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1000+ Basics of Economics Multiple Choice Question Answer [Solved]

Thursday 9th of March 2023

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Downlaod Basics of Economics MCQ PDF
1. The effect of consumer boycotts usually is:
A. A rise in the price of the product
B. A decrease in the demand for the product
C. A decrease in the supply of the product
D. An increase in the quantity supplied of the product
Answer : B
2. 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
3. If the demand for good is less 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 : B
4. Identify the author of The Principles of political Economy and Taxation:
A. Alfred Marshal
B. J.S.Mill
C. David Ricardo
D. A.C.Pigou
Answer : C
5. A monopolist will fix the equilibrium output of his product where the elasticity of his average revenue curve is:
A. Less than one
B. Equal to one
C. Greater than one
D. Less than one
Answer : C
6. Which of the following is not a feature of isoproduct curves?
A. Are downward sloping to the right
B. Show different input combination producing the same output
C. Intersect each other
D. Are convex to the origin
Answer : C
7. 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
8. The arc elasticity is the measure of average elasticity at the mid-point of the chord and connects:
A. Two points on demand curve
B. Two points on supply curve
C. Many points on demand curve
D. Many points on demand curve
Answer : A
9. Who is the author of Problems of Capital Formation in Underdeveloped Countries?
A. R.Nurkse
B. N.Kaldor
C. S.kuznets
D. Alfred Marshal
Answer : A
10. If a straight line supply curve passes through the point of origin O, the elasticity of supply is:
A. Zero
B. Infinity
C. Unity
D. More than unity
Answer : C
11. Abstinence or Waiting theory of Interest was presented by:
A. Lord Keynes
B. J.S.Mill
C. Alfred Marshal
D. Prof.Senior
Answer : D
12. The game theory concentrates on:
A. Gaming
B. Strategic decisions
C. Both a and b
D. None of the above
Answer : C
13. An effective price ceiling usually results in:
A. Excess demand
B. Qd > Qs
C. Shortage of supply
D. All of the above
Answer : D
14. The right of individuals to control productive resources is known as:
A. Monopoly
B. Private property
C. Workable competition
D. Oligopoly
Answer : B
15. In perfect competition, the slope of the total revenue curve of a firm is equal to the:
A. Market price
B. AVC
C. TFC
D. AFC
Answer : A
16. The demand curve of ostentation goods (Veblen goods) will be:
A. Negatively sloped
B. Positively sloped
C. Parallel to X-axis
D. None of the above
Answer : B
17. The number of firms in monopolistic competition normally range between:
A. 14 to 28
B. 14 to 80
C. 14 to 38
D. 14 to 60
Answer : B
18. The cross-price elasticity of the demand for orange juice with respect to the price of apple juice is probably:
A. Negative
B. Positive
C. Near infinite
D. Zero
Answer : B
19. If in the long run all factor inputs are increased three times and the resulting output is four times as before, it is a case of:
A. Decreasing returns to scale
B. Variable returns to scale
C. Constant returns to scale
D. Increasing returns to scale
Answer : D
20. In real life firms:
A. Loss because of past
B. Learn from past
C. Destroy because of past
D. None of the above
Answer : B
21. According to translog production function, elasticity of substitution is:
A. Greater than one
B. Less than one
C. Zero
D. Equal to one
Answer : D
22. The external economies of scale experienced by a firm include the:
A. Growth of firms processing its waste materials
B. Development of research bureau serving the industry
C. Supply of suitable skilled labor in the area D. All of the above
Answer : D
23. Rational economic behavior on the part of the consumer means that he will:
A. Save as much of his income as possible
B. Spend as much of his income as possible
C. Buy everything at the lowest possible price
D. Make wise choices among available economic goods
Answer : D
24. Least cost combination of two factor inputs is achieved at a point where:
A. Budget line cuts the isoquant
B. Budget line is below the isoquant
C. Budget line is tangent with isoquant
D. None of the above
Answer : C
25. In discriminating monopoly (price discrimination), the cost of production in two markets are:
