PRC-3 · Chapter 10
Demand, Supply and Market Equilibrium MCQs with Answers
70 multiple-choice questions on Demand, Supply and Market Equilibrium for PRC-3 Business & Economic Insights. Try each one before revealing the answer and explanation.
Practise this chapter interactivelyQuestion 1
A sudden, widespread health craze causes consumers to prefer green tea over regular black tea. Assuming the price of black tea remains unchanged, what will happen to the demand curve for black tea?
- A) It will shift to the right
- B) It will shift to the left
- C) There will be an upward movement along the curve
- D) There will be a downward movement along the curve
Show answer & explanation
Answer: B) It will shift to the left
A change in consumer tastes and preferences away from a product causes its demand curve to shift to the left (decrease in demand at every price level).
Question 2
The price of smartphones drops by 15% due to a massive holiday sale. What is the immediate effect on the demand graph for smartphones?
- A) The entire demand curve shifts to the right
- B) The entire demand curve shifts to the left
- C) A downward movement along the existing demand curve
- D) An upward movement along the existing demand curve
Show answer & explanation
Answer: C) A downward movement along the existing demand curve
A change in the price of the good itself causes a movement along the demand curve (expansion in quantity demanded), not a shift of the curve.
Question 3
If household incomes rise significantly across a nation, and as a result, the demand for generic, low-quality canned goods sharply decreases, what type of good are these canned goods?
- A) Veblen goods
- B) Normal goods
- C) Inferior goods
- D) Public goods
Show answer & explanation
Answer: C) Inferior goods
An inferior good is one whose demand decreases when consumer income rises, as consumers switch to higher-quality substitutes.
Question 4
Automobiles and gasoline are frequently consumed together. If the global price of gasoline doubles, what is the most likely impact on the market for heavy, fuel-inefficient automobiles?
- A) The demand curve for the automobiles will shift to the left
- B) The demand curve for the automobiles will shift to the right
- C) The supply curve for gasoline will shift right
- D) Automobile prices will immediately skyrocket
Show answer & explanation
Answer: A) The demand curve for the automobiles will shift to the left
Gasoline and automobiles are complementary goods. An increase in the price of a complement causes the demand for the related good to fall (shift left).
Question 5
Due to a severe frost, a country's entire orange harvest is severely damaged. How will this event affect the supply curve for oranges?
- A) Movement down the supply curve
- B) Shift of the supply curve to the right
- C) Shift of the supply curve to the left
- D) The demand curve will shift right to compensate
Show answer & explanation
Answer: C) Shift of the supply curve to the left
A negative supply shock (like bad weather destroying crops) reduces the quantity supplied at every price, causing the supply curve to shift to the left.
Question 6
A factory producing shoes negotiates a new contract that halves the wages paid to its workers. Assuming all other factors remain constant, what will happen in the shoe market?
- A) The supply curve for shoes will shift to the right
- B) The supply curve for shoes will shift to the left
- C) The demand curve for shoes will shift to the right
- D) The equilibrium price of shoes will increase
Show answer & explanation
Answer: A) The supply curve for shoes will shift to the right
A decrease in the cost of production (lower wages) makes it cheaper to produce the good, shifting the supply curve to the right (increase in supply).
Question 7
In a free market, if the current market price of wheat is set artificially higher than the equilibrium price, what market condition will inevitably occur?
- A) A shortage of wheat
- B) A surplus of wheat
- C) Immediate market clearing
- D) A rightward shift in demand
Show answer & explanation
Answer: B) A surplus of wheat
When the price is above equilibrium, the quantity supplied exceeds the quantity demanded, resulting in an excess supply, or surplus.
Question 8
The government imposes a legal 'price ceiling' on apartment rentals to keep them affordable for low-income families, setting the maximum rent below the natural market equilibrium. What is the primary unintended consequence of this policy?
- A) A severe shortage of available apartments
- B) A massive surplus of empty apartments
- C) Landlords immediately building more apartments
- D) The supply curve shifting to the right
Show answer & explanation
Answer: A) A severe shortage of available apartments
A price ceiling set below equilibrium leads to high demand but low supply, resulting in a persistent market shortage.
