1000+ Basics of Economics MCQ for CTET [Solved]

1. Elasticity (E) expressed by the term, 1>E>0, is:
A. Perfectly elastic
B. Relatively elastic
C. Unitary elastic
D. Relatively inelastic
Answer : D

2. MRSxy measures:
A. The amount of Y a consumer is willing to give up to obtain one additional unit of X and still remain on the same indifference curve
B. The amount of X a consumer is willing to give up to obtain one additional unit of Y and still remain on the same indifference curve
C. The amount of Y a consumer is willing to give up to obtain one additional unit of X and move to a higher indifference curve
D. The amount of X a consumer is willing to give up to obtain one additional unit of Y and move to a higher indifference curve
Answer : B

3. Which one of the following has been the most influential work of F.H.Knight?
A. Freedom and Reform
B. The Green Revolution
C. Economic Integration
D. Risk ,Uncertainty and Profit
Answer : D

4. Nash Equilibrium is stable:
A. They involve dominant strategies
B. They involves constant-sum games
C. Once the strategies are chosen, no player has an incentive to deviate unilaterally from them
D. None of the above
Answer : C

5. If both demand and supply were to increase then:
A. Quantity exchanged would fall and price would rise
B. Quantity exchanged and price would both fall
C. Quantity exchanged would rise and price might rise or fall
D. Quantity exchanged and price would both rise
Answer : C

6. Who wrote A Contribution to the Theory of Trade Cycle?
A. N.Kaldor
B. J.R.Hicks
C. A.C.Pigou
D. J.M.Keynes
Answer : B

7. Who is the author of the famous work Asian Drama: An Enquiry intro the Causes of Poverty of Nations?
A. Irving Fisher
B. J.B.Clark
C. J.M.Keynes
D. Gunnar Myrdal
Answer : D

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

9. The marginal revenues are derivatives of:
A. TR function
B. AR function
C. MR function
D. AP function
Answer : A

10. If the demand curve is inelastic then:
A. It may be nearly vertical
B. Quantity demanded is very sensitive to income
C. Demand is hardly affected by income
D. Close substitutes for the good are abundant
Answer : A

11. 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

12. Cross-elasticity of demand or cross-price elasticity between two substitutes will be:
A. Negative
B. Positive
C. Infinite
D. Zero
Answer : B

13. In short run, a firm would remain in business as long as which one of the following of cost is covered?
A. Total costs
B. Fixed costs
C. Variable costs
D. Constant costs
Answer : C

14. If the commodity is inferior then Income Effect (I.E) is:
A. Negative
B. Positive
C. Zero
D. Infinite
Answer : A

15. If the price of coffee increases, you would predict that:
A. Demand curve for sugar will shift downward (leftward)
B. Supply curve for sugar will shift leftward (upward)
C. Demand curve for bread will shift downward (leftward)
D. None of the above
Answer : A

16. 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

17. A firm will be in equilibrium when the lowest isocost is:
A. Tangent to the lowest isoquant
B. Tangent to the given isoquant
C. Above the given isoquant
D. Below the given isoquant
Answer : B

18. The basic and essential economic problems in a community are related to choice and:
A. Freedom
B. Scarcity
C. Social class
D. Politics
Answer : B

19. The imaginary differentiation is attributed to difference in:
A. Style
B. Salesmanship
C. Locality
D. All of these
Answer : D

20. In monopoly, new firms:
A. Can enter and exit
B. Partially can enter and exit
C. Cannot enter
D. None of the above
Answer : C

21. Cross-elasticity of demand or cross-price elasticity between two independent goods will be:
A. Negative
B. Positive
C. Infinite
D. Zero
Answer : D

22. Consumers are likely to get a variety of similar goods under:
strong>A. Monopoly
B. Perfect competition
C. Duopoly
D. Monopolistic competition
Answer : D

23. 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

24. When at a given price, the quantity demanded of a commodity is more than the quantity supplied, there will be:
A. An upward pressure on price
B. A downward pressure on price
C. Price will remain unaffected
D. All of the above
Answer : A

25. The vertical distance between TVC and TC is equal to:
A. MC
B. AVC
C. TFC
D. AC
Answer : C

26. In cournot model, during the process of adjustment, the number of firms:
A. Donot change
B. Change
C. Both a and b
D. None of the above
Answer : A

27. The elasticity of demand is equal to slope of demand function divided by:
A. Average demand function
B. Qualified demand function
C. Constructive demand function
D. Relative demand function
Answer : A

