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

1. 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

2. 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

3. Demand is consumers:
A. Ability to get a commodity
B. Willingness to get a commodity
C. Willingness and ability to get a commodity
D. Desire for a commodity
Answer : C

4. Classical production function is:
A. Q = f(L)
B. U =f(X)
C. Q =f(K)
D. Q =f(L,K)
Answer : D

5. Other things remaining the same, when a consumers income increases his equilibrium point moves to:
A. A lower indifference curve
B. A lower PPC curve
C. Remains on same indifference curve
D. A higher indifference curve
Answer : D

6. The spending of money by the producer to influence consumers is an example of:
A. Derived demand
B. Joint demand
C. Demand creation
D. Compressed demand
Answer : C

7. The game theory concentrates on:
A. Gaming
B. Strategic decisions
C. Both a and b
D. None of the above
Answer : C

8. 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

9. If the demand curve remains unchanged and supply increases, the price will:
A. Rise
B. Fall
C. Remain the same
D. None of the above
Answer : B

10. In case of monopoly, the price charged against the additional unit is:
A. Not different
B. Same
C. Not same
D. Zero
Answer : C

11. The monopolist often lead to exploitation of:
A. Producers
B. Workers
C. Managers
D. Consumers
Answer : D

12. 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

13. 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

14. Under monopolistic competition, the products sold by the firms are:
A. Economic substitutes
B. Technical substitutes
C. Both a and b
D. None of the above
Answer : C

15. The advertisement and other selling activities:
A. Lessen the differentiation
B. Widen the differentiation
C. Does not effect the differentiation
D. All of the above
Answer : B

16. 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

17. Technological efficiency:
A. Is the same as economic efficiency
B. Is achieved when the output produced is maximum for the given level of inputs
C. Means that there is only one way to produce a given quantity of output
D. None of the above
Answer : B

18. 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

19. 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

20. When was Adam Smiths major work An Enquiry into the Nature and Causes of Wealth of Nations published?
A. 1756
B. 1777
C. 1776
D. 1801
Answer : C

21. Identify the author of The Affluent Society?
A. Gunnar Myrdal
B. N.Kaldor
C. A.C.Pigou
D. J.K.Galbraith
Answer : D

22. 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 he opposite direction and neutralize each other
D. Both remain constant
Answer : C

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

24. Income-demand curve shows:
A. Income-expenditure relationship
B. Income-cost relationship
C. Income-price relationship
D. Income-quantity relationship
Answer : D

25. The main contribution of Alfred Marshal is in the field of:
A. Research in mathematical economics
B. Economics of labor
C. Theory of production
D. Theory of demand
Answer : D

26. Marginal revenue from a given output:
A. The price at which the marginal unit sells
B. Total revenue sale of all units divided by volume of sales
C. Average revenue of total output average revenue of last unit
D. The change in total revenue resulting from the sale of one unit more of output
Answer : D

27. In the immediate run:
A. Supply curves are inelastic
B. Supply curves are perfectly elastic
C. Demand curves are elastic
D. Supply curves are elastic
Answer : A

28. Any expansion in output by a firm in the short period will always reduce the:
A. Average variable cost
B. Average fixed cost
C. Both average fixed and variable cost
D. None of the above
Answer : B

29. A monopolist is:
A. Price winner
B. Price searcher
C. Price taker
D. Price leaver
Answer : B

30. 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

31. In modern theory, LAC = LMC after the attainment of:
A. Maximum optimal scale
B. Average optimal scale
C. Minimum optimal scale
D. None of the above
Answer : C

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

33. Who introduced the concept of Elasticity of Demand into economic theory?
A. Alfred Marshal
B. Adam Smith
C. Karl Marx
D. George Stigler
Answer : A

34. 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

35. 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

36. 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

37. Average cost curve contains in it:
A. Normal profits
B. No normal profits
C. Sometimes normal profits and sometimes no normal profits
D. Super normal profits
Answer : A

38. If a straight line supply curve makes an intercept on the X-axis, the elasticity of supply is:
A. Equal to unity
B. Less than unity
C. More than unity
D. Zero
Answer : B

39. Under the law of variable proportions, the average and the marginal product of the variable factor would ultimately:
A. Become equal
B. Decrease
C. Become constant
D. Increase
Answer : B

40. The relationship between AC and MC curves depend upon the behavior of:
A. AP curves
B. MP curves
C. Both of them
D. None of them
Answer : C

41. The normal long-run average cost curve is influenced by the:
A. Principle of diminishing returns
B. Economies and diseconomies of large scale production
C. Principle of constant return to scale
D. All of the above
Answer : B

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

43. In the case of an inferior good, the income effect:
A. Partially offsets the substitution effect
B. Reinforces the substitution effect
C. Is equal to the substitution effect
D. More than offsets the substitution effect
Answer : A

44. Consumer surplus is the difference between
A. Price demanded and price paid
B. Price quoted and price actually paid
C. Price that a consumer is willing to pay and the price actually paid
D. None of the above
Answer : C