Question 9
If there is a simultaneous outward shift of the demand curve (increase in demand) and an inward shift of the supply curve (decrease in supply) for a specific product, what will definitely happen?
- A) Equilibrium quantity will definitely increase
- B) Equilibrium quantity will definitely decrease
- C) Equilibrium price will definitely increase
- D) Equilibrium price will definitely decrease
Show answer & explanation
Answer: C) Equilibrium price will definitely increase
Both an increase in demand and a decrease in supply push the price upward. The effect on quantity depends on the magnitude of the shifts, but the price will unequivocally rise.
Question 10
Consumers hear a credible news report that the price of cooking oil will double next month due to an international crisis. What is the immediate effect on the current market for cooking oil?
- A) Current demand shifts to the right as consumers stockpile
- B) Current demand shifts to the left as consumers wait
- C) Current supply shifts to the right
- D) There is no effect until the price actually changes
Show answer & explanation
Answer: A) Current demand shifts to the right as consumers stockpile
Expectations of higher future prices cause consumers to buy more now, shifting the current demand curve to the right.
Question 11
Which of the following best describes 'Derived Demand'?
- A) The demand for luxury cars driven by prestige
- B) The demand for industrial steel caused by a surge in demand for new buildings
- C) The demand for inferior goods when incomes fall
- D) The demand for coffee when the price of tea rises
Show answer & explanation
Answer: B) The demand for industrial steel caused by a surge in demand for new buildings
Derived demand occurs when the demand for one good (steel) is purely driven by the demand for the final product it is used to produce (buildings).
Question 12
An exclusive designer brand releases a limited-edition handbag. Strangely, as they increase the price, the wealthy elite demand it even more because of its higher status symbol. What economic anomaly does this represent?
- A) Giffen good
- B) Inferior good
- C) Veblen good
- D) Public good
Show answer & explanation
Answer: C) Veblen good
A Veblen good violates the law of demand; higher prices make it more desirable to status-conscious consumers, resulting in an upward-sloping demand curve.
Question 13
To protect poor farmers, the government sets a legal 'price floor' (minimum price) for wheat that is substantially above the natural market equilibrium. What is a direct consequence of this policy?
- A) A shortage of wheat in the market
- B) A massive surplus of unsold wheat
- C) Immediate equilibrium
- D) The demand curve will permanently shift to the right
Show answer & explanation
Answer: B) A massive surplus of unsold wheat
A price floor set above the equilibrium price means suppliers produce more than consumers are willing to buy at that high price, creating a surplus.
Question 14
How is a 'Market Demand Curve' derived from individual demand curves?
- A) By taking the average of all individual quantities
- B) By vertically summing the prices consumers are willing to pay
- C) By horizontally summing the quantities demanded by all individuals at each price
- D) By finding the intersection of individual demand and supply
Show answer & explanation
Answer: C) By horizontally summing the quantities demanded by all individuals at each price
The market demand curve is the horizontal summation of all individual consumers' demand curves at every given price point.
Question 15
Two goods, Alpha and Beta, are substitutes. If the government places a heavy tax on the production of Alpha, causing its price to rise significantly, what will happen in the market for Beta?
- A) The supply of Beta will decrease
- B) The demand for Beta will shift to the left
- C) The demand for Beta will shift to the right
- D) The price of Beta will fall
Show answer & explanation
Answer: C) The demand for Beta will shift to the right
If Alpha becomes more expensive, consumers will switch to its substitute, Beta, causing the demand curve for Beta to shift to the right.
Question 16
A massive improvement in robotic automation significantly lowers the cost of manufacturing laptops. Simultaneously, laptops become a critical necessity for all school children, drastically increasing consumer desire. What happens to equilibrium?
- A) Price definitely falls, Quantity is indeterminate
- B) Quantity definitely rises, Price is indeterminate
- C) Price and Quantity both definitely rise
- D) Price and Quantity both definitely fall
Show answer & explanation
Answer: B) Quantity definitely rises, Price is indeterminate
Lower costs shift supply right (P down, Q up). Increased desire shift demand right (P up, Q up). Both increase Q, but push P in opposite directions. The net price change is indeterminate.
