MCQOPTIONS
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MCQOPTIONS
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.
| 1. |
Market equilibrium exists when _________ at the prevailing price? |
| A. | quantity demanded equals quantity supplied |
| B. | quantity demanded is less than quantity supplied |
| C. | quantity supplied is greater than quantity demanded |
| D. | quantity demanded is greater than quantity supplied |
| Answer» B. quantity demanded is less than quantity supplied | |
| 2. |
If a 4% increase in price leads to a increase in the quantity supplied of 8% ? |
| A. | Supply is price elastic |
| B. | Supply is income elastic |
| C. | Price elasticity of demand is -2 |
| D. | Price elasticity of supply is -2 |
| Answer» B. Supply is income elastic | |
| 3. |
If the quantity demanded of beef increases by 5% when the price of chicken increase by 20% the cross-price elasticity of demand between beef and chicken is ? |
| A. | -4 |
| B. | 0.25 |
| C. | 4 |
| D. | -0.25 |
| Answer» C. 4 | |
| 4. |
Increased level consumption ? |
| A. | shift aggregate supply to the right |
| B. | shift aggregate supply to the left |
| C. | shift aggregate demand to the right |
| D. | shift aggregate demand to the left |
| Answer» C. shift aggregate demand to the right | |
| 5. |
Marginal revenue is the ________ when output is __________? |
| A. | Change in average revenue, increased |
| B. | Change in total revenue, increase by one unit |
| C. | change in average revenue, increased by one unit |
| D. | change in total revenue increased |
| Answer» C. change in average revenue, increased by one unit | |
| 6. |
A measurement showing how quantity demanded varies with income is the ? |
| A. | Price elasticity of demand |
| B. | Cross-price elasticity of demand |
| C. | budget elasticity of demand |
| D. | income elasticity of demand |
| Answer» E. | |
| 7. |
A firm that makes profit in addition to normal profit is making ? |
| A. | Economic profit |
| B. | Accounting profit |
| C. | Normal profit |
| D. | supernormal profit |
| Answer» E. | |
| 8. |
An upward shift in marginal cost _____ output and an upward shift in marginal revenue ______ output? |
| A. | reduces; reduces |
| B. | reduces; increases |
| C. | increases; increases |
| D. | increases; reduces |
| Answer» C. increases; increases | |
| 9. |
The opportunity cost of a student is____________? |
| A. | Course fees and rent |
| B. | A loan from the bank |
| C. | What the student could have earned in the best job available by not studying |
| D. | What the student will earn after graduation |
| Answer» D. What the student will earn after graduation | |
| 10. |
Firms are assumed to ________ costs and to ________ profits? |
| A. | incur, desire |
| B. | pay, make |
| C. | charge earns |
| D. | minimize, maximize |
| Answer» E. | |
| 11. |
If your income doubles and the prices of the goods you buy double then your demand for these goods will likely? |
| A. | increase |
| B. | not change |
| C. | decrease |
| D. | shift |
| Answer» C. decrease | |
| 12. |
The extra utility from consuming one more unit of a good is called ? |
| A. | Marginal utility |
| B. | Additional utility |
| C. | Surplus utility |
| D. | Bonus utility |
| Answer» B. Additional utility | |
| 13. |
If a product is an inferior good ? |
| A. | Demand is inversely related to income |
| B. | Demand in inversely related to price |
| C. | Demand is directly related to price |
| D. | Demand is inversely related to the price of substitutes |
| Answer» B. Demand in inversely related to price | |
| 14. |
The income effect of a price increase of a normal good is to ________ of that good and the substitution effect is to _________ of that good? |
| A. | increase quantity demanded, reduce quantity demanded |
| B. | increase quantity demanded, increases quantity demanded |
| C. | reduce quantity demanded, reduce quantity demanded |
| D. | reduce quantity demanded, increase quantity demanded |
| Answer» D. reduce quantity demanded, increase quantity demanded | |
| 15. |
