MCQOPTIONS
Saved Bookmarks
MCQOPTIONS
This section includes 124 Mcqs, each offering curated multiple-choice questions to sharpen your Economics knowledge and support exam preparation. Choose a topic below to get started.
| 1. |
Which of the following statements is true about the impact of an increase in the price of lettuce ? |
| A. | Both the demand for lettuce will decrease and the equilibrium price and quantity of salad dressing will fall |
| B. | The supply of lettuce will decrease |
| C. | The demand for lettuce will decrease |
| D. | The equilibrium price and quantity of salad dressing will fall |
| E. | The equilibrium price and quantity of salad dressing will rise |
| Answer» E. The equilibrium price and quantity of salad dressing will rise | |
| 2. |
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 | |
| 3. |
With free trade, suppose that the rest of the world can supply calculators to Canada at a price of $30. Canada’s imports would now equal _____ and its consumer surplus would ____ relative to what occurred in the absence of trade. What is the change in consumer surplus? Refer to the figure that you have plotted ? |
| A. | 20 calculators increase |
| B. | 25 calculators decrease |
| C. | 25 calculators increase |
| D. | 30 calculators increase |
| Answer» E. | |
| 4. |
With free trade suppose that the rest of the world can supply computers to Norway at a price of $1,500 Norway’s imports will now equal. Compared to What occurred in the absence of trade, Norway’s consumers surplus will _____ and its producer surplus will ____. Can you calculate these amounts? Try plotting the information of this table on a sheet of graph paper ? |
| A. | 1,600 computers, decrease, increase |
| B. | 1,600 computers, increase, decrease |
| C. | 1,200 computers, decrease, increase |
| D. | 1,200 computers, increase, decrease |
| Answer» C. 1,200 computers, decrease, increase | |
| 5. |
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 | |
| 6. |
Which of the following is the government most likely to subsidies ? |
| A. | Negative externalies |
| B. | Positive externalities |
| C. | Monopolies |
| D. | Oligopolies |
| Answer» C. Monopolies | |
| 7. |
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 | |
| 8. |
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. | |
| 9. |
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: | |
| 10. |
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 | |
| 11. |
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 | |
| 12. |
What type of trade barrier was used to protect U.S auto firms from foreign competition during 1981 – 1984 ? |
| A. | export quotas imposed by the Japanese government |
| B. | export tariffs imposed by the Japanese’s government |
| C. | import quotas imposed by the U.S government |
| D. | domestic subsidies granted by the U.S government |
| Answer» B. export tariffs imposed by the Japanese’s government | |
| 13. |
We cannot say whether one allocation of resources is better than another allocation because ? |
| A. | some people can’t count |
| B. | some people may not be permanent resident |
| C. | not all economic activity is legal |
| D. | We can’t make value judgments to compare different people’s welfare |
| Answer» E. | |
| 14. |
Under a tariff- rate quota ? |
| A. | The within-quota tariff rate exceeds the over-quota tariff rate |
| B. | the over-quota tariff rate exceeds the with-quota tariff rate |
| C. | The within-quota tariff rate equals the over-quota tariff rate |
| D. | The within-quota tariff rate plus over-quota tariff rate equal 100 percent |
| Answer» C. The within-quota tariff rate equals the over-quota tariff rate | |
| 15. |
To reduce imports, suppose that the government of Norway’s imposes a quota equal to 800 computers, Compared to what occurred under free trade, Norway’s consumers surplus will ________ and its producer surplus will _______ Can you calculate these amounts? Try plotting the information of this table on a sheet of graph paper ? |
| A. | increase, increase |
| B. | increase, decrease |
| C. | decrease, increase |
| D. | decrease, decrease |
| Answer» D. decrease, decrease | |
| 16. |
To maintain that South koreans are dumping their DVDs in the United States is to maintain that ? |
| A. | Koreans are selling DVDs in the U.S below their production cost |
