Explore topic-wise MCQs in Economics Mcqs.

This section includes 135 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.

When a market is contestable, incumbent firms must __________ to avoid the entry of new competitors?
A. behave like competitive firms
B. agree to act together
C. differentiate their products
D. practice price discrimination
Answer» B. agree to act together
Discussion
52.

A perfectly competitive market has ?
A. firms that set their own prices
B. only one seller.
C. at least a few sellers.
D. many buyers and sellers.
Answer» E.
Discussion
53.

From the perspective of the American public as a whole, export subsidies levied by overseas governments on goods sold to the United States ?
A. help more than they hurt
B. hurt more then they help
C. are equivalent to an import quota
D. are equivalent to an export quota
Answer» B. hurt more then they help
Discussion
54.

Suppose both buyers and sellers of wheat expect the price of wheat to rise in the near future. What would we expect to happen to the equilibrium price and quantity in the market for wheat today ?
A. The impact on both price and quantity is ambiguous
B. Price will decrease, quantity is ambiguous.
C. price will increase, quantity will decrease
D. price will increase, quantity is ambiguous.
E. Price will increase, quantity will increase
Answer» E. Price will increase, quantity will increase
Discussion
55.

According to the cost-based definition of dumping, dumping occurs when a firm sells a product abroad at a price that is less than ?
A. average total cost
B. average variable cost
C. average fixed cost
D. marginal cost
Answer» B. average variable cost
Discussion
56.

A shift in supply will have more effect on price than quantity if ?
A. The price elasticity of supply is – 3
B. The price elasticity of supply is – 0.2
C. The price elasticity of supply is – 2
D. The price elasticity of supply is infinity
Answer» B. The price elasticity of supply is – 0.2
Discussion
57.

A _______ allows a specified number of goods to be imported each year, and it not specifies from where the product is shipped and who is permitted to import ?
A. import quota
B. export quota
C. selective quota
D. global quota
Answer» D. global quota
Discussion
58.

The form of dumping that represents the greatest potential net welfare loss the for importing national is ?
A. predatory dumping
B. sporadic dumping
C. persistent dumping
D. yearend dumping
Answer» B. sporadic dumping
Discussion
59.

A attempts to limit outsourcing of jobs to foreigners by requiring that a minimum percentage of a product’s value must be produced domestically if that good is to be sold in the domestic market ?
A. domestic subsidy
B. voluntary restraint agreement
C. domestic content requirement
D. tariff-rate quota
Answer» D. tariff-rate quota
Discussion
60.

A production subsidy that is granted to a producer of an import-competing good ?
A. does not require government taxes to finance it
B. yields the same deadweight welfare loss as an import tariff or import quota
C. has only a consumption effect deadweight loss
D. has only a protective effect deadweight loss
Answer» E.
Discussion
61.

international dumping may involve ?
A. selling goods to foreigners at a price below that charged domestic consumers
B. selling goods to foreigners at a price below the cost of production
C. antidumping duties being levied on the imported, dumped goods
D. All of the above
Answer» E.
Discussion
62.

Export subsidies levied by foreign governments on products in which the Pakistan the comparative disadvantage ?
A. lower the welfare of all Pakistanis
B. lead to increases in Pakistani consumer surplus
C. encourage Pakistan’s production of competing goods
D. encourage Pakistani workers to demand higher wages
Answer» C. encourage Pakistan’s production of competing goods
Discussion
63.

Suppose a frost destroys much of the Florida orange crop. At the same time, suppose consumer tastes shift toward orange juice, What would we expect to happen to the equilibrium price and quantity in the market for orange juice ?
A. price will decrease, quantity is ambiguous
B. The impact on both price and quantity is ambiguous.
C. Price will increase, quantity will increase
D. price will increase, quantity will decrease
E. price will increase, quantity is ambiguous.
Answer» F.
Discussion
64.

Suppose there is an increase in the both the supply and demand for personal computers Further, suppose the supply of personal computer increase more than demand for personal computers In the market for personal computers i the market for personal computers, we would expect ?
A. the change in the equilibrium quantity to be ambiguous and the equilibrium price to fall.
B. the equilibrium quantity to rise and the equilibrium price to rise
C. the equilibrium quantity to rise and the change in the equilibrium price to be ambiguous
D. the equilibrium quantity to rise and the equilibrium price to fall
E. the equilibrium quantity to rise and the equilibrium price to remain constant
Answer» E. the equilibrium quantity to rise and the equilibrium price to remain constant
Discussion
65.

