Basics of Economics 1000+ MCQ with answer for SSC Scientific Assistant

1. According to Marshal, the Law of Diminishing Marginal Utility:
A. Applies on both money and other commodities
B. Does not apply on money
C. Does not apply on bank money but applies on cash money
D. Applies on all the commodities except on money
Answer : A

2. 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

3. Microeconomics is also known as:
A. Price theory
B. Demand theory
C. Supply theory
D. Income theory
Answer : A

4. If demand is elastic and supply is inelastic then the burden of a tax on the good will be:
A. Borne mostly by producers
B. Borne mostly by consumers
C. Borne mostly by government
D. Shared equally by producers and consumers
Answer : A

5. Increasing returns is not caused by:
A. Specialization of labor
B. Technological advancement
C. Marketing economics
D. Varying factor proportions
Answer : D

6. 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

7. A country is advised to devalue (reduce external value of) its currency only when its exports face:
A. Inelastic demand in foreign markets
B. Elastic demand in foreign markets
C. Unit elastic demand in foreign markets
D. None of the above
Answer : B

8. When the slope of a demand curve is zero (also known as vertical demand curve) then elasticity will be:
A. Zero (perfectly inelastic)
B. Equal to one (unitary elastic)
C. Infinite (perfectly elastic)
D. None of the above
Answer : C

9. When with a change in price the total outlay (expenditures) on a commodity remains constant, it is a case of:
A. Perfect elasticity (infinitely elastic)
B. Perfect inelasticity (zero elasticity)
C. Unit elasticity
D. Zero elasticity (infinitely inelastic)
Answer : C

10. In respect of which of the following category of goods is consumers surplus highest?
A. Giffen goods
B. Necessities
C. Luxuries
D. Prestige goods
Answer : B

11. An exceptional demand curve is:
A. Downward sloping
B. Upward sloping
C. Horizontal straight line
D. Vertical straight line
Answer : B

12. When SAC curve rises, SMC curve lies its:
A. Below
B. Above
C. Equal level
D. None of the above
Answer : B

13. Which is not a central problem of an economy?
A. What to produce
B. How to produce
C. How to maximize private profit
D. For whom to produce
Answer : C

14. Airlines that try to lower fares in order to increase revenues believe that demand for airline services is:
A. Price elastic
B. Price inelastic
C. Income elastic
D. Income inelastic
Answer : A

15. If a monopolist is producing under decreasing cost conditions, increase in demand is beneficial to the society because:
A. Consumers get better quality goods
B. Cost of production falls and hence price will follow
C. Goods will be sold in many markets
D. None of the above
Answer : B

16. The production possibility curve (PPC) is concerned with:
A. Resources of the economy
B. Interests of the economy
C. Limitations of the economy
D. Qualities of the economy
Answer : A

17. Traditionally, the study of determination of price is called:
A. Theory of price
B. Theory of value
C. Theory of labor
D. Theory of cost
Answer : B

18. 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

19. 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

20. For the given production function, technical inefficiency is defined as:
A. Sets of points relating production function that maximizes output given input (labor) i.e. Q = f(L, K)
B. Sets of points relating production function that produces less output than possible for a given set of input (labor) i.e. Q < f(L, K)
C. Use of imported technology
D. None of the above
Answer : B

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

22. The game theory takes into consideration:
A. Reaction of rival firms
B. Reactions of people
C. No reaction of rival firms
D. None of the above
Answer : A

23. In short run, a firm can change its:
A. Total production
B. Fixed production
C. Variable production
D. None of the above
Answer : C

24. If the commodity is normal then price effect is:
A. Negative
B. Inverse
C. Positive
D. Both (a) and(b)
Answer : D

25. Each firm in cournot model can:
A. not ignor the activities of the rival
B. ignor the activities of the rival
C. both a and b
D. none of the above
Answer : A

26. 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

27. In the long-run:
A. Fixed cost will be greater than variable cost
B. Variable costs will be greater than fixed costs
C. All costs are variable costs
D. All costs are fixed costs
Answer : C

28. Even in the long-run equilibrium, the pure monopolist can make abnormal profits because of:
A. Advertising
B. His low LAC
C. Blocked entry
D. High price he charges
Answer : C

29. The price under perfect competition is settled by:
A. Producers
B. Sellers
C. Buyers
D. Sellers and buyers
Answer : D

30. In which case the elasticity shown by the different points of a curve is the same?
A. A straight line curve
B. A downward sloping demand curve
C. A rectangular hyperbola demand curve
D. None of the above
Answer : C

31. In a perfectly competitive market, suppliers must know:
A. The incomes of consumers
B. The price of the good
C. What other commodities households could substitute for the good
D. Consumers expectations of the future
Answer : B

32. According to Saint Thomas Aquinas value is determined by God, but prices by:
A. Consumers
B. Employees
C. People
D. Labor
Answer : C

33. The total revenue curve for monopolist is the shape of:
A. Circle
B. Rectangle
C. Parabola
D. None of the above
Answer : C

34. The indirect utility function is a homogeneous function of:
A. degree one
B. degree zero
C. degree less than one
D. degree greater than one
Answer : B

35. The total utility (TU) curve is:
A. Concave to X-axis
B. Convex to X-axis
C. Concave to Y-axis
D. Convex to Y-axis
Answer : A

36. 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

37. If the commodities X and Y are perfect complements then:
A.
B.
C.
D. None of the above
Answer : C

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

39. The production function can convey to a firm:
A. The cost of producing any given output
B. The various combinations of input that could be employed in production of any given quantity of output
C. The various combinations of input that should be used in producing any given quantity of output in an efficient manner
D. The maximum profit level of output
Answer : B

40. According to Robbins, economics is a:
A. Science of wealth
B. Science of national welfare
C. Science of optimality
D. Science of scarcity
Answer : D

41. 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

42. 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

43. 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

45. The situation of single buyer and single seller is called:
A. Monopoly
B. Multi-plant monopolist
C. Bilateral monopoly
D. Price discrimination
Answer : C

46. A demand curve which is horizontal and parallel to x-axis represents:
A. Infinitely elastic demand
B. Infinitely inelastic demand
C. Relatively elastic demand
D. Relatively inelastic demand
Answer : A

47. 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

48. 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

49. 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

50. If the price of product increases and in the result the demand for product B also increases then:
A. A and B are substitute goods
B. A and B are complementary goods
C. A is inferior to B
D. A is superior to B
Answer : A