Explore topic-wise MCQs in Economics Mcqs.

This section includes 80 Mcqs, each offering curated multiple-choice questions to sharpen your Economics Mcqs knowledge and support exam preparation. Choose a topic below to get started.

51.

In which of the following cases is the assumption most reasonable ?
A. To address the impact to taxes on income distribution an economist assumes that everyone earns the same income.
B. To address the impact of money growth on inflation, an economist assumes that money is strictly coins.
C. To model the benefits of trade. an economist assumes that there are two people and two goods
D. To estimate the speed at which a beach ball falls, a physicist assumes that if falls in a vacuum.
Answer» D. To estimate the speed at which a beach ball falls, a physicist assumes that if falls in a vacuum.
Discussion
52.

Economic models are ?
A. Usually made of wood and plastic
B. built with assumptions.
C. useless if they are simple.
D. created to duplicate reality.
Answer» C. useless if they are simple.
Discussion
53.

Economic profit is equal to total revenue minus ?
A. variable costs
B. implicit costs
C. explicit costs
D. marginal costs
Answer» C. explicit costs
Discussion
54.

Which of the following statements regarding the circular-flow diagram is true ?
A. If Susan works for BAe Systems and receives a salary payment, the transaction takes place in the market for good and services.
B. If BAe Systems sells a military aircraft, the transaction takes place in the market for factors for production
C. None of these
D. The factors of production are owned by households
Answer» E.
Discussion
55.

The efficient scale of production is the quantity of output that minimizes ?
A. average fixed cost
B. average total cost
C. average variable cost
D. marginal cost
Answer» C. average variable cost
Discussion
56.

Which of the following is a variable cost in the short run ?
A. rent on the factory
B. wages paid to factory labor
C. interest payments on borrowed financial capital
D. payments on the lease for factory equipment
E. salaries paid to upper management
Answer» F.
Discussion
57.

Rank utilitarianism liberalism, and libertarianism in sequence from the political philosophy that would redistribute income the greatest to the one that would redistribute income the least?
A. utilitarianism, liberalism, libertarianism
B. All three political philosophies argue for similar degree of income redistribution
C. liberalism, libertarianism, utilitarianism
D. libertarianism liberalism, utilarianism
E. libertariansim, utilitarianism, libertarianism
Answer» F.
Discussion
58.

Permanent income is ?
A. Social Security income of the elderly and disabled
B. none of these answers
C. wages fixed by a union or other labour contract
D. equal to the minimum wage
E. a person’s normal or average income
Answer» F.
Discussion
59.

Rawls’s suggestion that policy should be directed at maximizing the welfare of the least well off person in society is derived from ?
A. the idea that people should consider policy as if behind a veil of ignorance as to what their circumstances might be in society, and the idea that as
B. the idea that people should consider policy as if behind a veil of ignorance as to what their circumstances might be in society, and the idea that peo
C. the idea that people a veil of ignorance as policy as if behind a veil of ignorance as to what their circumstances might be in society, and the ignora
D. the idea that everyone in society should have an equal income
Answer» C. the idea that people a veil of ignorance as policy as if behind a veil of ignorance as to what their circumstances might be in society, and the ignora
Discussion
60.

Mariam earns more than Seamus and she came by her income fairly and honestly which of the following political philosophies would argue against the redistribution of income from Mariam to Seamus ?
A. all of these answers
B. libertarianism
C. utilitarianism
D. none of these answers
Answer» C. utilitarianism
Discussion
61.

Because people’s income vary other the life cycle and because there are transitory shocks to people’s incomes the standard measures of income distribution ?
A. exaggerate the inequality of living standards
B. could exaggerate or understate the inequality of living standards depending on whether the transitory shocks are positive or negative
C. understate the inequality of living standards
D. accurately represent the true inequality of living standards
Answer» B. could exaggerate or understate the inequality of living standards depending on whether the transitory shocks are positive or negative
Discussion
62.

Tax shifting ?
A. is the way in which a tax is structured
B. occurs when households can alter their behaviour and do something to avoid paying tax
C. occurs when taxes cause prices to increase but wages to fall.
D. is the ultimate distribution of a tax’s burden
Answer» C. occurs when taxes cause prices to increase but wages to fall.
Discussion
63.

Housing Benefit is a good example of ?
A. a means tested cash benefit
B. a universal (social insurance based) benefit
C. a benefit in kind
D. none of the above
Answer» B. a universal (social insurance based) benefit
Discussion
64.

In Pakistan the term the poverty trap is used to describe the fact that ?
A. poor people are excluded from most leisure and social activities
B. the Pakistan benefit system makes being poor vary degrading
C. if poor people earn more their benefits fall, making them no better off.
D. in the Pakistan poor people are heavily taxed
Answer» D. in the Pakistan poor people are heavily taxed
Discussion
65.

Horizontal equity holds that ?
A. those with equal ability to pay should bear unequal tax burdends.
B. those who benefits the most from government services should bear the higher tax burden.
C. those who benefit the most from government services should have the greatest voice in determining what gets produced
D. those with equal ability to pay should bear equal tax burdens.
Answer» E.
Discussion
66.

