Basics of Economics MCQ Solved Paper for NEET
Thursday 9th of March 2023
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1. Identify the work of Irving Fisher:
A. Policy on trade
B. Policy against inflation
C. The making of index numbers
D. Labor theory
Answer : C
A. Policy on trade
B. Policy against inflation
C. The making of index numbers
D. Labor theory
Answer : C
2. 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
A. 1756
B. 1777
C. 1776
D. 1801
Answer : C
3. 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
A. Less than one
B. Equal to one
C. Greater than one
D. Less than one
Answer : C
4. 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
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
5. In monopoly, the relationship between average revenue and marginal revenue curves is as follows:
A. Average revenue curve lies above the marginal revenue curve
B. Average revenue curve coincides with the marginal revenue curve
C. Average revenue curve lies below the marginal revenue curve
D. Average revenue curve is parallel to the marginal revenue curve
Answer : A
A. Average revenue curve lies above the marginal revenue curve
B. Average revenue curve coincides with the marginal revenue curve
C. Average revenue curve lies below the marginal revenue curve
D. Average revenue curve is parallel to the marginal revenue curve
Answer : A
6. In case of perfect competition, TR curve rises at a:
A. Constant rate
B. Decreasing rate
C. Increasing rate
D. None of the above
Answer : A
A. Constant rate
B. Decreasing rate
C. Increasing rate
D. None of the above
Answer : A
7. A monopolist:
A. Can not influence the market
B. Can influence the market
C. Is a price taker
D. None of the above
Answer : B
A. Can not influence the market
B. Can influence the market
C. Is a price taker
D. None of the above
Answer : B
8. The cost of one thing in terms of the alternative given up is known as:
A. Production cost
B. Physical cost
C. Real cost
D. Opportunity cost
Answer : D
A. Production cost
B. Physical cost
C. Real cost
D. Opportunity cost
Answer : D
9. Which of the following does not have a uniform elasticity of demand at all points?
A. A vertical demand curve
B. A horizontal demand curve
C. A rectangular hyperbola demand curve
D. A downward sloping demand curve
Answer : D
A. A vertical demand curve
B. A horizontal demand curve
C. A rectangular hyperbola demand curve
D. A downward sloping demand curve
Answer : D
10. 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
A. Zero (perfectly inelastic)
B. Equal to one (unitary elastic)
C. Infinite (perfectly elastic)
D. None of the above
Answer : C
11. If two households have identical preferences but different incomes then:
A. They must consume the same amounts of all goods
B. The wealthier one will have lower marginal utility for most goods
C. The wealthier one will have higher marginal utility for most goods
D. They will enjoy the same level of utility
Answer : B
A. They must consume the same amounts of all goods
B. The wealthier one will have lower marginal utility for most goods
C. The wealthier one will have higher marginal utility for most goods
D. They will enjoy the same level of utility
Answer : B
12. Microeconomics deals with the:
A. Allocation of resources of the economy as between production of different goods and services
B. Determination of prices of goods and services
C. Behavior of industrial decision makers
D. All of the above
Answer : D
A. Allocation of resources of the economy as between production of different goods and services
B. Determination of prices of goods and services
C. Behavior of industrial decision makers
D. All of the above
Answer : D
13. The kink demand curve faced by an oligopolist is based on the assumption that:
A. Competitors will follow a price increase but not a price cut
B. Competitors will follow a price increase as well as a price cut
C. Competitors will ignore both a price increase and a price cut
D. Competitors will ignore a price increase but will follow a price cut
Answer : D
A. Competitors will follow a price increase but not a price cut
B. Competitors will follow a price increase as well as a price cut
C. Competitors will ignore both a price increase and a price cut
D. Competitors will ignore a price increase but will follow a price cut
Answer : D
14. At the point where the straight line from the origin is tangent to the TC curve, AC is:
A. Maximum
B. Minimum
C. Equal
D. Lower
Answer : B
A. Maximum
B. Minimum
C. Equal
D. Lower
Answer : B
15. Who first used the term Quasi-Rent?
A. David Ricardo
B. Alfred Marshal
C. J.S.Mill
D. Karl Marx
Answer : B
A. David Ricardo
B. Alfred Marshal
C. J.S.Mill
D. Karl Marx
Answer : B
16. Marginal cost is the cost:
