1000+ Basics of Economics MCQ for CEED [Solved]

1. Total Utility (TU) curve:
A. Always rises
B. Always falls
C. First falls and then rises
D. First rises and then falls
Answer : D

2. Indifference curves reflect:
A. Preferences
B. Income
C. Prices
D. Consumption
Answer : A

3. When price decreases and with it the total outlay on a commodity also decreases, it is a case of:
A. Perfect elasticity (infinitely elastic)
B. Relative elasticity (greater than one elasticity)
C. Perfect inelasticity (zero elasticity)
D. Relative inelasticity (less than one elasticity)
Answer : D

4. All of the following are capital resources except:
A. Warehouses
B. Buildings
C. Dams
D. Share of stock
Answer : D

5. When the output of a firm is increasing, its average fixed cost:
A. Declines continuously
B. Remains constant
C. Rises continuously
D. Declines and then rises
Answer : A

6. Indifference curves are downward sloping and are drawn bowed toward the origin (convex to the origin) implying:
A. Consumers prefer to have less satisfaction than more of both commodities
B. As more and more of one commodity is obtained, less and less of the other must be given up to keep satisfaction constant
C. The total satisfaction obtained along an indifference curve decreases at an increasing rate
D. None of the above
Answer : B

7. An economic theory is :
A. An axiom
B. A proposition
C. A hypothesis
D. A tested hypothesis
Answer : D

8. If the demand for good is more elastic and government levied a tax per unit of output, the price per unit for the firm would:
A. Rise by the amount of the tax
B. Rise by more than the amount of the tax
C. Rise by less than the amount of the tax
D. Remain the same
Answer : C

9. Production is a function of:
A. Profits
B. Costs
C. Inputs
D. Price
Answer : A

10. A high value of cross-elasticity indicates that the two commodities are:
A. Very good substitutes
B. Poor substitutes
C. Good complements
D. Poor complements
Answer : A

11. An increase in the price of the good measured on the horizontal axis causes:
A. The budget line to get steeper
B. The budget line to shift parallel to the right
C. The indifference curve to shift up
D. The budget line to get flatter
Answer : A

12. Increasing returns imply:
A. Constant average cost
B. Diminishing cost per unit of output
C. Optimum use of capital and factor
D. External economies
Answer : B

13. In the long-run competitive equilibrium, the theory predicts that:
A. TC = TR and MC = MR
B. Firms operate at a minimum average total cost
C. There is no incentive for entry or exit of firms
D. All these conditions exist
Answer : D

14. The main contribution of Adam Smith is in the field of:
A. Economics of state
B. Wealth of Nations
C. Value and price
D. Theory of demand
Answer : B

15. When total product falls:
A. MP is positive
B. MP is negative
C. MP is falling
D. MP is rising
Answer : B

16. Some farm land can be used to produce either corn or soybeans. If the demand for corn increases then:
A. The demand for soybeans should increase
B. The supply of soybeans should increase
C. The demand for soybeans should decrease
D. The supply of soybeans should decrease
Answer : D

17. The MRTS along an iso-quant goes on to:
A. Appear
B. Diminish
C. Prominent
D. Increase
Answer : B

18. The slope of budget line shows the price ratios of:
A. Many goods
B. Few goods
C. Two goods
D. Three goods
Answer : C

19. Stable cobweb model is a:
A. Simple model
B. Dynamic model
C. Both of them
D. None of them
Answer : C

20. The Strategy of Economic Development is the work of:
A. S.Kuznets
B. H.Liebenstein
C. A.O.Hirshman
D. Alfred Marshal
Answer : C

21. According to current thinking, the law of diminishing returns applies to:
A. All fields of production
B. Agriculture
C. Mining
D. Manufacturing
Answer : A

22. A maximin strategy:
A. Maximizes the minimum gain that can be earned
B. Maximizes the gain of one player, but minimizes the gain of the opponent
C. Minimizes the maximum gain that can be earned
D. None of the above
Answer : A

23. In first degree price discriminaton, monopolist takes away :
A. All of the consumer surplus
B. All of the producer surplus
C. Some part of the consumer surplus
D. None of them
Answer : A

24. A monopolist:
A. Can not influence the market
B. Can influence the market
C. Is a price taker
D. None of the above
Answer : B

25. In Prisoners Dillemma, the players are:
A. Industrialists
B. Prisoners
C. Common men
D. Workers
Answer : B

26. The demand curve of a firm in monopolistic competition is:
A. Negatively sloped
B. Vertical
C. Horizontal
D. Positively sloped
Answer : A