If both marginal cost and marginal revenue increase, a firm ? |
| A. | Should increase output |
| B. | Should reduce output |
| C. | will require further information on how to respond |
| D. | Should not change output |
| Answer» D. Should not change output | |
| 16. |
The price elasticity of demand measures ? |
| A. | The responsiveness of quantity demanded to a change in price |
| B. | How far a demand curve shifts |
| C. | a change in price |
| D. | a change in quantity demanded |
| Answer» B. How far a demand curve shifts | |
| 17. |
A firm that breaks even after all economic costs are paid is earning ? |
| A. | Economic profit |
| B. | Accounting profit |
| C. | Normal profit |
| D. | Supernormal profit |
| Answer» D. Supernormal profit | |
| 18. |
Profits are maximized when ? |
| A. | costs are minimized |
| B. | revenue is maximized |
| C. | average cost is less than average revenue |
| D. | marginal cost equals marginal revenue |
| Answer» E. | |
| 19. |
If a firm wage costs increase this will cause __________ and __________? |
| A. | marginal cost to increase, output to fall |
| B. | marginal revenue to increase output to fall |
| C. | opportunity cost to increase the firm will close |
| D. | average cost will rise output will increase ____ output and an upward shift in marginal revenue ____ output |
| Answer» B. marginal revenue to increase output to fall | |
| 20. |
Inferior goods have _________ and luxury goods have _________? |
| A. | negative income elasticity income elasticity greater than 1 |
| B. | income elasticity greater than 1, negative income elasticities |
| C. | Positive income elasticities, negative income elasticities |
| D. | None of the above |
| Answer» B. income elasticity greater than 1, negative income elasticities | |
| 21. |
Adding up the quantities demanded of a good by different people facing the same price gives us the ? |
| A. | Supply curve |
| B. | Market demand curve |
| C. | Demand curve |
| D. | Market supply curve |
| Answer» C. Demand curve | |
| 22. |
The increase in total cost when one more unit is produced is known as ? |
| A. | marginal cost |
| B. | opportunity cost |
| C. | limited cost |
| D. | average cost |
| Answer» E. | |
| 23. |
The price elasticity of demand is a negative number this means ? |
| A. | Demand is price elastic |
| B. | Demand is price inelastic |
| C. | The demand curve is downward sloping |
| D. | An increase in income will reduce the quantity demanded |
| Answer» D. An increase in income will reduce the quantity demanded | |
| 24. |
Economics assumes that people consume goods and services to achieve ? |
| A. | Status |
| B. | Prestige |
| C. | Utility |
| D. | Self-esteem |
| Answer» D. Self-esteem | |
| 25. |
Positive cross elasticities suggest that goods are ____ and negative cross-elasticities that goods are ? |
| A. | substitutes inferior |
| B. | normal, complements |
| C. | substitutes complements |
| D. | normal, inferior |
| Answer» D. normal, inferior | |
| 26. |
A movement along the demand curve to the left may be caused by ? |
| A. | a decrease in supply. |
| B. | a rise in income |
| C. | a fall in the number of substitute goods |
| D. | a rise in the price of inputs |
| Answer» B. a rise in income | |
| 27. |
If the cross elasticity of demand is -2 ? |
| A. | The products are substitutes and demand is cross price elastic |
| B. | The products are substitutes and demand is cross price inelastic |
| C. | The products are complements and demand is cross price elastic |
| D. | The products are complements and demand is cross price inelastic |
| Answer» D. The products are complements and demand is cross price inelastic | |
| 28. |
The price decrease from Rs 2,000 to Rs 1,800 Quantity demanded per year increases 5000 to 6000 units. Which of the following is correct ? |
| A. | The price elasticity of demand is -2 |
| B. | The good is inferior |
| C. | Income elasticity is + 0.5 |
| D. | Income elasticity is + 2 |
| Answer» B. The good is inferior | |
| 29. |
An increase in price all other things unchanged leads to ? |