Question 17
Which of the following events would NOT cause a shift in the demand curve for beef?
- A) A significant rise in consumer incomes
- B) A severe drop in the price of chicken (a substitute)
- C) A widespread medical report stating beef causes health issues
- D) A decrease in the price of beef at the butcher shop
Show answer & explanation
Answer: D) A decrease in the price of beef at the butcher shop
A change in the price of the good itself causes a movement along the demand curve, not a shift of the curve.
Question 18
A cartel of oil-producing nations decides to artificially restrict the pumping of oil to half of the normal capacity. What is the immediate graphical effect?
- A) The demand curve for oil shifts left
- B) The supply curve for oil shifts left
- C) The supply curve for oil shifts right
- D) A downward movement along the supply curve
Show answer & explanation
Answer: B) The supply curve for oil shifts left
Withholding supply directly reduces the quantity available at every price point, representing an inward (leftward) shift of the supply curve.
Question 19
If the government maintains a 'Buffer Stock' system for agricultural crops, what action does it take during a year of exceptional overproduction to stabilize prices?
- A) It sells stored crops into the market
- B) It buys the surplus crop from the market to store it
- C) It strictly burns the entire surplus
- D) It imposes a heavy tax on farmers
Show answer & explanation
Answer: B) It buys the surplus crop from the market to store it
To prevent prices from crashing during a surplus, a buffer stock scheme requires the government to purchase and store the excess supply.
Question 20
At the point where the downward-sloping demand curve intersects the upward-sloping supply curve, the market achieves a state where:
- A) Quantity demanded perfectly equals quantity supplied
- B) There is a structural shortage
- C) There is an inherent surplus
- D) Prices are completely unstable
Show answer & explanation
Answer: A) Quantity demanded perfectly equals quantity supplied
The intersection marks the market equilibrium, where the plans of buyers and sellers perfectly match, resulting in a market-clearing price with no shortage or surplus.
Question 21
Because of a highly successful marketing campaign, coffee becomes the most popular beverage in the nation. Assuming the price of coffee itself hasn't changed yet, what happens graphically?
- A) A movement upward along the demand curve
- B) A rightward shift of the entire demand curve
- C) A leftward shift of the entire demand curve
- D) The supply curve immediately shifts right
Show answer & explanation
Answer: B) A rightward shift of the entire demand curve
A change in consumer tastes in favor of a product increases demand at every price level, causing the entire demand curve to shift to the right.
Question 22
If the market price of laptops drops from Rs. 80,000 to Rs. 60,000 during a massive sale, consumers will naturally buy more. What economic terminology describes this specific reaction?
- A) An increase in demand (shift)
- B) An extension in quantity demanded (movement)
- C) A contraction in supply
- D) An increase in market clearing
Show answer & explanation
Answer: B) An extension in quantity demanded (movement)
A change in the quantity demanded caused solely by a change in the product's own price is called an extension (or contraction) and is represented by a movement along the curve.
Question 23
Beef and chicken are substitute meats. If a viral disease severely reduces the chicken population, causing the price of chicken to triple, what will happen in the beef market?
- A) The demand for beef will shift to the left
- B) The supply of beef will shift to the left
- C) The demand for beef will shift to the right
- D) Beef prices will crash
Show answer & explanation
Answer: C) The demand for beef will shift to the right
As chicken becomes highly expensive, consumers will substitute away from chicken and buy more beef instead, increasing the overall demand for beef.
Question 24
Printers and printer ink cartridges are consumed together. If a tech company suddenly decides to give away its printers for free, what will happen to the market for ink cartridges?
- A) The demand for ink cartridges will shift right
- B) The demand for ink cartridges will shift left
- C) The supply of ink cartridges will shift left
- D) The price of ink cartridges will fall to zero
Show answer & explanation
Answer: A) The demand for ink cartridges will shift right
Printers and ink are complementary goods. If the price of printers falls (to zero), more people will own printers, drastically increasing the demand for the complementary ink.