| B. | Koreans are selling DVDs is the U.s above their productions cost |
| C. | The cost of manufacturing DVDs in Korea is lower in Korea than in the U.S since wages are lower in Korea |
| D. | The cost of manufacturing DVDs in Korea is higher in Korea than in the U.S since wages are higher in Korea |
| Answer» B. Koreans are selling DVDs is the U.s above their productions cost | |
| 17. |
To aid its calculator producers, suppose that the government provides them a subsidy of $10 for each calculator produced The amount of imports now equals _____ and the deadweight loss of the subsidy to the Canadian economy equals _________? |
| A. | 20 calculator, $50 |
| B. | 20 calculator, $100 |
| C. | 25 calculator, $50 |
| D. | 25 calculator, $100 |
| Answer» B. 20 calculator, $100 | |
| 18. |
Throughout the world, governments tend to auction quota licenses to their highest bidder ? |
| A. | always |
| B. | often |
| C. | seldom |
| D. | never |
| Answer» D. never | |
| 19. |
The welfare effects of a quota depend to a considerable extent upon ? |
| A. | who has the quota license |
| B. | the size of the quota |
| C. | elasticities of domestic demand and supply |
| D. | All of the above |
| Answer» E. | |
| 20. |
The social costs of monopoly power arises because ? |
| A. | marginal cost is set equal to marginal revenue |
| B. | price is less than marginal cost |
| C. | marginal consumer benefit is less than marginal revenue |
| D. | there is too little output at too high a cost |
| Answer» E. | |
| 21. |
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 | |
| 22. |
The reason for dumping is that the demand curve for ABC Co’s computers is _______ because ________ are available from other nations? |
| A. | more elastic in Japan, more substitutes are available from other nations |
| B. | more elastic in Japan, fewer substitutes are available from other; nations |
| C. | more inelastic in Japan; more substitutes are available from other; nations |
| D. | more inelastic in Japan; fewer substitutes are available from other nations |
| Answer» B. more elastic in Japan, fewer substitutes are available from other; nations | |
| 23. |
The problem posed by a natural monopoly is that it faces a _____ This means that _______? |
| A. | increasing average cost curve, marginal cost lies above average cost |
| B. | increasing average cost curve, marginal cost lies below average cost |
| C. | decreasing average cost curve marginal cost lies above average cost |
| D. | decreasing average cost curve, marginal cost lies below average cost |
| Answer» E. | |
| 24. |
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. | |
| 25. |
The price mechanism cannot ? |
| A. | Act as a signal |
| B. | Act as a incentive |
| C. | Act as a rationing device |
| D. | shift the demand curve |
| Answer» E. | |
| 26. |
The price mechanism does not act as a ? |
| A. | Signal |
| B. | Incentive |
| C. | Rationing device |
| D. | Indicator of income |
| Answer» E. | |
| 27. |
The law of supply states that an increase in the price of a good ? |
| A. | none of these answers |
| B. | increases the quantity supplied of that good |
| C. | increase the supply of that good |
| D. | decrease the demand for the good |
| E. | decrease the quantity demanded for that good |
| Answer» C. increase the supply of that good | |
| 28. |
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 | |
| 29. |
The home country government can confiscate the revenue effect of an import quota if ? |
| A. | quota licenses are given to foreign exporting companies |
| B. | quota licenses are auctioned to the highest bidding importing company |
| C. | if quota licenses are given to domestic consumers of the good |
| D. | Both A and C |
| Answer» C. if quota licenses are given to domestic consumers of the good | |
| 30. |
The government is considering placing a tax on cigarettes to raise revenue to finance health-care benefits. The demand for cigarettes is price inelastic Which of the following statements is True ? |
| A. | This tax will not raise much revenue either in the short term or the long term since demand is price inelastic |
| B. | The tax on cigarettes may not raise as much revenue as anticipated in the years to com because the demand for cigarettes is likely to become more elas |
| C. | This a very good way to raise revenue both in the short term and in the long term, because there are no substitutes for cigarettes. |