A. Different
B. Same
C. Zero
D. None of the above
Answer : B
26. Income-demand curve shows:
A. Income-expenditure relationship
B. Income-cost relationship
C. Income-price relationship
D. Income-quantity relationship
Answer : D
27. Normally when price per unit of time falls:
A. Quantity demanded increases
B. Quantity demanded decreases
C. Quantity demanded remains constant
D. Quantity demanded becomes zero
Answer : A
28. A budget line shows:
A. Quantities of commodity X which a consumer could buy with no amount of Y
B. Quantities of commodity Y which a consumer could buy with no amount of X
C. The different combinations of X and Y that the consumer could buy
D. All of the above
Answer : D
29. In the case where two commodities are good substitutes then cross elasticity will be:
A. Positive
B. Unitary
C. Negative
D. Infinite
Answer : A
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. If, at the prevailing price, more of a good is desired than is available for sale:
A. The price is below equilibrium
B. The price is at equilibrium
C. The price must fall
D. We cannot tell anything about the price
Answer : A
32. The isoquant approach is:
A. Classical approach
B. Keynesian approach
C. Neo-classical approach
D. Modern approach
Answer : C
33. Which of the following conditions is met in the long-run equilibrium in monopolistic competition, where the firm is earning only normal profits?
A. MC =AC and PB. MC = AC and P=MR
C. P =MC and PD. MC=MR and P =AR= ATC
Answer : D
34. Price discrimination is undertaken with the aim of:
A. Increasing sales and maximizing profits
B. Reducing sales and raising prices
C. Minimizing cost and maximizing revenue
D. Serving the markets without earning profits
Answer : A
35. An income demand curve of an inferior good is:
A. Upward sloping
B. Downward sloping
C. Constant in slope
D. None of the above
Answer : B
36. Elasticity of demand is equal to unity while marginal revenue is:
A. Positive
B. Zero
C. Negative
D. Indeterminate
Answer : B
37. To calculate the elasticity of demand, which of the following formula is used?:
A. Percentage change in demand Original demand
B. Proportionate change in demand Proportionate change in price
C. Change in demand Change in price
D. None of the above
Answer : B
38. 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
39. Which of the following formula determine the income elasticity of demand?:
A. Proportionate change in demand Proportionate change in price
B. Proportional change in the purchase of Y Proportional change in the price of X
C. Proportionate change in demand Proportionate change in income
D. Proportionate change in demand Proportionate change in price
Answer : C
40. According to marginalistic rule, the profit maximization hypothesis requires:
A. MCB. MC>MR
C. MC=AP
D. MC=MR
Answer : D
41. Revealed Preference Theory was presented by:
A. Ricardo
B. Adam Smith
C. Pigou
D. Samuelson
Answer : D
42. According to Saint Thomas Aquinas value is determined by God, but prices by:
A. Consumers
B. Employees
C. People
D. Labor
Answer : C
43. The vertical demand curve for a commodity shows that its demand is:
A. Highly elastic
B. Perfectly inelastic
C. Fairly elastic
D. Moderately elastic
Answer : B
44. A mixed economy is characterized by the coexistence of:
A. Modern and traditional industries
B. Public and private sectors
C. Foreign and domestic investments
D. Commercial and subsistence farming
Answer : B
45. The amount of income left over for a consumer in equilibrium is :
A. Consumer surplus
B. Zero
C. Two rupees
D. Excess demand
Answer : B
46. With elasticity of demand, the:
A. Negative sign is ignored
B. Positive sign is ignored
C. None of them
D. Both of them
Answer : A
47. The shape of the TC curve is:
A. U
B. V
C. P
D. S(inverted)
Answer : D
48. Karl Marx:
A. Led the Russian Revolution
B. Provided the theoretical basis for socialism(communism)
C. Developed his theory in response to the Great Depression of the 1930s
D. None of the above
Answer : B
49. In cournot model, firms make decisions separately regarding:
A. output
B. input
C. price
D. advertisement
Answer : A
50. MC curve is:
A. L-shaped
B. U-shaped
C. V-shaped
D. Both a and b depending on situation
Answer : D
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