Posted by Anjali Kaur on Nov 20, 2021
Microeconomics Test

Practice Test 5

Practice test 5 on microeconomics for class XI, CBSE Students.

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1. ‘Homogeneous Product’ is a characteristic of:

a. Perfect competition only

b. Perfect Oligopoly

c. Both a and b

Answer. a. Perfect competition only

2. Define demand.

Answer. Demand is the ability and willingness to buy a product.

3. Identify the commodity whose demand will not change inspite of rise or fall in the price of the commodity.

a. Cosmetics

b. Salt

c. Television

d. Garments

Answer. b. Salt because it is a necessity good.

4. Average revenue and price are always equal under

a. Perfect competition only

b. Monopolistic competition only

c. Monopoly only

d. All market forms

Answer. d. All market forms

Because Total revenue = Price x quantity

Average revenue = Total revenue / quantity


AR = PRICE Always.

5. Explain the “close substitute” feature of monopolistic competition.

Answer. The product of the seller are differentiated but close substitutes for one another.

The buyers can make choices as the same product produced by 1 firm is different from the product produced by the other firm. For example, Dove soap and LUX soap.

6. Distinguish between microeconomics and macroeconomics.


7. State the meaning and properties of production possibilities frontier.

Answer. This is a curve that shows the different production possibilities or the production combination of two goods that an economy can produce, given the resources and technique of production

This is the slope of the production possibility curve. Marginal Opportunity Cost (MOC) refers to the rate at which the production (or quantity) of one commodity is sacrificed (Good Y) to produce one more unit of other commodities (Good X). To construct the production possibility curve we calculate marginal opportunity cost using the slope formula. MOC = Δy/Δx

It is read as a sacrifice in the production of good Y, to produce more units of good X (or change in Y over a change in X).

With the help of marginal opportunity cost, we can easily depict the shape of the production possibility curve. Let’s see what are the three main shapes of the production possibility curve.:

  • If the marginal opportunity cost is increasing, then the production possibility curve is concave in shape
  • MOC is decreasing so PPC will be convex in shape
  • If the marginal opportunity cost is constant, then the production possibility curve will be a negatively sloped straight line(like a demand curve).

8. Complete the following table:


Step 1: Find TFC, which. is same as TC AT 0 level of output

Step 2: Find TVC = TC – TFC.

Step 3: Use MC to find TVC, whichever is possible. TVC = Summation of MC, whereas MC changes in TVC by a change in output level.

Step 4: Find AFC, which is TFC/Q. Similarly, complete the rest.

9. When price of a commodity X falls by 10%, its demand rises from 150 units to 180 units. Calculate its price elasticity of demand.

Answer. Price elasticity of demand is the percentage change in quantity demanded by the percentage change in price.

Percentage change in demand = Change in demand by original demand X 100.

Percentage change in demand = 30/150 x100 = 20 %

Ped = 20% / 10% = 2

10. Differentiate between movement along demand curve and shift in demand curve.


11. State different phases of the law of variable proportions on the basis of total product.


12. Explain briefly the factors determining elasticity of demand.


13. Explain the conditions of consumer’s equilibrium under indifference curve approach.


14. What is producer equilibrium? Explain its condition with the help of schedule and diagram.


Thank You!

  1. Real and nominal GDP
  2. National income
  3. National income formula list
  4. Value-added method
  5. Income method
  6. Expenditure method

You can read more posts by me on national income:

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