Question 25
During an economic boom, average salaries rise by 30%. Consequently, sales of generic, unbranded powdered milk plummet as families switch to premium fresh milk. How is the powdered milk classified?
- A) Normal good
- B) Veblen good
- C) Inferior good
- D) Capital good
Show answer & explanation
Answer: C) Inferior good
Inferior goods are those for which demand falls when consumer income rises, because consumers switch to better-quality substitutes.
Question 26
A major breakthrough in battery technology drastically cuts the cost of manufacturing electric vehicles (EVs). What is the immediate effect on the EV market?
- A) Demand curve shifts right
- B) Supply curve shifts right
- C) Supply curve shifts left
- D) Equilibrium price rises
Show answer & explanation
Answer: B) Supply curve shifts right
A decrease in production costs allows manufacturers to produce more at every price level, causing the supply curve to shift outward to the right.
Question 27
The government enforces a strict minimum wage law (a price floor) that is significantly higher than the current free-market equilibrium wage. What is the unintended economic consequence in the labor market?
- A) A shortage of workers
- B) Immediate full employment
- C) A surplus of labor (unemployment)
- D) The labor demand curve shifting right
Show answer & explanation
Answer: C) A surplus of labor (unemployment)
A price floor set above equilibrium means more people want to work than companies are willing to hire at that high wage, creating a surplus of labor (unemployment).
Question 28
In an attempt to make housing affordable, a city places a strict cap on apartment rents (a price ceiling) well below the market equilibrium. What market condition will this directly cause?
- A) A shortage of available rental apartments
- B) A surplus of empty apartments
- C) Landlords investing heavily in new buildings
- D) Market clearing equilibrium
Show answer & explanation
Answer: A) A shortage of available rental apartments
A price ceiling set below equilibrium makes renting very cheap (high demand) but unprofitable for landlords (low supply), resulting in a persistent housing shortage.
Question 29
Consumers hear a verified news leak that the government will double the tax on mobile phones starting next week. What happens in the mobile phone market today?
- A) Current demand shifts to the left
- B) Current demand shifts to the right
- C) Current supply shifts to the right
- D) No change until the tax is actually implemented
Show answer & explanation
Answer: B) Current demand shifts to the right
Expectations of higher future prices prompt consumers to buy immediately to beat the price hike, causing an outward shift in current demand.
Question 30
Because of a sudden, intense heatwave, the demand for air conditioners skyrockets (shifting right). Simultaneously, a factory strike severely restricts the supply of air conditioners (shifting left). What happens to the equilibrium?
- A) Both price and quantity will definitely fall
- B) Both price and quantity will definitely rise
- C) Price will definitely rise, but the effect on quantity is indeterminate
- D) Quantity will definitely rise, but the effect on price is indeterminate
Show answer & explanation
Answer: C) Price will definitely rise, but the effect on quantity is indeterminate
Both an increase in demand and a decrease in supply exert upward pressure on price. However, they push quantity in opposite directions, making the net change in quantity indeterminate.
Question 31
Certain status-symbol goods, like ultra-luxury watches, sometimes exhibit an anomaly where raising the price actually makes the wealthy desire them more. This type of good is known as a:
- A) Giffen good
- B) Veblen good
- C) Normal good
- D) Public good
Show answer & explanation
Answer: B) Veblen good
Veblen goods violate the law of demand because their appeal lies in their high price functioning as a status symbol; higher prices lead to higher demand.
Question 32
A massive surge in the popularity of online video games leads to a massive surge in the demand for specialized graphics microchips. The demand for these microchips is termed:
- A) Derived demand
- B) Inferior demand
- C) Direct demand
- D) Elastic supply
Show answer & explanation
Answer: A) Derived demand
Derived demand occurs when the demand for a component (microchips) is derived solely from the demand for the final consumer product (video games) it helps produce.
