal to the quantity that the consumers want to buy.

Choose the correct answer from the options given below:

(A), (B), (C), (D)

(A), (C), (B), (D)

(B), (A), (D), (C)

(C), (B), (D), (A)

Correct Answer

Option 2

Correct Answer

Explanation

Q15:

2025: 22 May Shift 1

Micro

>

Market Equilibrium

Medium

The price elasticity of demand is different at different points on the linear demand curve. Arrange the elasticity point on a downward sloping (left to right) demand curve.

(A). |ed| < 0

(B). |ed| = 1

(C). |ed| > 1

(D). |ed| < 1

Choose the correct answer from the options given below:

(A), (B), (C), (D)

(A), (C), (B), (D)

(B), (A), (D), (C)

(C), (B), (D), (A)

Correct Answer

Option 4

Correct Answer

Explanation

Q16:

2025: 22 May Shift 1

Micro

>

Market Equilibrium

Easy

Firms can choose where to locate production and workers to choose where to work. There are various immigration laws which restrict the movement of labour between countries. This market is called...

Input Market.

Output Market.

Financial Market.

Labour Market.

Correct Answer

Option 4

Correct Answer

Explanation

Q17:

2025: 21 May Shift 1

Micro

>

Market Equilibrium

Medium

A hurricane in some parts of the country destroyed a major part of the onion crop. Arrange the chain effects of the same on onion market in proper sequence.

(A) There will be upward pressure on the price of onions.

(B) The buyers will compete in order to get onions in the market.

(C) Demand contracts and supply expands until the market achieves a new equilibrium.

(D) The market supply of onions decreases, leading to excess demand for the same.

Choose the correct answer from the options given below:

(A), (B), (D), (C)

(A), (D), (B), (C)

(D), (A), (B), (C)

(D), (B), (A), (C)

Correct Answer

Option 4

Correct Answer

Explanation

Q18:

2025: 21 May Shift 1

Micro

>

Market Equilibrium

Easy

Comprehension:

FLOOR PRICES

For certain goods and services, fall in price below a particular level is not desirable and hence the government sets floors or minimum prices for these goods and services. The government imposed lower limit on the price that may be charged for a particular good or service is called price floor. Most well-known examples of imposition of price floor are agricultural price support programmes and the minimum wage legislation. Through an agricultural price support programme, the government imposes a lower limit on the purchase price for some of the agricultural goods. Similarly, through the minimum wage legislation, the government ensures that the wage rate of the labourers does not fall below a particular level.

The market determined price of a good is Rs. 40.The government fixes the minimum price of the good as Rs. 50. Calculate the excess demand/excess supply it will cause if the demand and supply functions are Qd = 200 – p and Qs = 120 + p respectively.

Excess demand of 20 units.

Excess supply of 20 units.

Excess demand for 50 units.

Excess supply of 30 units.

Correct Answer

Option 2

Correct Answer

Explanation

Q19:

2025: 21 May Shift 1

Micro

>

Market Equilibrium

Easy

Comprehension:

FLOOR PRICES

For certain goods and services, fall in price below a particular level is not desirable and hence the government sets floors or minimum prices for these goods and services. The government imposed lower limit on the price that may be charged for a particular good or service is called price floor. Most well-known examples of imposition of price floor are agricultural price support programmes and the minimum wage legislation. Through an agricultural price support programme, the government imposes a lower limit on the purchase price for some of the agricultural goods. Similarly, through the minimum wage legislation, the government ensures that the wage rate of the labourers does not fall below a particular level.

Floor prices are meant for the welfare of

Consumers.

Producers.

Both consumers and producers.

Government.

Correct Answer

Option 2

Correct Answer

Explanation

Q20:

2025: 21 May Shift 1

Micro

>

Market Equilibrium

Medium

Comprehension:

FLOOR PRICES

For certain goods and services, fall in price below a particular level is not desirable and hence the government sets floors or minimum prices for these goods and services. The government imposed lower limit on the price that may be charged for a particular good or service is called price floor. Most well-known examples of imposition of price floor are agricultural price support programmes and the minimum wage legislation. Through an agricultural price support programme, the government imposes a lower limit on the purchase price for some of the agricultural goods. Similarly, through the minimum wage legislation, the government ensures that the wage rate of the labourers does not fall below a particular level.

Imposition of price floors usually lead to following

Excess demand.

Excess supply.

Shortage of goods in the market.

Determination of market equilibrium.

Correct Answer

Option 2

Correct Answer

Explanation

Q21:

2025: 21 May Shift 1

Micro

>

Market Equilibrium

Easy

Comprehension:

FLOOR PRICES

For certain goods and services, fall in price below a particular level is not desirable and hence the government sets floors or minimum prices for these goods and services. The government imposed lower limit on the price that may be charged for a particular good or service is called price floor. Most well-known examples of imposition of price floor are agricultural price support programmes and the minimum wage legislation. Through an agricultural price support programme, the government imposes a lower limit on the purchase price for some of the agricultural goods. Similarly, through the minimum wage legislation, the government ensures that the wage rate of the labourers does not fall below a particular level.

To be effective, the floor price should be determined

Lesser than the market determined price.

More than the market determined price.

Equal to the market determined price.

either lesser or more than the market determined price but not equal to it.

