Market Mechanism MCQ Class 12 – Equilibrium Price and Quantity in a Competitive Market

Market Mechanism MCQ Class 12 – Equilibrium Price and Quantity in a Competitive Market, covers certain important topics, which are covered under syllabus for ISCE Class 12 and are coming in Term I examination for the academic year 2022-23. Market Mechanism Class 12 MCQ Test contains 52 questions. MCQ on Economics Class 12 ISC have been made for Class 12 students to help check the concept you have learnt from detailed classroom sessions and application of your knowledge.

Market Mechanism MCQ Class 12




1.The price at which Quantity Demanded = Quantity Supplied is
(a) Market Price
(b) Equilibrium Price
(c) Consumer’s Price
(d) Supply Price

Answer

Answer: (b) Equilibrium Price


 

2. The maximum price a consumer will pay for a good is equal to its
(a) Total Utility
(b) Income of the Consumer
(c) Marginal Utility
(d) Reserve Price

Answer

Answer: (c) Marginal Utility


 

3. The minimum limit of price which producers will offer a good for sale is their
(a) Final Price
(b) Marginal Utility
(c) Marginal Cost of Production
(d) Equilibrium Price

Answer

Answer: (c) Marginal Cost of Production


 

4.________ and ______ curves tell us about different quantities that are demanded by a consumer at different prices
(a) demand, price
(b) price, supply
(c) demand, supply
(d) supply, output

Answer

Answer: (c) demand, supply





5.equilibrium refers to a state of
(a) discomfort
(b) rest
(c) supply
(d) none of the above

Answer

Answer: (b) rest


 

6.When the quantity demanded is not equal to the quantity supplied, we say the market is ____
(a) collapsing
(b) in stable equilibrium
(c) in equilibrium
(d) in disequilibrium

Answer

Answer: (d) in disequilibrium


 

7.At equilibrium, ________ are in equilibrium
(a) price
(b) demand
(c) supply
(d) All of the above

Answer

Answer: (d) All of the above


 

8.Buyer demands a commodity because it possesses ______
(a) utility
(b) satisfaction
(c) purchasing power
(d) None of the above

Answer

Answer: (a) utility





9.Sellers aim at ______
(a) achieving equilibrium
(b)earning profits
(c) selling below equilibrium price
(d) none of the above

Answer

Answer: (b) earning profits


 

10.Lowest limit of Price is the
(a) Average Cost
(b) Marginal Utility
(c) Marginal Cost of Production
(d) None of the above

Answer

Answer: (c) Marginal Cost of Production


 

11.When the price equals the equilibrium price and quantity bought and sold equals the equilibrium quantity, is called
(a) Consumer equilibrium
(b) Market equilibrium
(c) Mechanized equilibrium
(d) Suppliers’ Equilibrium

Answer

Answer: (b) Market equilibrium


Market Mechanism MCQ Class 12

Equilibrium Price and Quantity in a Competitive Market – Price Determination

12.What kind of a situation arises at point A

 

(a)Excess Supply
(b) Excess Demand
(c) Demand > Supply
(d) Equilibrium

Answer

Answer: (a)Excess Supply





13.Which of the following is NOT True about Determination of Equilibrium
(a) Amount by which quantity demanded exceeds quantity supplied is called Excess Demand
(b) Equilibrium falls between Marginal Utility and Marginal Cost of Production
(c) Both sides have to compromise/budge from their price to attain Equilibrium
(d) Graphically, equilibrium is where the demand and supply curve do not intersect

Answer

Answer: (d) Graphically, equilibrium is where the demand and supply curve do not intersect


 

14. Equilibrium price is also called as ______ price
(a) ideal
(b) optimum
(c) supply-demand
(d) market clearing

Answer

Answer: (d) market clearing


 

15.In a competitive market, price is determined through the interaction of market
(a) price and demand
(b) demand and supply
(c) price and supply
(d) None of the above

Answer

Answer: (b) demand and supply


Price

(Rs per Shirt)

Quantity Demanded

(000 Shirts per month)

Quantity Supplied

(000 Shirts per month)

Market Position
1000 30 56
900 40 50
800 45 45
700 55 35
600 70 20

Answer the following with reference to the given demand and supply schedule of shirts

16.At what price is market equilibrium found
(a) 800
(b) 900
(c) 1000
(d) 850

Answer

Answer: (a) 800


 

