SSC CGL Finance – Basic Concepts of Economics, Micro Economics, Demand & Supply – Level 2 · Exam Level · Paper III Sprint

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SSC CGL Finance – Basic Concepts of Economics, Micro Economics, Demand & Supply – Level 2 · Exam Level · Paper III Sprint – 16 questions, subject: Finance & Economics (Tier II Paper III). 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.  
Statement-basedWhich is/are correct?
I. Microeconomics studies individual units such as a consumer or a firm.
II. Unemployment in the whole economy is a microeconomic problem.

Correct Answer: C [Only I]

Explanation:

Economy-wide unemployment is an aggregate → macro.

2.  
Price rises from ₹ 20 to ₹ 24 and quantity demanded falls from 110 to 90 units. Using the midpoint (arc) method, price elasticity is:

Correct Answer: D [1.1]

Explanation:

ΔQ/avg Q = 20/100 = 0.2; ΔP/avg P = 4/22; e = 0.2 × 22/4 = 1.1.

3.  
Price of a good falls from ₹ 50 to ₹ 40 and quantity demanded rises from 200 to 240. By the total outlay method, demand is:

Correct Answer: A [Less than unitary elastic (inelastic)]

Explanation:

TR falls from ₹ 10,000 to ₹ 9,600 when price falls → inelastic.

4.  
Assertion–Reason
A: The demand curve of a Giffen good slopes upward.
R: For a Giffen good, the negative income effect of a price change outweighs the substitution effect.

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

Explanation:

Strong negative income effect on an inferior staple beats the substitution effect → quantity rises with price.

5.  
Match the followingMatch the demand curve with its elasticity:
P. Horizontal line Q. Rectangular hyperbola R. Vertical line
1. e = 1 2. e = 0 3. e = ∞

Correct Answer: A [P-3, Q-1, R-2]

Explanation:

Horizontal = perfectly elastic (∞); hyperbola = unitary; vertical = 0.

6.  
A rise in consumers' income, other things equal, affects the demand curve of a normal good by:

Correct Answer: D [Shifting it to the right]

Explanation:

Income is a 'shift factor'; normal good → increase in demand.

7.  
Qd = 200 − 4P and Qs = 6P − 50. The equilibrium quantity is:

Correct Answer: B [100 units]

Explanation:

200 − 4P = 6P − 50 → P = 25 → Q = 200 − 100 = 100.

8.  
For the demand function Q = 80 − 2P, point price elasticity at P = ₹ 10 is:

Correct Answer: C [1/3]

Explanation:

Q = 60; e = 2 × 10/60 = 1/3 (or P/(Pmax − P) = 10/30).

9.  
Consumers' income rises by 20% and the demand for a good rises by 30%. The good is:

Correct Answer: B [A luxury (income elasticity 1.5)]

Explanation:

Ey = 30/20 = 1.5 > 1 → luxury.

10.  
In the market Qd = 100 − 2P and Qs = 4P − 20, the government fixes a maximum price of ₹ 15. The resulting shortage is:

Correct Answer: C [30 units]

Explanation:

At ₹ 15: Qd = 70, Qs = 40 → shortage 30 units.

11.  
Odd one outwhich does NOT shift the demand curve of tea?

Correct Answer: A [A fall in the price of tea]

Explanation:

Own price causes a movement along the curve; the others shift it.

12.  
Two-quantity comparison
Quantity I: price elasticity at the midpoint of a straight-line demand curve
Quantity II: price elasticity on a demand curve that is a rectangular hyperbola

Correct Answer: D [Quantity I = Quantity II]

Explanation:

Midpoint: lower segment = upper segment → e = 1.

13.  
A consumer is in equilibrium. MU of X = 30 utils, price of X = ₹ 6 and price of Y = ₹ 4. MU of Y must be:

Correct Answer: D [20 utils]

Explanation:

MUx/Px = MUy/Py → 30/6 = MUy/4 → MUy = 20.

14.  
Trick SpotterPrice rises from ₹ 8 to ₹ 10 and sales fall from 500 to 380 units. The fastest correct way to tell whether demand is elastic is to:

Correct Answer: A [Compare total spending: ₹ 4,000 vs ₹ 3,800]

Explanation:

TR falls as price rises → elastic.

15.  
Which of these will shift the supply curve of rice to the LEFT?

Correct Answer: B [A rise in wages of farm labour]

Explanation:

Higher input cost → less supplied at every price (decrease in supply).

16.  
Spot My Mistake“Price rises from ₹ 60 to ₹ 75 and quantity falls from 200 to 170. e = (30/170) ÷ (15/75) = 0.88.” Using the percentage method on the initial values, the correct elasticity is:

Correct Answer: C [0.6]

Explanation:

Use OLD values: %ΔQ = 30/200 = 15%, %ΔP = 15/60 = 25% → e = 0.6.

➤ Full notes, shortcuts and every answer explained – SSC CGL 2026 Finance & Economics (Tier II Paper III) book (₹149): www.shanmugamiasacademy.in/study-materials/ssc-cgl-finance-economics

📘 SSC CGL 2026 – General Studies – Finance & Economics (Tier II Paper III)
Here you get the answer with a one-line explanation. 1,064 original questions with worked answers · Part A Finance & Accounts and Part B Economics & Governance notes · practice sets + 3 mock tests
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