A decrease (leftward shift) in the supply for a good will tend to cause ?
A. an increase in the equilibrium price and quantity
B. a decrease in the equilibrium price and an increase in the equilibrium quantity
C. none of these answers
D. a decrease in the equilibrium price and quantity.
E. an increase in the equilibrium price and a decrease in the equilibrium quantity
Answer» B. a decrease in the equilibrium price and an increase in the equilibrium quantity
Discussion
66.

If the market price is below the equilibrium price ?
A. quantity demanded will be greater than quantity supplied
B. quantity demanded will be less than quantity supplied
C. demand will be less than supply.
D. quantity demanded will equal quantity supplied
Answer» B. quantity demanded will be less than quantity supplied
Discussion
67.

If the price of good is equal to the equilibrium price ?
A. there is a shortage and the price will fall
B. the quantity demanded is equal to the quantity supplied supplied and the price remains unchanged
C. there is surplus and the price will rise
D. there is a shortage and the price will rise
E. there is a surplus and the price will fall
Answer» C. there is surplus and the price will rise
Discussion
68.

An increase in demand for a product should ?
A. Increase equilibrium price and quantity
B. Decrease equilibrium price and quantity
C. Increase equilibrium price and decrease quantity
D. Decrease equilibrium price and increase quantity
Answer» E.
Discussion
69.

A movement along the supply curve may be caused by ?
A. A change in technology
B. A change in the number of producers
C. A shift in demand
D. A change in costs
Answer» D. A change in costs
Discussion
70.

A shift is demand will have more effect on price than quantity if ?
A. The price elasticity of supply is price inelastic
B. The price elasticity of supply is price elastic
C. The price elasticity of supply is perfectly elastic
D. The price elasticity of supply is infinity
Answer» E.
Discussion
71.

Which best describes consumer surplus ?
A. The price consumers are willing to pray for a unit
B. The cost of providing a unit
C. The profits made by a firm
D. The difference the price a consumer pays for an item and the price he/she is willing to pay
Answer» E.
Discussion
72.

Governments around the world tend to auction quota licenses ?
A. never
B. seldom
C. often
D. always
Answer» C. often
Discussion
73.

Economists use the term Black Markets for situations where ?
A. goods are sold at prices above legal or official price.
B. buyers and/or sellers are not paying taxes as they should
C. illegal substances are sold
D. transactions are not recorded in the GDP figures.
Answer» B. buyers and/or sellers are not paying taxes as they should
Discussion
74.

If the price of a good is above the equilibrium price ?
A. there is a surplus and the price will rise
B. there is a shortage and the price will fall
C. there is a shortage and the price will rise
D. The quantity demanded is equal to the quantity supplied and the price remains unchanged
E. there is a surplus and the price will fall
Answer» F.
Discussion
75.

It is necessary to ration a good whenever ?
A. supply exceeds demand
B. a surplus exists
C. there is perfectly inelastic demand for the good
D. demand exceeds supply
Answer» E.
Discussion
76.

The prisoners Dilemma Game demonstrates that ?
A. players are better of to act independently
B. monopoly is better than competition
C. people will always cheat
D. players are better off if they co-operate
Answer» E.
Discussion
77.

Moral hazard means that the act of insuring ____ that the desired outcome will occur?
A. reduces the likelihood
B. increases the likelihood
C. guarantees
D. none of the above
Answer» C. guarantees
Discussion
78.

The reason for the kinked demand curve is that ?
A. The oligopolist believes that competitors will match output increase but not output reduction
B. The oligopolist believes that competitors will match price increase but not output reduction
C. The oligopolist believers that competitors will match price cuts but not price rises
D. The oligopolist believes that competitors will match price increase but not output increase
Answer» D. The oligopolist believes that competitors will match price increase but not output increase
Discussion
79.

A price ceiling is ?
A. a maximum price usually set by government that sellers may charge for a good
B. the different between the initial equilibrium price and the equilibrium price after a decrease in supply
C. a minimum price usually set by government that sellers must charge for a good
D. a minimum price that consumers are willing to pay for a good.
Answer» B. the different between the initial equilibrium price and the equilibrium price after a decrease in supply
Discussion
80.

A dominant strategy is ?
A. a wining strategy
B. a losing strategy
C. a players best strategy when moving first
D. a player’s best strategy whatever the strategies adopted by rivals
Answer» E.
Discussion
81.

An allocation is Pareto-efficient if no reallocation of resources would make some people _______ without making others ________?
A. worse off; worse off
B. better off; better off
C. better off; worse off
D. equal, unequal
Answer» D. equal, unequal
Discussion
82.