Question 33
A local farmer has exactly 1,000 tons of harvested rice sitting in his warehouse. Due to a sudden market crash, he decides to withhold the rice and only offer 200 tons for sale at the current low price. In economic terms, the 200 tons is his:
- A) Total Stock
- B) Market Equilibrium
- C) Quantity Supplied
- D) Buffer surplus
Show answer & explanation
Answer: C) Quantity Supplied
Stock is the total amount in existence (1,000 tons). Supply is only the specific portion of that stock (200 tons) actually offered for sale at a given price and time.
Question 34
The Law of Demand states that, ceteris paribus, there is what kind of relationship between the price of a good and the quantity demanded?
- A) A direct relationship
- B) An inverse relationship
- C) A perfectly proportional relationship
- D) No relationship at all
Show answer & explanation
Answer: B) An inverse relationship
The Law of Demand dictates an inverse relationship: as the price of a good rises, the quantity demanded falls, assuming all other factors remain constant.
Question 35
If the price of tea drops significantly, causing people to drink more tea, what will happen in the market for coffee (a substitute)?
- A) The demand for coffee will shift to the right
- B) The demand for coffee will shift to the left
- C) The supply of coffee will increase
- D) There will be a movement along the coffee demand curve
Show answer & explanation
Answer: B) The demand for coffee will shift to the left
Since tea and coffee are substitutes, cheaper tea will cause consumers to abandon coffee for tea, shifting the entire demand curve for coffee to the left.
Question 36
A massive increase in national wages allows families to stop buying cheap, low-quality bread and start buying premium bakery goods. What kind of good is the low-quality bread?
- A) A normal good
- B) A Veblen good
- C) An inferior good
- D) A complementary good
Show answer & explanation
Answer: C) An inferior good
An inferior good is one where demand falls (negative income effect) as consumer income rises, because consumers substitute it with higher-quality alternatives.
Question 37
If a government decides to impose a 'Price Floor' on wheat to guarantee farmers a high income, and sets this price significantly above the market equilibrium, what will be the result?
- A) A market clearing equilibrium
- B) A massive shortage of wheat
- C) A surplus (excess supply) of wheat
- D) A leftward shift in demand
Show answer & explanation
Answer: C) A surplus (excess supply) of wheat
A price floor set above the natural equilibrium price causes quantity supplied to exceed quantity demanded, inevitably creating a surplus.
Question 38
Cars and petrol are complementary goods. If the global price of petrol suddenly triples, what is the most immediate effect on the automobile market?
- A) The demand curve for cars will shift to the right
- B) The demand curve for cars will shift to the left
- C) The supply curve for cars will shift left
- D) Car prices will inherently skyrocket
Show answer & explanation
Answer: B) The demand curve for cars will shift to the left
When the price of a complement (petrol) rises, it makes using the primary good (cars) much more expensive, resulting in a decrease in demand (leftward shift) for cars.
Question 39
A strict new law forces landlords to cap apartment rentals at Rs. 10,000 per month (a Price Ceiling), while the natural equilibrium is Rs. 25,000. What is the direct market consequence?
- A) A massive surplus of empty apartments
- B) A severe shortage of available apartments
- C) Landlords immediately building new apartments
- D) A rightward shift in the supply of housing
Show answer & explanation
Answer: B) A severe shortage of available apartments
A price ceiling set below equilibrium keeps prices artificially low. This encourages massive demand but discourages supply, creating a persistent market shortage.
Question 40
A farmer brings highly perishable fresh strawberries to the Sunday market. Since they will rot by Monday, he must sell all of them today regardless of how low the price drops. What is the shape of his supply curve?
- A) A horizontal line
- B) A downward sloping line
- C) A perfectly vertical line (perfectly inelastic)
- D) A U-shaped curve
Show answer & explanation
Answer: C) A perfectly vertical line (perfectly inelastic)
Perishable goods must be sold immediately and cannot be withheld. Thus, the quantity supplied is fixed regardless of price, creating a vertical, perfectly inelastic supply curve.
Question 41
What specific terminology defines the total amount of a commodity physically in existence in a warehouse, as opposed to the amount actually offered for sale at a specific price?