A. Of the last unit of production
B. Of marginal unit
C. Of marginal efficient units
D. Of the average units of production
Answer : A
A. Of the last unit of production
B. Of marginal unit
C. Of marginal efficient units
D. Of the average units of production
Answer : A
17. The expansion point is attained by joining:
A. Similar optimal combinations
B. Different optimal combinations
C. Both of them
D. None of them
Answer : B
A. Similar optimal combinations
B. Different optimal combinations
C. Both of them
D. None of them
Answer : B
18. 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
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
19. External economies are witnessed in:
A. A rising supply curve
B. A rising demand curve
C. A falling supply curve
D. A falling demand curve
Answer : D
A. A rising supply curve
B. A rising demand curve
C. A falling supply curve
D. A falling demand curve
Answer : D
20. If in the long run, output increases in the same proportion as increase in all the input in the given proportion, this is known as:
A. Increasing returns to scale
B. Decreasing returns to scale
C. Constant returns to scale
D. Variable returns to scale
Answer : C
A. Increasing returns to scale
B. Decreasing returns to scale
C. Constant returns to scale
D. Variable returns to scale
Answer : C
21. In monopolistic competition, if a firm lowers its price, the rival firms will:
A. Also lower their prices
B. Increase their prices
C. Show no reaction
D. None of the above
Answer : A
A. Also lower their prices
B. Increase their prices
C. Show no reaction
D. None of the above
Answer : A
22. Short run cost curves are influenced by:
A. Principle of returns to scale
B. Law of variable proportions
C. External and internal economies and diseconomies
D. None of the above
Answer : B
A. Principle of returns to scale
B. Law of variable proportions
C. External and internal economies and diseconomies
D. None of the above
Answer : B
23. Abstinence or Waiting theory of Interest was presented by:
A. Lord Keynes
B. J.S.Mill
C. Alfred Marshal
D. Prof.Senior
Answer : D
A. Lord Keynes
B. J.S.Mill
C. Alfred Marshal
D. Prof.Senior
Answer : D
24. A monopolist is able to maximize his profit when:
A. His output is maximum
B. He charges a high price
C. His average cost is minimum
D. His marginal revenue is equal to marginal cost
Answer : D
A. His output is maximum
B. He charges a high price
C. His average cost is minimum
D. His marginal revenue is equal to marginal cost
Answer : D
25. 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
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
26. In case of monopoly, the price charged against the additional unit is:
A. Not different
B. Same
C. Not same
D. Zero
Answer : C
A. Not different
B. Same
C. Not same
D. Zero
Answer : C
27. The maximization of output subject to cost requires equilibrium at the:
A. Lowest isoquant
B. Lowest isocost line
C. Highest isoquant
D. Highest isocost line
Answer : C
A. Lowest isoquant
B. Lowest isocost line
C. Highest isoquant
D. Highest isocost line
Answer : C
28. In short-run, in monopolistic competition, a firm earns:
A. Normal profits
B. Abnormal profits
C. No profits
D. All of the above
Answer : B
A. Normal profits
B. Abnormal profits
C. No profits
D. All of the above
Answer : B
29. The Chamberline model recognizes mutual:
A. Independence of firms
B. Interdependence of firms
C. Independence of individuals
D. Interdependence of materials
Answer : B
A. Independence of firms
B. Interdependence of firms
C. Independence of individuals
D. Interdependence of materials
Answer : B
30. In monopolistic competition, the individual demand curve is also known as:
A. Planned products curve
B. Planned material curve
C. Planned costs curve
D. Planned sales curve
Answer : D
A. Planned products curve
B. Planned material curve
C. Planned costs curve
D. Planned sales curve
Answer : D
31. 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
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
32. In monopolistic competition, the firms have to face:
A. Same cost conditions
B. Different cost conditions
C. Same price conditions
D. Same products conditions
Answer : B
A. Same cost conditions
B. Different cost conditions
C. Same price conditions
D. Same products conditions
Answer : B
33. A budget line shows:
A. Price of commodity X in terms of Y
B. Price of commodity Y in term of X
C. Income of the consumer
D. All of the above
Answer : D
A. Price of commodity X in terms of Y
B. Price of commodity Y in term of X
C. Income of the consumer
D. All of the above
Answer : D
34. Which form of market structure is characterized by interdependence in decision-making as between the different competing firms?