17.When price is 600, there emerges
(a) excess supply
(b)excess demand
(c) shortage of demand
(d) equilibrium

Answer

Answer: (b) excess demand





18.When the price is 1000, what must happen to the quantity demanded for it to achieve equilibrium
(a) it should remain the same
(b)it should decrease
(c) it should increase
(d) none of the above

Answer

Answer: (b) it should decrease


 

19.The amount by which the quantity demanded exceeds quantity supplied is referred to as
(a) excess consumer demand
(b) excess supply
(c) excess demand
(d) equilibrium

Answer

Answer: (c) excess demand


 

20.Whenever there is shortage of goods in the market, ____ compete against each other for the limited goods offered for sale
(a) sellers
(b) producers
(c) buyers
(d) none of the above

Answer

Answer: (d) none of the above


 

21.The demand and supply curve together
(a) are parallel to each other
(b) are always perpendicular to each other
(c) intersect each other and are in a diagonal plus shape
(d) none of the above

Answer

Answer: (c) intersect each other and are in a diagonal plus shape


Market Mechanism MCQ Class 12

Answer questions based on the following diagram

22.What does point A represent
(a) Excess Supply
(b) Shortage in Demand
(c) None of the above
(d) Both a and b

Answer

Answer: (d) Both a and b





23.What does Point L represent
(a) Excess Supply
(b) Shortage of Demand
(c) Both a and b
(d) None of the above

Answer

Answer: (d) None of the above


 

24._________ equilibrium is one which, if displaced due to some small disturbance, brings forces in operation which restore the initial equilibrium position.
(a) unstable
(b)stable
(c) equal
(d) none of the above

Answer

Answer: (b) stable


 

25._______ has described the two forces of demand and supply as the two blades of a scissor which are necessary to cut a piece of cloth.
(a) Parets
(b) Hicks and Allen
(c) Adam Smith
(d) Alfred Marshall

Answer

Answer: (d) Alfred Marshall





Market Mechanism MCQ Class 12

Effects of Changes and simultaneous changes in demand and supply on the equilibrium price along with special cases of equilibrium

26.If supply remains constant, a Leftward Shift in demand curve will lead to
(a) fall in equilibrium price and quantity bought
(b) rise in equilibrium price and quantity bought
(c) fall in equilibrium price but increase in demand
(d) fall in demand but increase in price of good

Answer

Answer: (a) fall in equilibrium price and quantity bought


 

27.With demand being constant, an increase in supply of the commodity causes
(a) decrease in equilibrium price and quantity
(b) increase in equilibrium price and quantity
(c) decrease in equilibrium price and increase in the equilibrium quantity
(d) increase in the equilibrium price and decrease in the equilibrium quantity

Answer

Answer: (c) decrease in equilibrium price and increase in the equilibrium quantity


 

28.When demand and supply increase in the same proportion,
(a) Price Increases
(b) Price is same
(c) Price decreases
(d) No constant value of price

Answer

Answer: (b) Price is same


 

29.What happens here, with respect to equilibrium (P is initial Price)

 

 

(a) Price remains same
(b) Price rises
(c) Price falls
(d) Increase in demand > Increase in Supply

Answer

Answer: (c) Price falls


 

30.When the demand curve is perfect elastic,
(a) increase in supply leads to decrease in quantity bought and sold
(b) decrease in supply leads to increase in quantity bought and sold
(c) Both a and b
(d) None of the above

Answer

Answer: (d) None of the above


 

31.Identify this diagram

(a) Perfectly Elastic Supply Curve
(b) Unitary Elastic Demand Curve
(c) Perfectly Inelastic Demand curve
(d) Demand curve where Elasticity is Infinite

Answer

Answer: (c) Perfectly Inelastic Demand curve





32.When supply curve is perfectly inelastic, an increase in demand leads to
(a) fall in price and quantity
(b) rise in price but fall in quantity
(c) fall in price but same quantity
(d) rise in price but same quantity

Answer

Answer: (d) rise in price but same quantity


 

33.A leftward shift of the demand curve will lead to ______ in equilibrium price and _____ in equilibrium quantity bought and sold
(a) rise, fall
(b) fall, rise
(c) rise, rise
(d) fall, fall

