If demand for a good is perfectly inelastic, a tax on the good will be borne: MCQ with Answer and Explanation

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If demand for a good is perfectly inelastic, a tax on the good will be borne:

A. equally by buyers and sellers

B. by the government

C. entirely by buyers

D. entirely by sellers

Answer: Option C

Solution (By JKSSB Mock Tests)

With perfectly inelastic demand, buyers bear the entire tax burden because quantity demanded does not change.

This question belongs to: Economy GK Economy Set 1

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Question #1

In the context of international trade, 'Most Favoured Nation' (MFN) treatment means:

A. Ban on imports from certain countries

B. Higher tariffs for all countries

C. Equal trade treatment to all member countries

D. Preferential treatment to one country only

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Correct Answer: Option C

Explanation:
MFN principle under WTO requires that any advantage granted to one member country must be extended to all other members, ensuring non-discrimination.

This question belongs to: Economy GK Economy Set 1

Question #2

Which of the following is NOT a feature of the Keynesian theory?

A. Wage-price flexibility ensuring full employment

B. Emphasis on effective demand

C. Importance of government intervention

D. Possibility of underemployment equilibrium

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Correct Answer: Option A

Explanation:
Keynes rejected the classical assumption of wage-price flexibility leading to automatic full employment. He argued that underemployment equilibrium is possible.

This question belongs to: Economy GK Economy Set 1

Question #3

The 'snob effect' in consumer behaviour refers to:

A. buying goods to appear exclusive and different

B. buying only necessities

C. buying more when price falls

D. following popular trends

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Correct Answer: Option A

Explanation:
The snob effect is consumer preference for exclusive goods that set them apart.

This question belongs to: Economy GK Economy Set 1

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