Home

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

Thursday 9th of March 2023

Sharing is caring

Downlaod Basics of Economics MCQ PDF
1. Substitution effect means a consumer
A. Shifts away from the commodity the price of which has fallen
B. Shifts in favour of a commodity the price of which has risen
C. Shifts away from a commodity the price of which has risen, in favour of a commodity the price of which has fallen
D. None of the above
Answer : C
2. Any straight line supply which cuts the x-axis will have:
A. Zero elasticity
B. An elasticity greater than one
C. Unitary elasticity of supply
D. An elasticity less than one
Answer : B
3. Loanable funds theory of Interest was developed by:
A. Wicksell
B. Robert San
C. Ruskin
D. J.B.Say
Answer : A
4. The Substitution Effect (S.E) is always:
A. Negative
B. Zero
C. Positive
D. Infinite
Answer : A
5. When total product increases at a decreasing rate:
A. MP = AP
B. MP < AP
C. MP > AP =0
D. MP > AP
Answer : D
6. 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
7. If cross-elasticity of one commodity for another turns out to be zero, it means they are:
A. Close substitutes
B. Good complements
C. Completely unrelated (independent goods)
D. None of the above
Answer : C
8. In economic term water is a:
A. Free good
B. Economic good
C. Both of the above
D. None of the above
Answer : A
9. 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
10. The budget constraint can be written as:
A. X.PX + Y.PY = 1
B. X.PX + Y.PY < 1
C. X.PX + Y.PY > 1
D. X.PX + Y.PY = 0
Answer : A
11. If a straight line supply curve makes an intercept on the Y-axis, elasticity of supply is:
A. Equal to unity
B. Less than unity
C. More than unity
D. Zero
Answer : C
12. In the modern theory of costs, the level of production which the firm considers feasible is known as:
A. Input factor
B. Heavy factor
C. Output factor
D. Load factor
Answer : D
13. Demand is elastic when the coefficient of elasticity is:
A. greater than zero
B. less than one
C. greater than one
D. less than one
Answer : C
14. A firm in a position of equilibrium is supposed to be maximizing:
A. Output
B. Sales
C. Profits
D. None of the above
Answer : C
15. Who is the founder of classical school of thought?
A. David Ricardo
B. Adam Smith
C. T.R.Malthus
D. J.S.Mill
Answer : B
16. If the price of a product falls then quantity demanded tends to increase ceteris paribus because:
A. The MU/P ratio has decreased
B. Of the income and substitution effects
C. Consumers tend to feel poorer when prices fall
D. When price falls the demand curve shifts right
Answer : B
17. In monopolistic competition, the firm take advantage due to customers:
A. Similar choices
B. Unlimited choices
C. Differential choices
D. Few choices
Answer : C
18. In sweezy model (kinked demand curve model), the overall increase in costs of production:
A. Do not effect equilibrium
B. Affect equilibrium
C. Both a and b
D. None of the above
Answer : B
19. The word ECONOMICS is derived from the Greek terms meanings:
A. Political economy
B. Household Management
C. Production and consumption
D. Financial Accounting
Answer : B
20. Quantity demanded or supplied is measured in:
A. Monetary units
B. Physical units
C. Relative units
D. Constant units
Answer : B
21. Cross-elasticity of demand or cross-price elasticity between two complements will be:
A. Negative
B. Positive
C. Infinite
D. Zero
Answer : A
22. The water diamond paradox was firstly resolved with the help of:
A. Labor theory of value
B. Individual theory of value
C. Producer theory of value
D. Consumer theory of value
Answer : A
23. 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
24. The modern cost curves are based upon the idea of:
A. Fixed capacity
B. Specific capacity
C. Excess capacity
D. Reserve capacity
Answer : D
25. Income effect operates through an increase
A. In nominal income
B. In money income
C. In wages
D. In real income because of the fall of price of a commodity
Answer : D
26. 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
27. With the change in the factor prices, the slope of the expansion path will:
A. Not change
B. Also change
C. Increase
D. Decrease
Answer : B
28. 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
29. Which of the following is the work of A.C.Pigou?
A. Economics of Welfare
B. Commerce and Trade
C. Industrial Economics
D. None of the above
Answer : A
30. In finding equilibrium position of a profitmaximizing firm, which technique is most convenient?
A. Total revenue and total cost technique
B. Marginal revenue and marginal cost technique
C. Demand and supply technique
D. None of the above
Answer : B
31. In short run:
A. Labor is variable
B. Labor is fixed
C. Capital is variable
D. None of the above
Answer : A
32. Stable cobweb model is a:
A. Simple model
B. Dynamic model
C. Both of them
D. None of them
Answer : C
33. In Revealed Preference Theory, a consumer reveals preference for bundle of:
A. Two goods
B. A few goods
C. One good
D. Many goods
Answer : A
34. Opportunity costs are also known as:
A. Spill-over costs
B. Money costs
C. Alternative costs
D. External costs
Answer : C
35. Of the following, which one corresponds to fixed cost?
A. Payments for raw materials
B. Labor cost
C. Transportation charges
D. Insurance premium on property
Answer : D
36. In case of monopoly, both AR and MR fall, but MR falls:
A. Double to that of AR
B. 1/2 to that of AR
C. 2/3 to that of AR
D. Four times to that of AR
Answer : A
37. The cobweb model will convergent when the slope of:
A. Demand curve is more than supply curve
B. Supply curve is more than demand curve
C. Supply curve is equal to demand curve
D. None of the above
Answer : A
38. In case of monopoly, the price charged against the additional unit is:
A. Not different
B. Same
C. Not same
D. Zero
Answer : C
39. In repeated game, the Prisoners Dillemma can have a:
A. Non-cooperative outcome
B. Cooperative outcome
C. Dominant behavior
D. Recessive behavior
Answer : B
40. If the commodity is normal then fall in price will result in:
A. Increase the quantity demanded
B. Fixed the quantity demanded
C. Decrease the quantity demanded
D. None of the above
Answer : A
41. Efficient allocation of resources is achieved to a greater extent under:
A. Monopoly
B. Perfect competition
C. Monopolistic competition
D. Oligopoly
Answer : B
42. The largest possible loss that a firm will make in the short run is:
A. Zero
B. Its total fixed cost
C. Its total variable cost
D. Equal to one
Answer : B
43. The study of economic theory for the sake of certain objective is called:
A. Positive Economics
B. Normative Economics
C. Micro Economics
D. Development Economics
Answer : B
44. Who finalized the model of imperfect competition?
A. Ricardo
B. Marshal
C. Chamberlin
D. Mrs. Robinson
Answer : D
45. In perfect cartel, the:
A. Perfect competition price is charged
B. Monopoly price is charged
C. Monopoly price is not charged
D. None of the above
Answer : B
46. A monopoly producer has:
A. Control over production but not over price
B. Control neither on production nor on price
C. Control over consumers
D. Control over production as well as over price
Answer : D
47. The budget line is described by each of the following except:
A. Prices of products are assumed to be fixed
B. The consumer need not to spend all his income
C. Consumer income is assumed to be fixed
D. The slope represents relative prices
Answer : B
48. In monopolistic competition, the firm compete on the basis of:
A. Price
B. Entry
C. Both a and b
D. None of the above
Answer : C
49. In case of complementary factors, the isoquants are:
A. L-shaped
B. J-shaped
C. M-shaped
D. V-shaped
Answer : A
50. 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
Downlaod Basics of Economics MCQ PDF

Sharing is caring

Related Post