Basics of Economics MCQ Solved Paper for NDA

1. MC = MR = AC = AR shows the long run equilibrium position of the:
A. Competitive firm
B. Oligopolistic firm
C. Monopolist firm
D. None of the above
Answer : A

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

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

4. Income -elasticity of demand will be zero when a given change in income brings about:
A. A less than proportionate change in quantity demanded
B. A more than proportionate change in quantity demanded
C. The same proportionate change in quantity demanded
D. No change in quantity demanded
Answer : D

5. Which of the following oligopoly models is concerned with the maximization of joint profits?
A. Price leadership model
B. Bertrands model
C. Collusive model
D. Edgeworths model
Answer : C

6. 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

7. The Tit for Tat strategy means cooperation by the 2nd firm if:
A. 1st firm does not cooperate
B. 1st firm cooperates
C. 1st firm collapses
D. None of the above
Answer : B

8. To get more revenue, a Finance Minister impose tax on that commodity which has:
A. Inelastic demand
B. Elastic demand
C. Unit elasticity
D. Zero elasticity
Answer : A

9. In microeconomics, we study:
A. Aggregates of the economy
B. Few units of the economy
C. Large units of the economy
D. Individual units of the economy
Answer : D

10. When sales tax is imposed on monopolist, its:
A. Output is effected
B. Equilibrium is effected
C. Input is effected
D. Reputation is effected
Answer : B

11. An effective price ceiling usually results in:
A. Excess demand
B. Qd > Qs
C. Shortage of supply
D. All of the above
Answer : D

12. Each firm in cournot model starts selling:
A. 1/2 of the total market demand
B. 1/4 of the total market demand
C. 1/3 of the total market demand
D. None of the above
Answer : A

13. In 1776, a famous book An enquiry into the nature and causes of the wealth of nation was written by:
A. J.S.Mill
B. Adam Smith
C. Robert Malthus
D. David Ricardo
Answer : B

14. The average product is given as:
A. Q.L
B. Q- L
C. Q+ L
D. Q/L
Answer : D

15. 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

16. According to classical approach, utility can be:
A. Ranked
B. Consumed
C. Expressed in numbers
D. Cannot be expressed in numbers
Answer : C

17. A firm can never produce in the middle area of input space, in case of:
A. Concave isoquant
B. Convex isoquant
C. Constant isoquant
D. None of the above
Answer : A

18. The costs faced by the firm against fixed factors are:
A. Total costs
B. Fixed costs
C. Variable costs
D. Marginal costs
Answer : B

19. The short run cost curve is U shaped because of:
A. The operation of increasing cost
B. The existence of fixed cost
C. The existence of variable cost
D. All of the above
Answer : C

20. Which of the following is not an explicit cost of production?
A. Wage of self-employed proprietor
B. Depreciation on machinery
C. Returns on owned capital
D. Cost of raw materials
Answer : D

21. The non-price competition cartel is a:
A. stable cartel
B. unstable cartel
C. prominent cartel
D. special cartel
Answer : B

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

23. If the price of coffee increases, you would predict that:
A. Demand curve for sugar will shift downward (leftward)
B. Supply curve for sugar will shift leftward (upward)
C. Demand curve for bread will shift downward (leftward)
D. None of the above
Answer : A

24. Extension (expansion) and contraction of demand are result of:
A. Change in consumers income
B. Change in consumers tastes
C. Change in price
D. None of the above
Answer : C

25. 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

26. Who wrote Mathematical Analysis for Economists?
A. J.P.Lewis
B. R.G.D.Allen
C. Paul A.Samuelson
D. E.D.Domar
Answer : B

27. The firm producing at the minimum point of the AC curve is said to be:
A. Operating under diminishing cost
B. Making optimum use of plant capacity
C. Operating at excess capacity
D. Operating under increasing costs
Answer : B

28. Rent is a creation of value, not of wealth who made this observation?
A. Adam Smith
B. David Ricardo
C. Alfred Marshal
D. A.C.Pigou
Answer : B

29. Cross-demand curve shows:
A. The effect of a change in price of X on its demand
B. The effect of a change in price of X on the demand for Y
C. The effect of a change in price of Y on its demand
D. None of the above
Answer : B

30. Supply of a commodity refers to:
A. Total stock of a commodity in the market
B. Total production of a commodity during the year
C. Total production plus total stock of a commodity
D. Amount of commodity offered for sale at some price at a particular place and time
Answer : D

31. Slope of a demand curve is:
A. Not relevant to elasticity
B. The only factor determining elasticity
C. Only one of the factors influencing elasticity
D. None of the above
Answer : B

32. 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

33. In case of giffin good, price effect is:
A. Positive
B. Negative
C. Neutral
D. Infinite
Answer : A

34. From analysis, it is clear that both Marshal and Walras market models are:
A. Unstable
B. Stable
C. Variable
D. Fluctuating
Answer : B

35. If the marginal utility of apples to a consumer exceeds that of bananas then the consumer:
A. Is not in equilibrium
B. Will not buy any banana
C. Will buy some banana but less than he buys of apples
D. Is willing to pay more for apples than bananas
Answer : D

36. In monopoly, new firms:
A. Can enter and exit
B. Partially can enter and exit
C. Cannot enter
D. None of the above
Answer : C

37. 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

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

39. An indifference curve shows the bundles of two goods among which a consumer remains:
A. Indifferent
B. Different
C. In equilibrium
D. Dominant
Answer : A

40. The price consumption curve (PCC) for commodity X is the locus of points of consumer equilibrium resulting when:
A. The price of only Y is varied
B. The price of only X is varied
C. The prices of both Y and X are varied
D. None of the above
Answer : B

41. 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

42. 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

43. Which of the following theories of trade cycle was presented by William Jevons?
A. Sunspot Theory
B. Monetary Theory
C. Saving-Investment Theory
D. Innovation Theory
Answer : A

44. Labor Saving Technological Progress can be defined as:
A. Technlogical progress that causes to raise the marginal product of capital and labor in the same proportion
B. Technological progress that causes the marginal product of capital to increase relative to the marginal product of labor
C. Technological progress that causes the marginal product of labor to increase relative to the marginal product of capital
D. None of the above
Answer : B

45. In Prisoner Dilemma, the best choice of strategy is:
A. Stable
B. Unstable
C. Negative
D. Neutral
Answer : B

46. Using total revenue and total cost, a profit maximizing firm will be equilibrium at a point:
A. Where the gap between the two is the smallest
B. Where the gap between the two is the greatest
C. Where the two become equal
D. None of the above
Answer : B

47. Under competitive conditions, the industry will be in equilibrium:
A. When each firm is in equilibrium equating MC with MR
B. When all the firms are earning only normal profits
C. When firms outside have no tendency to enter the industry and those within, have no tendency to leave the industry
D. All of the above
Answer : B

48. 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

49. Economics define technology as:
A. Societys knowledge of production
B. Applied science
C. Knowledge of science and mathematics
D. None of the above
Answer : A

50. In the case of two factor inputs which are neither perfectly complementary nor perfect substitutes, the iso-product curve will be:
A. A downward sloping straight line
B. A downward sloping curve
C. An upward rising curve
D. Right angled iso-quants
Answer : B