A monopoly may be self-perpetuating because profits may be used for ?
A. research
B. cost-saving
C. technical advance
D. all of the above
Answer» E.
Discussion
83.

A natural monopoly has a declining _______ over a large range of output?
A. long run marginal cost
B. short run marginal cost
C. long run average cost
D. long run marginal cost
Answer» D. long run marginal cost
Discussion
84.

Comparing a monopoly and competitive firm, the monopolist will ?
A. produce less at a lower price
B. produce more at a lower price
C. produce less at a higher price
D. produce less at a lower price
Answer» D. produce less at a lower price
Discussion
85.

Nationalisation occurs when ?
A. The government sells assets to a the private sector
B. The government bans a product
C. The government takes control of an industry
D. The government taxes a product to a raise its price
Answer» D. The government taxes a product to a raise its price
Discussion
86.

With a positive externality ?
A. There is under-consumption in the free market
B. There is over consumption in the free market
C. The government may tax to decrease production
D. Society could be made off it less was produced
Answer» B. There is over consumption in the free market
Discussion
87.

Where a tax can be shifted, the incidence depends on ?
A. Whether there is perfect or imperfect information
B. elasticities of demand and supply
C. how many producers there are:
D. who is legally obliged to pay the tax
Answer» C. how many producers there are:
Discussion
88.

Assuming a downward sloping demand curve and upward sloping supply curve a higher equilibrium price may be caused by ?
A. An fall in demand
B. An increase in supply
C. improvements in production technology
D. An increase in demand
Answer» E.
Discussion
89.

When supply increase in an agricultural market farmer’s earning might fall because ?
A. Supply is price elastic
B. Demand is price inelastic
C. The government buys up all the excess production
D. All output must be sold at a maximum price
Answer» C. The government buys up all the excess production
Discussion
90.

If an increase in consumer incomes leads to a decrease in the demand for camping equipment, then camping equipment is ?
A. a normal good
B. none of these answers
C. an inferior good
D. a substitute good
Answer» D. a substitute good
Discussion
91.

If the price in a market is fixed by the government below equilibrium ?
A. There is excess equilibrium
B. There is excess supply
C. There is excess demand
D. There is equilibrium
Answer» D. There is equilibrium
Discussion
92.

Merit goods are ?
A. Not provided in the free market economy
B. Under provided in the free market economy
C. Over provided in the free market economy
D. Provided free
Answer» C. Over provided in the free market economy
Discussion
93.

A specification of a maximum amount of a foreign produced good that will be allowed to enter the country over a given time period is referred to as a (an) ?
A. domestic subsidy
B. export subsidy
C. import quota
D. export quota
Answer» D. export quota
Discussion
94.

A reduction in the costs of production will ?
A. Lead to a movement along the supply curve
B. Shift the demand curve
C. Shift the supply curve
D. Lead to an extension of supply
Answer» D. Lead to an extension of supply
Discussion
95.

A movement along the demand curve may be caused by ?
A. A change in income
B. A change in the number of buyers
C. A change in advertising
D. A shift in supply
Answer» E.
Discussion
96.

The law of demand states that an increases in the price of a good ?
A. None of these answers
B. decreases the quantity supplied of that good
C. decreases the quantity demanded for that good
D. increases the quantity supplied of that good
Answer» C. decreases the quantity demanded for that good
Discussion
97.

If demand increase in a market this will usually lead to ?
A. A higher equilibrium price and output
B. A lower equilibrium price and higher output
C. A lower equilibrium price and output
D. A higher equilibrium price and lower output
Answer» B. A lower equilibrium price and higher output
Discussion
98.

Which of the following shifts the demand for watches to the right ?
A. an increase in the price of watches
B. none of these answers
C. a decrease in the price of watch batteries if watch batteries and watches are complements
D. a decrease in consumer incomes if watches are a normal good
E. a decrease in the wage of workers employed to manufacture watches
Answer» C. a decrease in the price of watch batteries if watch batteries and watches are complements
Discussion
99.

________ are profits that accrue to whomever has the right to import the good that is restricted by the quota?
A. quota license
B. quota rents
C. quota prices
D. None of the above
Answer» C. quota prices
Discussion
100.

Which company in the United States would likely be most concerned about Brazil’s dumping of steel in the U.S market ?
A. General Motors, the manufacturer of automobiles
B. Tennessee Mining Co. an iron-ore mining company
C. Caterpillar Corp the producer of earth moving equipment
D. Sneva Construction Co. The builder of skyscrapers
Answer» C. Caterpillar Corp the producer of earth moving equipment
Discussion