In the context of market failure, externalities lead to: MCQ with Answer and Explanation

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In the context of market failure, externalities lead to:

A. Perfect competition

B. Efficient market outcomes

C. Divergence between private and social costs or benefits

D. Zero role for government intervention

Answer: Option C

Solution (By JKSSB Mock Tests)

Externalities cause a divergence between private and social costs (or benefits), leading to over- or under-production relative to the socially optimal level.

This question belongs to: Economy GK Economy Set 1

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Question #1

The 'Goods and Services Tax' law in India comprises:

A. CGST Act, SGST Acts, UTGST Act and IGST Act

B. only CGST Act

C. only IGST Act

D. one Act

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Correct Answer: Option A

Explanation:
GST law comprises CGST, SGST, UTGST and IGST Acts.

This question belongs to: Economy GK Economy Set 1

Question #2

A tariff is a:

A. quantitative limit on imports

B. subsidy given to exporters

C. ban on exports

D. tax imposed on imported goods

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Correct Answer: Option D

Explanation:
A tariff is a tax imposed on imported goods.

This question belongs to: Economy GK Economy Set 1

Question #3

Which of the following is NOT included in the calculation of GDP at market prices?

A. Private consumption expenditure

B. Gross investment

C. Intermediate goods

D. Net exports

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Correct Answer: Option C

Explanation:
GDP includes only final goods and services to avoid double counting. Intermediate goods are not included in GDP calculation.

This question belongs to: Economy GK Economy Set 1

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