Which of the following statements is true about the impact of an increase in the price of lettuce ?

The equilibrium price and quantity of salad dressing will rise

Both the demand for lettuce will decrease and the equilibrium price and quantity of salad dressing will fall

The supply of lettuce will decrease

The demand for lettuce will decrease

The equilibrium price and quantity of salad dressing will fall

The equilibrium price and quantity of salad dressing will rise

With a positive externality ?

There is over consumption in the free market

There is under-consumption in the free market

There is over consumption in the free market

The government may tax to decrease production

Society could be made off it less was produced

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 ?

1,200 computers, decrease, increase

1,600 computers, decrease, increase

1,600 computers, increase, decrease

1,200 computers, decrease, increase

1,200 computers, increase, decrease

Which of the following shifts the demand for watches to the right ?

a decrease in the price of watch batteries if watch batteries and watches are complements

an increase in the price of watches

a decrease in the price of watch batteries if watch batteries and watches are complements

a decrease in consumer incomes if watches are a normal good

a decrease in the wage of workers employed to manufacture watches

Which company in the United States would likely be most concerned about Brazil’s dumping of steel in the U.S market ?

Caterpillar Corp the producer of earth moving equipment

General Motors, the manufacturer of automobiles

Tennessee Mining Co. an iron-ore mining company

Caterpillar Corp the producer of earth moving equipment

Sneva Construction Co. The builder of skyscrapers

Which best describes consumer surplus ?

The price consumers are willing to pray for a unit

The difference the price a consumer pays for an item and the price he/she is willing to pay

Where a tax can be shifted, the incidence depends on ?

Whether there is perfect or imperfect information

elasticities of demand and supply

who is legally obliged to pay the tax

When supply increase in an agricultural market farmer’s earning might fall because ?

The government buys up all the excess production

All output must be sold at a maximum price

What type of trade barrier was used to protect U.S auto firms from foreign competition during 1981 – 1984 ?

export tariffs imposed by the Japanese’s government

export quotas imposed by the Japanese government

export tariffs imposed by the Japanese’s government

import quotas imposed by the U.S government

domestic subsidies granted by the U.S government

We cannot say whether one allocation of resources is better than another allocation because ?

some people may not be permanent resident

not all economic activity is legal

We can’t make value judgments to compare different people’s welfare

Under a tariff- rate quota ?

The within-quota tariff rate equals the over-quota tariff rate

The within-quota tariff rate exceeds the over-quota tariff rate

the over-quota tariff rate exceeds the with-quota tariff rate

The within-quota tariff rate equals the over-quota tariff rate

The within-quota tariff rate plus over-quota tariff rate equal 100 percent

To maintain that South koreans are dumping their DVDs in the United States is to maintain that ?

Koreans are selling DVDs is the U.s above their productions cost

Koreans are selling DVDs in the U.S below their production cost

Koreans are selling DVDs is the U.s above their productions cost

The cost of manufacturing DVDs in Korea is lower in Korea than in the U.S since wages are lower in Korea

The cost of manufacturing DVDs in Korea is higher in Korea than in the U.S since wages are higher in Korea

The welfare effects of a quota depend to a considerable extent upon ?

elasticities of domestic demand and supply

The social costs of monopoly power arises because ?

marginal cost is set equal to marginal revenue

price is less than marginal cost

marginal consumer benefit is less than marginal revenue

there is too little output at too high a cost

The reason for the kinked demand curve is that ?

The oligopolist believes that competitors will match price increase but not output increase

The oligopolist believes that competitors will match output increase but not output reduction

The oligopolist believes that competitors will match price increase but not output reduction

The oligopolist believers that competitors will match price cuts but not price rises

The oligopolist believes that competitors will match price increase but not output increase

The reason for dumping is that the demand curve for ABC Co’s computers is _______ because ________ are available from other nations?

more elastic in Japan, fewer substitutes are available from other; nations

more elastic in Japan, more substitutes are available from other nations

more elastic in Japan, fewer substitutes are available from other; nations

more inelastic in Japan; more substitutes are available from other; nations

more inelastic in Japan; fewer substitutes are available from other nations

The problem posed by a natural monopoly is that it faces a _____ This means that _______?

increasing average cost curve, marginal cost lies above average cost

increasing average cost curve, marginal cost lies below average cost

decreasing average cost curve marginal cost lies above average cost

decreasing average cost curve, marginal cost lies below average cost

The prisoners Dilemma Game demonstrates that ?

players are better of to act independently

monopoly is better than competition

players are better off if they co-operate

The law of supply states that an increase in the price of a good ?

increase the supply of that good

increases the quantity supplied of that good

increase the supply of that good

decrease the demand for the good

decrease the quantity demanded for that good

The law of demand states that an increases in the price of a good ?

decreases the quantity demanded for that good

decreases the quantity supplied of that good

decreases the quantity demanded for that good

increases the quantity supplied of that good

The home country government can confiscate the revenue effect of an import quota if ?

if quota licenses are given to domestic consumers of the good

quota licenses are given to foreign exporting companies

quota licenses are auctioned to the highest bidding importing company

if quota licenses are given to domestic consumers of the good

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 ?