A. Oligopoly
B. Perfect competition
C. Imperfect competition
D. None of the above
Answer : A
A. Oligopoly
B. Perfect competition
C. Imperfect competition
D. None of the above
Answer : A
35. In substitution effect, we:
A. Move to another indifference curve
B. Move along given indifference curve
C. Move to a higher indifference curve
D. Move to a lower indifference curve
Answer : B
A. Move to another indifference curve
B. Move along given indifference curve
C. Move to a higher indifference curve
D. Move to a lower indifference curve
Answer : B
36. 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
A. 1st firm does not cooperate
B. 1st firm cooperates
C. 1st firm collapses
D. None of the above
Answer : B
37. In arriving at stable equilibrium in cournot model, if one firm decreases output the other firm will:
A. Also decrease it
B. Increase it
C. Remain uneffected
D. None of the above
Answer : B
A. Also decrease it
B. Increase it
C. Remain uneffected
D. None of the above
Answer : B
38. All the firms with identical costs under perfect competition well, in the long-run, earn only:
A. Normal profits
B. Abnormal profits
C. Differential profits
D. No profits
Answer : A
A. Normal profits
B. Abnormal profits
C. Differential profits
D. No profits
Answer : A
39. In cournot model, firms make decisions separately regarding:
A. output
B. input
C. price
D. advertisement
Answer : A
A. output
B. input
C. price
D. advertisement
Answer : A
40. 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
A. Infinitely elastic demand
B. Infinitely inelastic demand
C. Relatively elastic demand
D. Relatively inelastic demand
Answer : A
41. The fixed cost of a firm:
A. Are fixed even in the long period
B. When expressed as an average, show a continuous decline with increase of output
C. Do not reflect diminishing marginal returns
D. None of the above
Answer : A
A. Are fixed even in the long period
B. When expressed as an average, show a continuous decline with increase of output
C. Do not reflect diminishing marginal returns
D. None of the above
Answer : A
42. In case of monopoly, when total revenue is maximum:
A. MR is positive
B. MR falls
C. MR rises
D. MR is zero
Answer : D
A. MR is positive
B. MR falls
C. MR rises
D. MR is zero
Answer : D
43. In the long run:
A. All factors can be used in different proportions
B. Management can be re-organized
C. A firm can experience returns to scale
D. All of the above
Answer : D
A. All factors can be used in different proportions
B. Management can be re-organized
C. A firm can experience returns to scale
D. All of the above
Answer : D
44. Firms average and marginal revenues are equal under:
A. Monopoly
B. Perfect competition
C. Oligopoly
D. Monopolistic competition
Answer : B
A. Monopoly
B. Perfect competition
C. Oligopoly
D. Monopolistic competition
Answer : B
45. 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
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
46. Identify the coefficient of price-elasticity of demand when the percentage increase in the quantity of a commodity demanded is smaller than the percentage fall in its price:
A. Equal to one
B. Greater than one
C. Smaller than one
D. Zero
Answer : C
A. Equal to one
B. Greater than one
C. Smaller than one
D. Zero
Answer : C
47. Given a U shaped average cost curve, the relationship between average cost and marginal cost is such that marginal cost must always be:
A. Falling when average cost is falling
B. Rising when average cost is falling
C. Falling when average cost is rising
D. Rising when average cost is rising
Answer : D
A. Falling when average cost is falling
B. Rising when average cost is falling
C. Falling when average cost is rising
D. Rising when average cost is rising
Answer : D
48. Labor Saving Technological Progress can be defined as:
A. Technological 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
A. Technological 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
49. Increase in demand occurs when:
A. The price falls and the demand also falls down
B. The price increases but demand falls down
C. The price increases the demand remains constant and when the price remains constant the demand goes up
D. The price remains constant but demand falls
Answer : C
A. The price falls and the demand also falls down
B. The price increases but demand falls down
C. The price increases the demand remains constant and when the price remains constant the demand goes up
D. The price remains constant but demand falls
Answer : C
50. The difference between average cost and average revenue is:
A. Total profit
B. Average profit
C. Net profit
D. Marginal profit
Answer : B
A. Total profit
B. Average profit
C. Net profit
D. Marginal profit
Answer : B
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