- A) Supply
- B) Buffer surplus
- C) Stock
- D) Equilibrium quantity
Show answer & explanation
Answer: C) Stock
Stock refers to the total physical quantity of a commodity available. Supply is only the portion of that stock a seller is willing to offer at a specific market price.
Question 42
Due to exceptionally favorable weather, a country produces double the normal harvest of cotton. Assuming demand remains strictly unchanged, what will happen to the market equilibrium?
- A) Both price and quantity will rise
- B) Both price and quantity will fall
- C) Price will fall, but quantity exchanged will rise
- D) Price will rise, but quantity exchanged will fall
Show answer & explanation
Answer: C) Price will fall, but quantity exchanged will rise
An exceptionally good harvest shifts the supply curve to the right. This excess supply pushes the equilibrium price down, which subsequently induces a higher quantity demanded.
Question 43
The demand for bricks, cement, and construction cranes only exists because there is a high demand for building new houses. This type of demand is economically classified as:
- A) Direct demand
- B) Derived demand
- C) Speculative demand
- D) Elastic demand
Show answer & explanation
Answer: B) Derived demand
Derived demand is demand for a factor of production or intermediate good that occurs purely as a result of the demand for the final good it produces.
Question 44
To prevent wild price fluctuations in agriculture, a government establishes a 'Buffer Stock'. What action must the government take if there is a severe shortage of crops causing prices to spike?
- A) Burn the existing crops to protect farmers
- B) Buy more crops from the open market
- C) Release (sell) its stored crops into the market
- D) Increase the income tax on farmers
Show answer & explanation
Answer: C) Release (sell) its stored crops into the market
In a buffer stock scheme, the government prevents prices from rising too high during a shortage by selling its previously stored reserve crops to increase market supply.
Question 45
A massive improvement in robotic assembly lines drastically cuts the production cost of televisions. What is the immediate graphical impact on the market for televisions?
- A) The supply curve shifts to the right
- B) The supply curve shifts to the left
- C) The demand curve shifts to the right
- D) The demand curve shifts to the left
Show answer & explanation
Answer: A) The supply curve shifts to the right
A decrease in the cost of production makes manufacturing more profitable, allowing firms to supply more goods at every price level (a rightward shift in supply).
Question 46
Which of the following events would cause a 'movement along' the demand curve for shoes, rather than a 'shift' of the entire demand curve?
- A) An aggressive new advertising campaign for the shoes
- B) A sudden increase in consumer incomes
- C) A substantial drop in the price of the shoes themselves
- D) An increase in the price of socks
Show answer & explanation
Answer: C) A substantial drop in the price of the shoes themselves
A change in the price of the good itself strictly causes a movement along the existing demand curve (an extension or contraction of quantity demanded).
Question 47
An exclusive diamond-encrusted watch actually sees an increase in sales when its manufacturer raises the price, because the ultra-wealthy desire it more as a status symbol. This violates the law of demand and is an example of a:
- A) Normal good
- B) Veblen good
- C) Public good
- D) Giffen good
Show answer & explanation
Answer: B) Veblen good
A Veblen good is a luxury item whose appeal is tied to its high price. Raising the price increases its perceived exclusivity and status, increasing demand.
Question 48
If there is a simultaneous outward shift (increase) in demand and an inward shift (decrease) in supply for a commodity, what will definitively happen to the market equilibrium?
- A) The equilibrium price will definitely decrease
- B) The equilibrium price will definitely increase
- C) The equilibrium quantity will definitely increase
- D) The equilibrium quantity will definitely decrease
Show answer & explanation
Answer: B) The equilibrium price will definitely increase
Both higher demand and lower supply put upward pressure on the price. The effect on quantity is indeterminate, but the price will unambiguously rise.
Question 49
Due to COVID-19, the world went into strict lockdowns. Consequently, the international market saw massive cuts in the consumption of petroleum. In economic theory, this inward shift of the curve is known as a:
- A) Contraction in quantity demanded
- B) Extension in quantity supply
- C) Fall in demand
- D) Fall in supply
Show answer & explanation
Answer: C) Fall in demand
A change in an external condition (like a pandemic destroying the need to travel) shifts the entire demand curve to the left, which is termed a 'fall in demand'.
