1000+ Basics of Economics MCQ for JEE Main [Solved]

1. Monopoly means:
A. Where there is no retail trade and every thing is sold on wholesale basis
B. Where trading of a particular commodity is controlled exclusively by one firm
C. Where many people sell only one commodity
D. A form of business organization in which only single proprietorship exists
Answer : B

2. Whenever a group of monopolistic competitors attains equilibrium, the firms in this group usually:
A. Charge different prices, but produce identical outputs
B. Produce different outputs, but charge identical prices
C. Charge different prices, and produce different outputs
D. None of the above
Answer : C

3. In substitution effect, we:
A. Move to another indifference curve
B. Move along given indifference curve
C. Move to a higher indifference curve
D. Move to a lower indifference curve
Answer : B

4. Which industries spend a relatively large share of their revenue on research and development in order to keep up with their competitors?
A. Grocery stores
B. High-Tech industries
C. Automobiles
D. Construction
Answer : B

5. To attain maximum profits during short-run a firm should produce the output that will:
A. Yield maximum total revenue
B. Minimize marginal cost
C. Maximize marginal cost
D. Equate marginal revenue with marginal cost
Answer : D

6. In the case of substitutes, the cross demand curve slopes
A. Downwards to the right
B. Upwards to the right
C. Backwards to the right
D. Inwards at the bottom
Answer : B

7. In general, most of the production functions measure:
A. The productivity of factors of production
B. The relation between the factors of production
C. The economies of scale
D. The relations between change in physical inputs and physical output
Answer : B

8. The basic subject matter of economics is:
A. Money
B. Capital resources
C. Scarcity
D. Inflation
Answer : B

9. In monopolistic competition, if a firm lowers its price, the rival firms will:
A. Also lower their prices
B. Increase their prices
C. Show no reaction
D. None of the above
Answer : A

10. The Cambridge School of Thought refers to the group of English economists who came under the influence of:
A. Alfred Marshal
B. J.M.Keynes
C. Paul A.Samuelson
D. A.C.Pigou
Answer : A

11. When total revenues equal to total opportunity cost then the firm will earn:
A. Abnormal profit
B. Zero profit
C. Normal profit
D. Negative profit
Answer : C

12. Who finalized the model of imperfect competition?
A. Ricardo
B. Marshal
C. Chamberlin
D. Mrs. Robinson
Answer : D

13. 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

14. When a consumer reached at the point of saturation then marginal utility (MU) is:
A. Negative
B. One
C. Positive
D. Zero
Answer : D

15. In cournot model firms:
A. Cannot make price adjustments
B. Can make price adjustments
C. Can adjust number of customers
D. None of the above
Answer : A

16. In modern cost theory, AVC= b1 and MC= b1 in the range of:
A. Excess capacity
B. Reserve capacity
C. Limited capacity
D. None of the above
Answer : B

17. The advantage of using indifference curves rather than marginal utilities is:
A. We do not need to attach util values to consumption
B. Consumers can attain higher utility
C. It takes into account how much income the household has
D. We can determine how much of one good the consumer is willing to sacrifice in order to consume one more unit of another
Answer : A

18. The nominal income of a consumer is income in terms of:
A. Goods
B. Goods and services
C. Goods and services it can purchased
D. Monetary units
Answer : D

19. Equilibrium of a firm represents maximization of profits as well as:
A. Maximization of losses
B. Minimization of losses
C. Minimization of profits
D. None of the above
Answer : B

20. If a ten percent increase in price causes a ten percent reduction in quantity demanded, elasticity of demand is:
A. Perfectly elastic
B. Elastic
C. Unitary elastic
D. Inelastic
Answer : C

21. The minimization of costs subject to output requires equilibrium at the lowest:
A. Isoquant line
B. Isocost line
C. Indifference curve
D. Price line
Answer : B

22 In Recardian theory of value, the stress has been made on:
A. Marginal cost
B. Production cost
C. Labor cost
D. Supply cost
Answer : A