27. Which is the first-order condition for the profit of a firm to be maximum?
A. AC=MR
B. MC=MR
C. MR=AR
D. AC=AR
Answer : B

28. Which of the following statement is wrong?
A. A utility function refers to a particular individual and reflects the tastes of that individual
B. When the tastes of an individual changes, his utility function changes(shifts)
C. Different individuals usually have different tastes and thus have different utility functions
D. Different individuals have same tastes and thus have the same utility function
Answer : D

29. The cost that a firm incurs in purchasing or hiring any factor of production is referred to as:
A. Explicit cost
B. Implicit cost
C. Variable cost
D. Fixed cost
Answer : A

30. The production function of homogeneous of degree one (n=1) is also called:
A. Linearly homogeneous
B. Zero homogeneous
C. Infinite homogeneous
D. None of the above
Answer : A

31. The addition or increment to the total cost involvesd in expanding or contracting output by one unit is called:
A. Fixed cost per unit
B. Variable cost per unit
C. Total cost per unit
D. Marginal cost
Answer : D

32. If two goods have same marginal utility for a consumer then:
A. He will consume only one of them
B. He will consume equal quantities of them
C. He will be willing to pay the same price for each of them
D. The total utility gained from each of them is equal
Answer : C

33. Total utility and price are:
A. Directly related
B. Unrelated
C. Closely related
D. Negatively related
Answer : B

34. In context of oligopoly, the kinky demand curve (kinked demand curve) hypothesis is designed to explain:
A. Price and output determination
B. Price rigidity (price stickness)
C. Price leadership
D. Collusion among rivals
Answer : B

35. The consumer is in equilibrium at the where:
A. Budget line and indifference curve intersect each other
B. Budget line and indifference curve are tangent to each other
C. Budget line and indifference curve are opposite to each other
D. Budget line and indifference curve are parallel to each other
Answer : B

36. Who wrote An Introduction to Positive Economics?
A. R.G.Lipsey
B. Paul.A.Samuelson
C. E.D.Domar
D. J.M.Keynes
Answer : A

37. In the long-run:
A. Fixed cost will be greater than variable cost
B. Variable costs will be greater than fixed costs
C. All costs are variable costs
D. All costs are fixed costs
Answer : C

38. All money costs can be regarded as:
A. Social costs
B. Opportunity costs
C. Explicit costs
D. Implicit costs
Answer : C

39. Income-elasticity of demand is expressed as:
A. % change in quantity demanded % change in income
B. % change in income % change in quantity demanded
C. Change in income Change in quantity demanded
D. None of the above
Answer : A

40. In monopolistic competition, the firm take advantage due to customers:
A. Similar choices
B. Unlimited choices
C. Differential choices
D. Few choices
Answer : C

41. If the commodity is normal then the Income Effect (I.E) and the Substitution Effect (S.E):
A. Both move together and reinforce each other
B. One moves and the other remains constant
C. Move in the opposite direction and neutralize each other
D. Both remain constant
Answer : A

42. Under monopoly and imperfect competition MC is:
A. More than the price
B. Less than the price
C. Equal to the price
D. Less than or equal to the price
Answer : B

43. Who wrote Economics of Imperfect Competition?
A. E.H.Chamberlin
B. Joan Robinson
C. E.A.G.Robinson
D. J.M.Keynes
Answer : B

44. Who is the author of Choice of Technique?
A. K.N.Raj
B. Amartiya Sen
C. A.C.Pigou
D. Alfred Marshal
Answer : B

45. Monopolistic firm can fix:
A. Both price and output
B. Eithr price or output
C. Neither price nor output
D. None of the above
Answer : B

46. Ordinal approach includes arranging:
A. The different combinations of X and Y in any way the consumer wants
B. The different combinations of X and Y higher and lower and measuring the difference of utility between them
C. The different combinations of X and Y higher and lower and not measuring the difference of utility between them
D. None of above
Answer : C

47. Plumbing and pipe-fitting require many of the same skills. If the wage paid to pipe-fitters increased then the effect on the market for plumbers would probably be:
A. An increase in demand
B. A decrease in demand
C. An increase in supply
D. A decrease in supply
Answer : D

48. In case of monopoly, TR curve rises at a:
A. Constant rate
B. Decreasing rate
C. Increasing rate
D. None of the above
Answer : B

49. If the supply curve is not a straight line but curvilinear, the elasticity on all points of the supply curve is:
A. Equal
B. Different
C. Zero
D. Infinity
Answer : B

50. An iso-product (an isoquant) curve slopes:
A. Downward to the left
B. Downward to the right
C. Upward to the right
D. Upward to the left
Answer : B