Question 50
Which of the following variables is NOT considered a fixed precondition (ceteris paribus assumption) for the Law of Demand?
- A) Price of substitute goods
- B) Income of the consumer
- C) Wages of factory workers
- D) Population size
Show answer & explanation
Answer: C) Wages of factory workers
Wages of factory workers affect the cost of production and thus shift the *supply* curve. They do not directly determine consumer demand.
Question 51
Which of the following variables is NOT considered a precondition (ceteris paribus assumption) for the Law of Supply?
- A) Technology levels
- B) Income of the consumer
- C) Cost of raw materials
- D) Government taxes on production
Show answer & explanation
Answer: B) Income of the consumer
Consumer income determines the purchasing power of buyers and shifts the *demand* curve, having no direct relation to the firm's willingness to supply.
Question 52
During the Covid-19 pandemic, the sudden panic buying and massive need for Face Masks caused the demand curve to shift outwards. This is formally termed a:
- A) Movement along the demand curve
- B) Rise in demand
- C) Inward shift in demand curve
- D) Price extension
Show answer & explanation
Answer: B) Rise in demand
When an external factor (fear of illness) causes consumers to demand a higher quantity at every price point, it is a rightward shift, known as a 'rise in demand'.
Question 53
Historically, Pakistan’s power sector originally consisted of which two massive Government-owned utilities?
- A) WAPDA & K-Electric (KE)
- B) WAPDA & KESC
- C) KESC & KE
- D) LESCO & WAPDA
Show answer & explanation
Answer: B) WAPDA & KESC
Historically, before privatizations and renaming, the state-run power sector was dominated entirely by the Water and Power Development Authority (WAPDA) and the Karachi Electric Supply Corporation (KESC).
Question 54
The Karachi Electric Supply Corporation (KESC) was officially privatized and later rebranded as K-Electric in which year?
- A) 2004
- B) 2005
- C) 2006
- D) 2007
Show answer & explanation
Answer: B) 2005
KESC was privatized by the Government of Pakistan in 2005 as part of a broad economic reform program.
Question 55
During reforms, WAPDA was functionally unbundled into multiple generation companies (GENCOs), distribution companies (DISCOs), and one national transmission entity known as:
- A) K-Electric (KE)
- B) KESC
- C) NTDC (National Transmission & Despatch Company)
- D) O&M
Show answer & explanation
Answer: C) NTDC (National Transmission & Despatch Company)
The NTDC was established to strictly handle the high-voltage transmission of power across the country, separate from generation and distribution.
Question 56
In the structural power supply value chain, the 'upstream' component specifically refers to:
- A) Transmission
- B) Generation
- C) Distribution
- D) Meter reading
Show answer & explanation
Answer: B) Generation
Generation is the upstream source where power is created. It then flows downstream through transmission lines to the final distribution networks.
Question 57
The official consumer electricity tariff in Pakistan's power sector is legally determined by:
- A) WAPDA
- B) OGRA
- C) NEPRA
- D) PEMRA
Show answer & explanation
Answer: C) NEPRA
The National Electric Power Regulatory Authority (NEPRA) is the sole regulatory body responsible for determining and approving electricity tariffs in Pakistan.
Question 58
The financial shortfall between the total energy generated by power plants and the actual energy successfully billed to consumers is known as:
- A) Power losses
- B) Line losses
- C) Distribution & transmission losses
- D) Tariff deficits
Show answer & explanation
Answer: C) Distribution & transmission losses
T&D losses account for energy lost due to electrical resistance in wires (technical loss) and energy stolen via theft (non-technical loss).
Question 59
When electricity leaves the main grid station’s transformer, it enters another smaller transformer that is typically pole-mounted for further reduction in voltage before entering homes.
- A) True
- B) False
Show answer & explanation
Answer: A) True
Pole-mounted distribution transformers step down the medium voltage from the grid into the 220V or 240V supply safely required by residential appliances.
