SSC CGL Finance – Basic Concepts of Economics, Micro Economics, Demand & Supply – Exam-Level Drill

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SSC CGL Finance – Basic Concepts of Economics, Micro Economics, Demand & Supply – Exam-Level Drill – 12 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.  
Qd = 150 − 5P and Qs = 10P − 30. After a rise in income, demand becomes Qd = 180 − 5P. The new equilibrium quantity is:

Correct Answer: C [110 units]

Explanation:

Old: P = 12, Q = 90. New: 180 − 5P = 10P − 30 → P = 14, Q = 110.

2.  
For Qd = 150 − 5P, Qs = 10P − 30, the price elasticity of demand at the equilibrium point is:

Correct Answer: D [2/3]

Explanation:

P = 12, Q = 90: e = 5 × 12/90 = 2/3.

3.  
In the same market (Qd = 150 − 5P, Qs = 10P − 30) a tax of ₹ 3 per unit is put on sellers. How much of the tax is borne by buyers?

Correct Answer: A [₹ 2]

Explanation:

Buyers' share = t × d/(b + d) = 3 × 10/15 = ₹ 2 (new P = 14, Q = 80).

4.  
For Qd = 150 − 5P and Qs = 10P − 30, total surplus (consumer + producer) at equilibrium is:

Correct Answer: B [₹ 1,215]

Explanation:

CS = ½ × 90 × (30 − 12) = 810; PS = ½ × 90 × (12 − 3) = 405; total 1,215.

5.  
Assertion–Reason
A: Demand for salt is price-inelastic.
R: Salt takes a very small share of the budget and has no close substitute.

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

Explanation:

Small budget share + no substitute are classic reasons for inelastic demand.

6.  
Petrol price rises from ₹ 100 to ₹ 110 per litre and demand for cars falls from 2,000 to 1,900 a month. Cross elasticity (initial base) and relation:

Correct Answer: A [−0.5; complements]

Explanation:

%ΔQ = −100/2,000 = −5%; %ΔP = +10% → −0.5; negative → complements.

7.  
Price rises from ₹ 40 to ₹ 50 and quantity supplied rises from 400 to 600 units. Elasticity of supply (initial base) is:

Correct Answer: C [2]

Explanation:

%ΔQs = 50%; %ΔP = 25% → es = 2 (elastic supply).

8.  
In the market Qd = 150 − 5P, Qs = 10P − 30, a minimum support price of ₹ 15 is fixed. The surplus that the government may need to buy is:

Correct Answer: B [45 units]

Explanation:

At ₹ 15: Qd = 75, Qs = 120 → surplus 45 units.

9.  
Match the followingMatch income elasticity (Ey) with the type of good:
P. Ey < 0 Q. 0 < Ey < 1 R. Ey > 1
1. Luxury 2. Inferior 3. Necessity

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

Explanation:

Negative → inferior; between 0 and 1 → necessity; above 1 → luxury.

10.  
Reverse questionA consumer is in equilibrium with MU of X = 24 utils at a price of ₹ 8. If the price of Y is ₹ 5, the MU of Y is:

Correct Answer: A [15 utils]

Explanation:

Answer: 15 utils. 24/8 = MUy/5 → MUy = 15.

11.  
Price elasticity of demand for cigarettes is 0.4. To cut consumption by 10%, price must be raised by about:

Correct Answer: B [25%]

Explanation:

%ΔP = %ΔQ ÷ e = 10 ÷ 0.4 = 25%.

12.  
Chronological orderArrange in chronological order of publication:
1. Robbins – An Essay on the Nature and Significance of Economic Science
2. Adam Smith – The Wealth of Nations
3. Keynes – The General Theory
4. Marshall – Principles of Economics

Correct Answer: D [2, 4, 1, 3]

Explanation:

1776 (Smith) → 1890 (Marshall) → 1932 (Robbins) → 1936 (Keynes).

➤ 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)
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