A firm under perfect competition is a price taker because: MCQ with Answer and Explanation

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A firm under perfect competition is a price taker because:

A. it controls the entire market

B. there are many buyers and sellers and the product is homogeneous

C. there are high barriers to entry

D. it differentiates its product

Answer: Option B

Solution (By JKSSB Mock Tests)

In perfect competition, many sellers produce a homogeneous product, so no single firm can influence price.

This question belongs to: Economy GK Economy Set 1

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Practice More Economy Set 1 Questions

Question #1

In the context of public expenditure, Wagner's Law suggests that:

A. Only private expenditure increases with development

B. Public expenditure is independent of economic growth

C. Public expenditure tends to increase as the economy develops

D. Public expenditure declines with economic development

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Correct Answer: Option C

Explanation:
Wagner's Law posits that as an economy develops, the share of public expenditure in national income tends to rise due to increased demand for public goods and social services.

This question belongs to: Economy GK Economy Set 1

Question #2

The 'Employees' State Insurance Corporation' provides which type of social security?

A. health insurance, sickness and maternity benefits

B. education loans

C. old age pension only

D. housing loans

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Correct Answer: Option A

Explanation:
ESIC provides health insurance, sickness, maternity and disability benefits to insured workers.

This question belongs to: Economy GK Economy Set 1

Question #3

Which of the following is NOT a measure to control inflation?

A. Open market sale of securities

B. Increase in government expenditure

C. Increase in bank rate

D. Increase in CRR

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Correct Answer: Option B

Explanation:
Increase in government expenditure would increase aggregate demand and potentially worsen inflation. The other measures reduce money supply or credit and help control inflation.

This question belongs to: Economy GK Economy Set 1

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