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.

This tax will not raise much revenue either in the short term or the long term since demand is price inelastic

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

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.

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

The allocation of resources is not efficient if ?

the distribution is inequitable

the marginal cost of production does not equal society’s marginal benefit

the distribution is inequitable

Nontariff trade barriers could include all of the following except ?

government procurement policies

health, safety, and environmental standards

antidumping/countervailing duties applied to imports

Nationalisation occurs when ?

The government taxes a product to a raise its price

The government sells assets to a the private sector

The government takes control of an industry

The government taxes a product to a raise its price

Over provided in the free market economy

Not provided in the free market economy

Under provided in the free market economy

Over provided in the free market economy

It is necessary to ration a good whenever ?

there is perfectly inelastic demand for the good

international dumping may involve ?

selling goods to foreigners at a price below that charged domestic consumers

selling goods to foreigners at a price below the cost of production

antidumping duties being levied on the imported, dumped goods

124 + Mcqs in Market in Economics Page 1 McqOptions

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

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.

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

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.

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

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.

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

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

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.

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

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.

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.

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

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

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

Explore topic-wise MCQs in Economics.

Which of the following statements is true about the impact of an increase in the price of lettuce ?

With a positive externality ?

Which of the following shifts the demand for watches to the right ?

Which of the following is the government most likely to subsidies ?

Which company in the United States would likely be most concerned about Brazil’s dumping of steel in the U.S market ?

Which best describes consumer surplus ?

Where a tax can be shifted, the incidence depends on ?

When supply increase in an agricultural market farmer’s earning might fall because ?

When a market is contestable, incumbent firms must __________ to avoid the entry of new competitors?

What type of trade barrier was used to protect U.S auto firms from foreign competition during 1981 – 1984 ?

We cannot say whether one allocation of resources is better than another allocation because ?

Under a tariff- rate quota ?

To maintain that South koreans are dumping their DVDs in the United States is to maintain that ?

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 _________?

Throughout the world, governments tend to auction quota licenses to their highest bidder ?

The welfare effects of a quota depend to a considerable extent upon ?

The social costs of monopoly power arises because ?

The reason for the kinked demand curve is that ?

The reason for dumping is that the demand curve for ABC Co’s computers is _______ because ________ are available from other nations?

The problem posed by a natural monopoly is that it faces a _____ This means that _______?

The prisoners Dilemma Game demonstrates that ?

The price mechanism cannot ?

The price mechanism does not act as a ?

The law of supply states that an increase in the price of a good ?

The law of demand states that an increases in the price of a good ?

The home country government can confiscate the revenue effect of an import quota if ?

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 ?

The form of international price discriminations (dumping) normally associated with economic recession or excess inventories in the exporting nation is known as ?

The form of dumping that represents the greatest potential net welfare loss the for importing national is ?

The firm would maximize profit by selling computers in the United States at a price of __________ and _________ computers in Japan at a price of __________?

The effect of a tax to offset a negative externality will be to ____ price and ______ quantity?

The allocation of resources is not efficient if ?

Satellite television subscription and television detection devices are ways in which broadcasting companies address the ________ problem?

Quotas are government-imposed limits on the _________ of goods trade between countries?

________ 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?

Nontariff trade barriers could include all of the following except ?

Nationalisation occurs when ?

Moral hazard means that the act of insuring ____ that the desired outcome will occur?

Merit goods are ?

Markets sometimes fail to exist because of________?

Market failure may arise because of ?

It is necessary to ration a good whenever ?

international dumping may involve ?

Income inequality can be high in the free market and should be reduced This is an example of What ?

In the insurance industry, high-risk customers are more likely to take out insurance. This is an example of ?

In the absence of traded, Norway’s equilibrium price and quantity equal ?

In the absence of trade, Canada’s equilibrium price and quantity equal ?

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 _____?

The reason for dumping is that the demand curve for ABC Co’s computers is _ because __ are available from other nations?

The problem posed by a natural monopoly is that it faces a _ This means that ___?

The firm would maximize profit by selling computers in the United States at a price of ______ and _ computers in Japan at a price of ______?

The effect of a tax to offset a negative externality will be to price and __ quantity?

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.

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