SSC CGL Economy – Basic Concepts of Economics – Tier II Level · Marathon

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SSC CGL Economy – Basic Concepts of Economics – Tier II Level · Marathon – 10 questions, subject: Indian Economy. Every question has the correct answer with a one-line explanation; tap "Show Answer". Free practice for TNPSC, UPSC, SSC, Bank and RRB exams – Shanmugam IAS Academy, Coimbatore.

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1.  
Price rises from ₹ 10 to ₹ 14 and quantity demanded falls from 60 to 40. The arc (midpoint) elasticity is:

Correct Answer: B [1.2]

Explanation:

ΔQ ÷ average Q = 20 ÷ 50 = 0.4; ΔP ÷ average P = 4 ÷ 12 = 1/3; Ed = 0.4 × 3 = 1.2 (spending 600 → 560 falls as price rises → elastic).

2.  
When a household's income rises by 10%, its demand for a good falls by 4%. The good is:

Correct Answer: D [an inferior good]

Explanation:

Income elasticity = −4 ÷ 10 = −0.4 < 0 → inferior good.

3.  
Ravi is willing to pay ₹ 90, ₹ 75 and ₹ 60 for the first, second and third kilogram of grapes. The price is ₹ 60 per kg and he buys 3 kg. His consumer surplus is:

Correct Answer: A [₹ 45]

Explanation:

(90 − 60) + (75 − 60) + (60 − 60) = ₹ 45.

4.  
A government fixes a maximum price for a good below the equilibrium price. The most likely result is:

Correct Answer: B [excess demand (shortage)]

Explanation:

A ceiling below equilibrium raises quantity demanded and lowers quantity supplied → shortage.

5.  
The minimum support price for crops is an example of:

Correct Answer: C [a price floor]

Explanation:

MSP is a minimum price set above the market level to protect farmers → price floor.

6.  
If the cross elasticity of demand between X and Y is +1.5, X and Y are:

Correct Answer: D [substitutes]

Explanation:

Positive cross elasticity → substitutes (price of Y up → demand for X up).

7.  
'Supply creates its own demand' is known as:

Correct Answer: B [Say's law]

Explanation:

Associated with the French economist J.

8.  
Assertion–Reason
A: A straight-line PPC shows constant opportunity cost.
R: The slope of the PPC equals the marginal opportunity cost.

Correct Answer: A [Both A and R are true and R explains A]

Explanation:

Constant slope = constant MOC (MOC Ladder).

9.  
Qd = 90 − 3P and Qs = 10 + P. If the government fixes the price at ₹ 25, the market will have:

Correct Answer: D [a surplus of 20 units]

Explanation:

Answer: a surplus of 20 units. Equilibrium P = 20, Q = 30.

10.  
Statement-basedWhich is/are correct?
I. Total utility is maximum when marginal utility is zero.
II. When marginal utility is negative, total utility rises.

Correct Answer: C [Only I]

Explanation:

Negative MU makes TU fall (60 → 56 in the idli table).

➤ Full notes, shortcuts and every answer explained – SSC CGL 2026 Indian Economy book (₹149): www.shanmugamiasacademy.in/study-materials/ssc-cgl-indian-economy

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