Question 60
When turbines generate electricity at the power plant, the voltage is immediately increased for efficient long-distance travel by passing it through a:
- A) Grid station
- B) Step-up transformer
- C) Pole-mounted transformer
- D) Distribution line
Show answer & explanation
Answer: B) Step-up transformer
Step-up transformers heavily increase the voltage of generated electricity, reducing current and thereby minimizing heat loss over long transmission distances.
Question 61
In the Textile industry, the mechanical process dedicated to converting raw cotton or polyester fibers into continuous yarn is called:
- A) Weaving
- B) Ginning
- C) Processing
- D) Spinning
Show answer & explanation
Answer: D) Spinning
Spinning is the fundamental upstream textile process where cleaned raw fibers are drawn out and twisted together to form durable yarn.
Question 62
The primary raw materials forming the backbone of the Pakistani Textile industry are naturally grown cotton, viscose, and:
- A) Thread
- B) Polyester
- C) Nylon
- D) Silk
Show answer & explanation
Answer: B) Polyester
Alongside natural cotton, polyester is a critical synthetic fiber widely used in the textile industry to create blended fabrics.
Question 63
The entire Pharmaceutical industry in Pakistan is officially regulated and monitored by which authority?
- A) NEPRA
- B) DRAP
- C) PEMRA
- D) SECP
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Answer: B) DRAP
The Drug Regulatory Authority of Pakistan (DRAP) oversees the registration, pricing, and quality control of all pharmaceutical products in the country.
Question 64
Extensive medical experiments undertaken to develop research evidence regarding the safety and efficacy of new medicines in treating human diseases are called:
- A) Clinical experiments
- B) Diagnostics
- C) Medical trials
- D) Clinical trials
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Answer: D) Clinical trials
Clinical trials are formal, regulated research studies performed on human volunteers to evaluate the safety and health effects of new medical treatments.
Question 65
In the Oil and Gas sector, the logistical phase where bulk petroleum products are transported by road networks, pipelines, and railways is categorized as:
- A) Upstream
- B) Midstream
- C) Down stream
- D) Exploration
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Answer: C) Down stream
The downstream sector involves the refining, transportation, and final distribution/marketing of petroleum products to end consumers.
Question 66
The risky process where crude oil is physically explored, drilled, and produced from the earth falls strictly under which category of the Oil & Gas sector?
- A) Upstream
- B) Midstream
- C) Down stream
- D) Retailing
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Answer: A) Upstream
Upstream operations (also known as E&P: Exploration and Production) encompass the search for underground reserves and the drilling of wells.
Question 67
Which of the following entities is widely recognized as the biggest Exploration & Production (E&P) company operating in Pakistan?
- A) OGDCL
- B) Pakistan State Oil (PSO)
- C) Attock Petroleum
- D) Shell Pakistan
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Answer: A) OGDCL
The Oil & Gas Development Company Limited (OGDCL) is the dominant, state-owned upstream exploration and production giant in Pakistan.
Question 68
The top value-added export products generated by Pakistan's textile sector are:
- A) Raw cotton bales
- B) Ready Made Garments
- C) Unprocessed yarn
- D) Industrial carpets
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Answer: B) Ready Made Garments
Value addition involves turning raw materials into finished consumer goods. Ready Made Garments command the highest international prices and are Pakistan's top value-added export.
Question 69
In pharmaceutical manufacturing quality control, 'AQL 4' mathematically means that there should not be more than 4% defective pieces in a selected batch sample.
- A) True
- B) False
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Answer: A) True
AQL stands for Acceptable Quality Limit. AQL 4 defines a strict tolerance threshold where a maximum of 4% defectives is permissible in a sample.
Question 70
Health, Safety and Environment (HSE) protocols are of least importance to Exploration & Production companies because drilling is inherently dangerous.
- A) True
- B) False
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Answer: B) False
Because oil drilling is highly hazardous, HSE policies are actually of extreme, paramount importance to prevent catastrophic accidents, spills, and loss of life.