Answer

Answer: (d) fall, fall


 

34.When demand curve shifts to the right, competition among producers and consumers cause price to
(a) rise
(b) fall
(c) remain constant
(d) none of the above

Answer

Answer: (a) rise


 

35.When demand remains constant, an increase in supply leads to ________ in price and ________ in quantity bought and sold
(a) rise, fall
(b) fall, rise
(c) rise, rise
(d) fall, fall

Answer

Answer: (b) fall, rise


 

36.When the relative increase in demand is smaller than the relative increase in supply, price ______ and equilibrium quantity _____
(a) rises, falls
(b) falls, rises
(c) falls, falls
(d) rises, rises

Answer

Answer: (b) falls, rises





37.When demand curve is parallel to the X-axis, an increase in supply leads to a ______
(a) decrease in quantity demanded
(b) increase in quantity demanded and sold
(c) change in price
(d) none of the above

Answer

Answer: (b) increase in quantity demanded and sold


 

38.The given diagram below shows a change in quantity demanded when ________ is _______

(a) demand, perfectly elastic
(b) supply, perfectly elastic
(c) demand, perfectly inelastic
(d) supply, perfectly inelastic

Answer

Answer: (b) supply, perfectly elastic


 

Market Mechanism MCQ Class 12

IMPORTANCE OF TIME ELEMENT IN DETERMINATION OF PRICE IS CANCELLED

Applications of Tools of Demand and Supply – Price Control

39.Maximum Price Legislation is also known as
(a) Price Ceiling
(b) MRP
(c) Price Floor
(d) Price Control

Answer

Answer: (a) Price Ceiling


 

40.Which of these is true about Price Ceiling
(a) There is no rationing
(b) Price ceiling is set below equilibrium price
(c) Price ceiling is used for goods like Gold, Luxury Cars
(d) It mainly benefits higher income groups

Answer

Answer: (b) Price ceiling is set below equilibrium price


 

41._____ is a system of distribution of a specified quantity of a product at price fixed by the government
(a) Black Market
(b) Allocation by Seller’s Preference
(c) Rationing
(d) First come, first serve

Answer

Answer: (c) Rationing





42.What happens when the price of a product is fixed at Floor Price
(a) Excess Demand
(b) Excess Supply
(c) Rationing
(d) Quantity Bought and sold rises

Answer

Answer: (b) Excess Supply


 

43.________ is the maximum legal price which the suppliers can charge for a particular good or service
(a) Price Ceiling
(b) Price Floor
(c) Price Mechanism
(d) Price Surface

Answer

Answer: (a) Price Ceiling


 

44.Price ceiling is imposed on goods like
(a) wheat
(b) oil
(c) rice
(d) all of the above

Answer

Answer: (d) all of the above


 

45.Price ceiling is usually more favorable for
(a)  Rich people
(b) Upper middle-class groups
(c) Low-income groups
(d) Both a and c

Answer

Answer: (c) Low-income groups


 

46.Price ceiling is set below equilibrium. Why does this happen?
(a) To create a shortage of the good
(b) To create excess demand
(c) Both a and b
(d) None of the above

Answer

Answer: (c) Both a and b


 

47.A seller may sell a scarce product only to his regular customers, this is called
(a)  rationing
(b) allocation by sellers’ preference
(c) First come, First served
(d) Black Market

Answer

Answer: (b) allocation by sellers’ preference





48.______ is a place where goods are sold illegally at prices higher than a legally fixed price by the government
(a) White bazaar
(b) Ration Market
(c) Black Market
(d) Piracy market

Answer

Answer: (c) Black Market


 

49.What is floor price also known as
(a) Minimum Support Price
(b) Minimum Price Legislation
(c) None of the above
(d) Both a and b

Answer

Answer: (d) Both a and b


 

50.Fixing minimum price causes
(a)  surplus
(b) shortage
(c) equilibrium
(d) None of the above

Answer

Answer: (a) surplus


Answer the following questions with reference to the diagram given below

51.At what price is the floor price set
(a) OP1
(b)OP2
(c)OP3
(d) None of the options

Answer

Answer: (a) OP1


 

52.At what price is the ceiling price set
(a) OP1
(b)OP2
(c)OP3
(d) None of the options

Answer

Answer: (c)OP3





Economics Class 12 ISC MCQs – Term 1

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