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

24. The cost of production is faced by a:
A. Producer
B. Consumer
C. Seller
D. Firm
Answer : D

25. The good will highest income elasticity is:
A. Beef
B. Mutton
C. Bread
D. Motion-picture tickets
Answer : D

26. In monopolistic competition, the individual demand curve is also known as:
A. Planned products curve
B. Planned material curve
C. Planned costs curve
D. Planned sales curve
Answer : D

27. In monopoly, the relationship between average revenue and marginal revenue curves is as follows:
A. Average revenue curve lies above the marginal revenue curve
B. Average revenue curve coincides with the marginal revenue curve
C. Average revenue curve lies below the marginal revenue curve
D. Average revenue curve is parallel to the marginal revenue curve
Answer : A

28. The reaction curve of a firm is attained by joining the:
A. Isoprofit curve
B. Super profit curve
C. Normal profit curve
D. Indoprofit curve
Answer : A

29. According to Diamond Water Paradox diamonds are more expensive than water because:
A. They yield higher total utility
B. They yield higher marginal utility
C. They are more useful
D. None of the above
Answer : B

30. With an increase in income, consumer is expected to buy more of:
A. An inferior good
B. A giffen good
C. A normal(or superior) good
D. None of the above
Answer : C

31. A price is a ratio of exchange between:
A. Money and exchange
B. Quantity and production
C. Production and consumption
D. Money and quantity
Answer : D

32. When in a market, the number of buyers is very large and the number of sellers is very small, it is known as:
A. Monopoly
B. Oligopoly
C. Imperfect competition
D. Perfect competition
Answer : B

33. Duopoly is a market where there are:
A. Two sellers
B. A few sellers
C. Five sellers
D. Many sellers
Answer : A

34. If the price of Pepsi Cola goes down, you would predict:
A. An increase in supply of coca cola
B. A decrease in supply of coca cola
C. An increase in demand for coca cola
D. A decrease in demand for coca cola
Answer : D

35. Moving down along a linear demand curve:
A. Demand becomes less elastic
B. Elasticity does not change
C. Demand has unitary elasticity
D. Demand becomes more elastic
Answer : A

36. The factors of production in perfect competition are:
A. Stagnant
B. Mobile
C. Immobile
D. Rare
Answer : B

37. In real life, brand loyalty is a barrier to:
A. Enter the new firms
B. Exit the new firms
C. Both a and b
D. None of the above
Answer : A

38. Price effect occurs on the higher IC in case of:
A. Slutsky approach
B. Hicksian approach
C. Marshallian approach
D. None of the above
Answer : A

39. The game theory was basically presented by:
A. Ricardo
B. Marshal
C. Neomann and Morgenstern
D. Karl Marx
Answer : C

40. If the commodity is inferior 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 : C

41. The monopolist firm is price setter. The price setter firm is one which:
A. Can influence the market price
B. Cannot influence the market price
C. Can sell at zero price
D. None of the above
Answer : A

42. The isoquant which are generated by CES (constant elasticity of substitution) production function are always:
A. Positively sloped
B. Negatively sloped
C. Concave to the origin
D. None of the above
Answer : B

43. 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

44. Diminishing returns occur when a firm:
A. Starts incurring losses
B. Uses more and more of one input while holding all other inputs constant
C. Does not utilize its inputs efficiently
D. Cuts down on the quantity of all inputs it uses
Answer : B

46. In the long run:
A. All factors can be used in different proportions
B. Management can be re-organized
C. A firm can experience returns to scale
D. All of the above
Answer : D

47. In Edgeworth model, prices oscillate between:
A. Firms and industry price
B. Monopoly and duopoly price
C. Competitive and monopoly price
D. None of the above
Answer : C

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

49. In arriving at stable equilibrium in cournot model, if one firm decreases output the other firm will:
A. Also decrease it
B. Increase it
C. Remain uneffected
D. None of the above
Answer : B

50. The short-run periods in monopolistic competition are:
A. Parallel to each other
B. Dependent upon each other
C. Independent of each other
D. Zero
Answer : C