Correct Answer

Option 2

Correct Answer

Explanation

Q22:

2025: 21 May Shift 1

Micro

>

Market Equilibrium

Easy

Comprehension:

FLOOR PRICES

For certain goods and services, fall in price below a particular level is not desirable and hence the government sets floors or minimum prices for these goods and services. The government imposed lower limit on the price that may be charged for a particular good or service is called price floor. Most well-known examples of imposition of price floor are agricultural price support programmes and the minimum wage legislation. Through an agricultural price support programme, the government imposes a lower limit on the purchase price for some of the agricultural goods. Similarly, through the minimum wage legislation, the government ensures that the wage rate of the labourers does not fall below a particular level.

The market determined wage rate is $500 per month whereas the minimum wage fixed by the government is $$450 per month. As a result of this government intervention,

The wage rate will fall.

The wage rate will rise.

The wage rate will remain unaffected.

Unemployment will increase.

Correct Answer

Option 3

Correct Answer

Explanation

Q23:

2025: 16 May Shift 1

Micro

>

Market Equilibrium

Medium

Which of the following is incorrect with reference to the imposition of a price floor for a good?

The government imposes a lower limit on the purchase price for some of the goods.

The floor is normally set at a level lower than the market-determined price for these goods.

It leads to an excess supply in the market.

It is also known as minimum support price(MSP).

Correct Answer

Option 2

Correct Answer

Explanation

Q24:

2025: 16 May Shift 1

Micro

>

Market Equilibrium

Medium

What will be the shape of unitary elastic supply curve?

45° upward sloping line.

A straight upward sloping line intercepting X axix.

downward sloping line.

A downward sloping line passing through the origin.

Correct Answer

Option 1

Correct Answer

Explanation

Q25:

2025: 16 May Shift 1

Micro

>

Market Equilibrium

Medium

When the price of a good falls from Rs. 40 to Rs 30, the total revenue earned by the firm falls from Rs. 4000 to Rs. 2700, find price elasticity of supply for the good.

2

1.3

1

0.5

Correct Answer

Drop

Correct Answer

Explanation

Q26:

2025: 16 May Shift 1

Micro

>

Market Equilibrium

Medium

In which of the following, the demand for a good will be highly price elastic?

When the price of the good and total expenditure on it change in the same direction.

When the price of the good and total expenditure on it change in the opposite direction.

When the price of the good and does not affect the total expenditure.

When the income of the consumer and total expenditure on it change in the same direction.

Correct Answer

Option 2

Correct Answer

Explanation

Q27:

2025: 15 May Shift 1

Micro

>

Market Equilibrium

Easy

If price of a commodity rises from Rs. 10 to Rs. 15, its supply increases by 20%.

calculate the price elasticity of supply for this commodity.

0.4

0.5

1.25

2.5

Correct Answer

Option 1

Correct Answer

Explanation

Q28:

2025: 15 May Shift 1

Micro

>

Market Equilibrium

Medium

Suppose there is a market consisting of identical firms producing the same quality of salt.

Suppose the market demand curve and the market supply curve for salt are given by:

$Q_D = \begin{cases} 350 - p & \text{for } 0 \leq p \leq 350 \\ 0 & \text{for } p > 350 \end{cases}$

$Q_S = \begin{cases} 220 + p & \text{for } p \geq 10 \\ 0 & \text{for } 0 \leq p < 10 \end{cases}$

Where $Q_D$ and $Q_S$ denote the demand for and supply of salt (in kg) respectively and $p$ denotes the price of salt per kg in rupees.

If the demand for salt increases supply remains the same and the new demand curve is

$Q_D = 400 - p$

What will be the new equilibrium price and quantity?

Rs 90

Rs 80

Rs 70

Rs 60

Correct Answer

Option 1

Correct Answer

Explanation

Q29:

2025: 15 May Shift 1

Micro

>

Market Equilibrium

Medium

Suppose there is a market consisting of identical firms producing the same quality of salt.

Suppose the market demand curve and the market supply curve for salt are given by:

$Q_D = \begin{cases} 350 - p & \text{for } 0 \leq p \leq 350 \\ 0 & \text{for } p > 350 \end{cases}$

$Q_S = \begin{cases} 220 + p & \text{for } p \geq 10 \\ 0 & \text{for } 0 \leq p < 10 \end{cases}$

Where $Q_D$ and $Q_S$ denote the demand for and supply of salt (in kg) respectively and $p$ denotes the price of salt per kg in rupees.

Find the equilibrium price of salt in this market.

Rs 10

Rs 35

Rs 55

Rs 65

Correct Answer

Option 4

Correct Answer

Explanation

Q30:

2025: 15 May Shift 1

Micro

>

Market Equilibrium

Medium

Suppose there is a market consisting of identical firms producing the same quality of salt.

Suppose the market demand curve and the market supply curve for salt are given by:

$Q_D = \begin{cases} 350 - p & \text{for } 0 \leq p \leq 350 \\ 0 & \text{for } p > 350 \end{cases}$

$Q_S = \begin{cases} 220 + p & \text{for } p \geq 10 \\ 0 & \text{for } 0 \leq p < 10 \end{cases}$

Where $Q_D$ and $Q_S$ denote the demand for and supply of salt (in kg) respectively and $p$ denotes the price of salt per kg in rupees.

If demand for salt increases, and there is no change in the equilibrium price in the market, how does it affect the market?

Increase in demand = increase in supply

Demand had increased but supply is unchanged.

Increase in demand = Decrease in supply

Increase in demand is greater than Increase in supply

Correct Answer

Option 1

Correct Answer

Explanation

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