| D. | No tax revenue can be raised in this way because sellers of cigarette will just lower their price by the amount of the tax and therefore, the price of |
| Answer» C. This a very good way to raise revenue both in the short term and in the long term, because there are no substitutes for cigarettes. | |
| 31. |
The form of international price discriminations (dumping) normally associated with economic recession or excess inventories in the exporting nation is known as ? |
| A. | Predatory dumping |
| B. | sporadic dumping |
| C. | persistent dumping |
| D. | year end dumping |
| Answer» C. persistent dumping | |
| 32. |
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 | |
| 33. |
The firm would maximize profit by selling computers in the United States at a price of __________ and _________ computers in Japan at a price of __________? |
| A. | 200, $2,000, 100 $1,000 |
| B. | 300, $1,800, 800 $800 |
| C. | 300, $1,800, 400 $800 |
| D. | 500, $1,400, 400 $800 |
| Answer» E. | |
| 34. |
The effect of a tax to offset a negative externality will be to ____ price and ______ quantity? |
| A. | reduce , reduce |
| B. | increase, increase |
| C. | increase, reduce |
| D. | reduce, increase |
| Answer» D. reduce, increase | |
| 35. |
The allocation of resources is not efficient if ? |
| A. | the marginal cost of production does not equal society’s marginal benefit |
| B. | the distribution is inequitable |
| C. | economic growth is low |
| D. | unemployment is high |
| Answer» B. the distribution is inequitable | |
| 36. |
Satellite television subscription and television detection devices are ways in which broadcasting companies address the ________ problem? |
| A. | externality |
| B. | market imperfection |
| C. | deadweight burden |
| D. | free rider |
| Answer» E. | |
| 37. |
Quotas are government-imposed limits on the _________ of goods trade between countries? |
| A. | prices |
| B. | quantity |
| C. | revenue |
| D. | costs |
| Answer» C. revenue | |
| 38. |
________ occurs when a firm disposes on foreign markets a temporary increases in inventories caused by unforeseen changes in supply and demand conditions in the home economy? |
| A. | sporadic dumping |
| B. | predatory dumping |
| C. | persistent dumping |
| D. | foreign dumping |
| Answer» B. predatory dumping | |
| 39. |
Nontariff trade barriers could include all of the following except ? |
| A. | domestic content laws |
| B. | government procurement policies |
| C. | health, safety, and environmental standards |
| D. | antidumping/countervailing duties applied to imports |
| Answer» E. | |
| 40. |
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 | |
| 41. |
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 | |
| 42. |
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 | |
| 43. |
Markets sometimes fail to exist because of________? |
| A. | externalities |
| B. | the free-rider problem |
| C. | a and b |
| D. | a and c |
| Answer» D. a and c | |
| 44. |
Market failure may arise because of ? |
| A. | imperfect competition |
| B. | taxation |
| C. | externalities |
| D. | missing markets |
| E. | all of the above |
| Answer» F. | |
| 45. |
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. | |
| 46. |
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. | |
| 47. |
Income inequality can be high in the free market and should be reduced This is an example of What ? |
| A. | Judicial economic statement |
| B. | Positive economic statement |
| C. | Formative economic statement |
| D. | Normative economic statement |
| Answer» E. | |
| 48. |
In the insurance industry, high-risk customers are more likely to take out insurance. This is an example of ? |
| A. | moral hazard |
| B. | risk aversion |
| C. | adverse selection |
| D. | a poor gamble |
| Answer» D. a poor gamble | |
| 49. |
In the absence of traded, Norway’s equilibrium price and quantity equal ? |
| A. | $1,500 and 2,800 computers |
| B. | $2,000 and 1,600 computers |
| C. | $2,500 and 2,000 computers |
| D. | $3,500 and 2,000 computers |
| Answer» D. $3,500 and 2,000 computers | |
| 50. |
In the absence of trade, Canada’s equilibrium price and quantity equal ? |
| A. | $65 and 40 calculators |
| B. | $55 and 20 calculators |
| C. | $45 and 25 calculators |
| D. | $30 and 40 calculators |
| Answer» D. $30 and 40 calculators | |