28. When a consumer is in equilibrium then slope of indifference curve is:
A. Equal to the slope of budget line
B. Greater than the slope of budget line
C. Smaller than the slope of budget line
D. Parallel to the slope of budget line
Answer : A

29. The difference between average cost and average revenue is:
A. Total profit
B. Average profit
C. Net profit
D. Marginal profit
Answer : B

30. If regardless of changes in its price, the quantity demanded of a commodity remains unchanged, then the demand curve for the commodity will be:
A. Horizontal
B. Vertical
C. Positively sloped
D. Negatively sloped
Answer : B

31. Which is the correct statement?
A. The U shape of long-run cost curve is less pronounced than the short-run cost curves
B. The U shape of the short-run cost curves is less pronounced than the long-run cost curves
C. The U shape of the long-run cost curve is more pronounced than the short-run cost curves
D. The long-run cost curves are never U shaped
Answer : A

32. Total utility:
A. Diminishes with increased consumption
B. Reflects the overall level of satisfaction of the consumer
C. Is directly related to the price the consumer is willing to pay for a good or service
D. Is independent of price changes
Answer : B

33. At the point where a straight line demand curve meets the quantity axis (x-axis), elasticity of demand is:
A. Equal to zero
B. Equal to one
C. Equal to infinite
D. More than one
Answer : A

34. On the total utility curve the economically relevant range is the portion over which:
A. The total utility is rising at a declining rate
B. The total utility is raising at an increasing rate
C. Total utility is maximum
D. Total utility is declining
Answer : A

35. In monopolistic competition, the customers are attached with one product because of:
A. Product similarity
B. Product differentiations
C. Product inferiority
D. None of the above
Answer : B

36. Price discrimination occurs when:
A. Different prices are charged to different consumers for homogenous products
B. Same prices are charged for differentiated products
C. Different prices are charged for homogenous goods for successive units to the same customer
D. Any of the above condition is present
Answer : D

37. Price elasticity of demand can be measured in the following way:
A. Percentage change in quantity demanded of a commodity divided by percentage change in price of that commodity
B. Change in quantity demanded of a commodity divided by change in price of that commodity
C. Percentage change in price of a commodity divided by percentage change in quantity demanded of that commodity
D. None of that commodity
Answer : A

38. 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

39. In case of monopoly:
A. MRB. MR>AR
C. MR=AR
D. AR=0
Answer : A

40. In monopolistic competition, the aim of the firm is to:
A. Maximize output
B. Minimize output
C. Minimize cost
D. Maximize profit
Answer : D

41. The Hicksian demand curve includes:
A. Substitution effect
B. Income effect
C. Both substitution and income effect
D. None of them
Answer : A

42. If we measure the elasticity of demand with the help of the average and marginal revenue, the formula is:
A. Ed = AR/ (AR- MR)
B. Ed = MR/ (AR-MR)
C. Ed = AR/(MR-AR)
D. Ed = AR/ MR
Answer : A

43. On an indifference map higher indifference curves show:
A. The same level of price
B. The same level of satisfaction
C. The higher level of satisfaction
D. The lower level of satisfaction
Answer : C

44. A firm considering what type of new plant to build is involved in a:
A. Immediate-run decision
B. Market period decision
C. Short-run decision
D. Long-run decision
Answer : D

45. A profit-maximizing monopolist in two separate markets will:
A. Charge the same price in both markets
B. Always charge a higher price in the market where he sells more
C. Always charge a higher price in the market where he sells less
D. Adjust his sales in the two markets so that his marginal revenue in each market just equals his aggregate marginal cost
Answer : D

46. Micro economics is concerned with:
A. Product markets
B. Factor markets
C. Supply and demand
D. a, b and c
Answer : D

47. In Nash Equilibrium:
A. Each player has a dominant strategy
B. No players have a dominant strategy
C. At least one player has a dominant strategy
D. Players may or may not have dominant strategies
Answer : D

48. In monopolistic competition, because of difference in choices, the firm charges:
A. Different prices
B. Similar prices
C. High prices
D. Low prices
Answer : A

49. Slope of a demand curve is:
A. Not relevant to elasticity
B. The only factor determining elasticity
C. Only one of the factors influencing elasticity
D. None of the above
Answer : B

50. Elasticity (E) expressed by the term, 8 >E>1, is:
A. Perfectly elastic (infinitely elastic)
B. Relatively elastic (greater than one elasticity)
C. Unitary elastic
D. Relatively inelasticity (less than one elasticity)
Answer : B