A tax whose burden is the same proportion of income for all households is ?
A. an equal tax
B. a proportional tax
C. a progressive tax
D. a regressive tax
Answer» C. a progressive tax
Discussion
67.

The total amount of tax you pay divided by your total income is the ?
A. average tax rate
B. marginal tax rate
C. proportional tax rate
D. total tax rate
Answer» E.
Discussion
68.

A tax whose burden expressed as a percentage of income, falls as income increases is a ?
A. benefits received tax
B. progressive tax
C. regressive tax
D. proportional tax
Answer» D. proportional tax
Discussion
69.

A Gini coefficient of one means that ?
A. all the income is received by the top 20% of the income distribution
B. income is distributed equally
C. the income is split equally between the top 20% and the rest of the distribution.
D. one family has all the income and every one else has nothing.
Answer» E.
Discussion
70.

If people can borrow and lend to perfectly smooth out their lifetime living standards, then ?
A. transitory income is a good measure of the distribution of living standards
B. none of these answers
C. permanent income is a good measure of the distribution of living standards.
D. life-cycle income is a good measure of the distribution of living standards.
E. current annual income is a good measure of the distribution of living standards.
Answer» D. life-cycle income is a good measure of the distribution of living standards.
Discussion
71.

The term ‘rent’ as it is used by economists. refers to ?
A. the return to any factor of production that is in fixed supply
B. the profit earned by the owner of any housing unit.
C. the amount paid each year by a tenant for an apartment
D. any profit earned by stockholders when they sell their stock
Answer» B. the profit earned by the owner of any housing unit.
Discussion
72.

In a competitive labour market firms will hire labour up to the point where the marginal revenue product of labour equals ?
A. total labour cost
B. the marginal product
C. the price of the product
D. the wage rate
Answer» C. the price of the product
Discussion
73.

An unemployed salesperson has been offered a job paying Rs500 a week. He turns that job down and continues to search for another job that pays more. The cost of this continued search is ?
A. the Rs500 weekly salary that he has forgone to search for another job
B. The Rs500 weekly salary that he has forgone and the monetary costs incurred by continuing to search
C. Rs difference between the weekly salary he finally accepts and the Rs500 weekly salary that he has forgone
D. Rs0, since he is currently unemployed
Answer» C. Rs difference between the weekly salary he finally accepts and the Rs500 weekly salary that he has forgone
Discussion
74.

A period of unemployment due to recession will ?
A. increase a worker’s current income and permanent income
B. reduce a worker’s current income but not necessarily their permanent income
C. affect neither the current nor the permanent income of a worker
D. reduce a worker’s permanent income but not their current income
Answer» C. affect neither the current nor the permanent income of a worker
Discussion
75.

Because in-kind transfers are not accounted for in standard measures of income distribution the standard measures of income distribution ?
A. accurately represent the true inequality of living standards
B. understate the inequality of living standards
C. exaggerate the inequality of living standards
D. could exaggerate of understate the inequality of living standards depending on whether the transfers are goods or services.
Answer» D. could exaggerate of understate the inequality of living standards depending on whether the transfers are goods or services.
Discussion
76.

Utilitarianism suggests that the government should choose policies that maximize the total utility of everyone in society by ?
A. redistributing income from rich to poor because this is what the members of society would choose to do if they were behind a veil of ignorance
B. redistributing income from rich to poor because due to the diminishing marginal utility of income, taking a pound from the rich reduces their utility
C. allowing each individual to maximize their own utility without interference from the government
D. redistributing income from rich to poor because this would maximize the well-being of the worst-off person in society
Answer» C. allowing each individual to maximize their own utility without interference from the government
Discussion
77.

If labour market discrimination crowds women into a limited number of occupations so that the number of occupations available to men increases, then ?
A. wages of men will be higher but the marginal productivity of men will be lower than it otherwise would be
B. the wages of men will be lower but the marginal productivity of men will be higher than it otherwise would be
C. both the wages and the marginal productivity of men will be lower than they otherwise would be
D. both the wages and the marginal productivity of men will be higher than they otherwise would be
Answer» E.
Discussion
78.

The maximin criterion suggested by Rawls’s theory of justice means that the government should aim to ?
A. Maximize the total utility of society
B. Maximize the well-being of the worst-off person in society
C. minimize the difference between the rich and poor
D. maximize the economic freedom of individuals by minimizing government interference in private decision making
E. minimize the well-being of the best-off person in society
Answer» C. minimize the difference between the rich and poor
Discussion
79.

The formula for the marginal revenue product of labour (L is for labour, X is the product) is ?
A. MPL + PX
B. (MPL) (PX)
C. PX/MPL
D. MPL/PX
Answer» D. MPL/PX
Discussion
80.

The Gini coefficient is ?
A. the ratio of the percentage of total income received by the top 20% of families to the percentage of total income received by by the bottom 20% of fam
B. the most common way of representing the income distribution graphically
C. a commonly used measure of the degree of inequality in an income distribution
D. a commonly used measure of the degree of inequity in an income distribution
Answer» B. the most common way of representing the income distribution graphically
Discussion