SSC CGL (Prelims) General: Microeconomics questions with solutions

Q1. Which curve represents combinations of two goods that yield equal utility?

1. Demand curve
2. Indifference curve
3. Production possibility curve
4. Engel curve

Answer: Indifference curve

An indifference curve shows all combinations of two goods that give the consumer the same level of satisfaction or utility. Hence, it represents equal utility combinations.

Q2. Which of the following statements accurately describes the law of demand in microeconomics?

1. As price increases, demand increases.
2. As price decreases, demand decreases.
3. As price increases, demand decreases, ceteris paribus.
4. Price has no effect on demand.

Answer: As price increases, demand decreases, ceteris paribus.

The law of demand states that, other things remaining constant, quantity demanded falls when price rises and rises when price falls. This inverse relationship is the core idea behind the demand curve.