For an inferior good, the income effect of a price fall: MCQ with Answer and Explanation

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For an inferior good, the income effect of a price fall:

A. increases quantity demanded

B. does not affect quantity demanded

C. decreases quantity demanded

D. always equals the substitution effect

Answer: Option C

Solution (By JKSSB Mock Tests)

For an inferior good, a price fall raises real income, and the income effect causes the consumer to buy less of the good.

This question belongs to: Economy GK Economy Set 1

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Practice More Economy Set 1 Questions

Question #1

The 'Input Tax Credit' under GST is available for:

A. all goods and services

B. goods and services used for business purposes

C. personal consumption

D. exempt supplies only

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Correct Answer: Option B

Explanation:
Input tax credit is available for inputs used for business purposes.

This question belongs to: Economy GK Economy Set 1

Question #2

The concept of 'Economic Value Added' (EVA) is defined as:

A. Net operating profit after tax minus the opportunity cost of capital employed

B. Only accounting profit

C. Only revenue minus explicit costs

D. Only cash flow

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Correct Answer: Option A

Explanation:
Economic Value Added is a measure of residual income calculated as net operating profit after tax minus a charge for the opportunity cost of the capital employed in the business.

This question belongs to: Economy GK Economy Set 1

Question #3

The 'GST' regime in India has subsumed which of the following state taxes?

A. Customs duty

B. Entry tax

C. Wealth tax

D. Income tax

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Correct Answer: Option B

Explanation:
GST subsumed state taxes like entry tax, purchase tax and VAT.

This question belongs to: Economy GK Economy Set 1

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