| A. | Shift demand outwards |
| B. | Shift demand inwards |
| C. | A contractions of demand |
| D. | An extension of demand |
| Answer» D. An extension of demand | |
| 30. |
When the market operates without interference, price increases will distribute what is available to those who are willing and able to pay the most. This process is known as ? |
| A. | Quantity setting |
| B. | price fixing |
| C. | price rationing |
| D. | quantity adjustment. |
| Answer» D. quantity adjustment. | |
| 31. |
An increase in income should ? |
| A. | Shift demand for an inferior product outward |
| B. | shift demand for an inferior product inward |
| C. | shift supply for an inferior product outward |
| D. | Shift supply for an inferior product inward |
| Answer» C. shift supply for an inferior product outward | |
| 32. |
According to the law of diminishing utility ? |
| A. | Utility is at a maximum with the first unit |
| B. | Increasing units of consumption increase the marginal utility |
| C. | Marginal product will fall as more units are consumed |
| D. | Total utility will rise at a falling rate as more units are consumed |
| Answer» E. | |
| 33. |
The price elasticity of supply is +4 The price increases by 15% sales were originally 200 units What will they be now ? |
| A. | 80 units |
| B. | 320 units |
| C. | 60 units |
| D. | 120 units |
| Answer» C. 60 units | |
| 34. |
A fall in price ? |
| A. | Will cause an inward shift of demand |
| B. | Will cause an outward shift of supply |
| C. | May be caused by a fall in demand |
| D. | Leads to a higher level of production |
| Answer» D. Leads to a higher level of production | |
| 35. |
Aggregate demand will increase if ? |
| A. | consumption falls |
| B. | investment falls |
| C. | Exports fall |
| D. | imports fall |
| Answer» E. | |
| 36. |
Improved training of employees would ? |
| A. | Shift aggregate supply to the right |
| B. | Shift aggregate supply to the left |
| C. | Shift aggregate demand to the right |
| D. | shift aggregate demand to the left |
| Answer» B. Shift aggregate supply to the left | |
| 37. |
Which of the following would increase aggregate demand ? |
| A. | Increased saving |
| B. | Increasing import spending |
| C. | Increased taxation revenue |
| D. | increased investment |
| Answer» D. increased investment | |
| 38. |
Which of the following is consistent with the law of supply ? |
| A. | As the price of calculators rise, the quantity supplied of calculators decreases, ceteris paribus. |
| B. | As the price of calculators calls the supply of calculators increases, ceteris paribus. |
| C. | As the price of calculators rise, the quantity supplied of calculators increases, ceteris paribus. |
| D. | As the price of calculators rise, the supply of calculators increases ceteris paribus. |
| Answer» D. As the price of calculators rise, the supply of calculators increases ceteris paribus. | |
| 39. |
An increase in productivity should ? |
| A. | Lead to a contraction of supply |
| B. | Lead to an expansion of supply |
| C. | Lead to a shift in supply outwards (i.e more supplied at each and every price) |
| D. | Lead to a higher equilibrium and lower equilibrium quantity |
| Answer» D. Lead to a higher equilibrium and lower equilibrium quantity | |
| 40. |
An increase in the costs of production will ? |
| A. | Shift demand outwards |
| B. | Shift demand inwards |
| C. | Shift supply outwards so more is supplied at each and every price, all other things unchanged |
| D. | Shift supply inwards |
| Answer» E. | |
| 41. |
If the demand for coffee decreases as income decreases, coffee is ? |
| A. | an inferior good |
| B. | a normal good |
| C. | a complementary good |
| D. | a substitute good |
| Answer» C. a complementary good | |
| 42. |
A supply curve that starts at the origin has ? |
| A. | A price elasticity of supply greater than one |
| B. | A price elasticity of supply equal to one |
| C. | A price elasticity of supply less than one |
| D. | A positive price elasticity of supply |
| Answer» C. A price elasticity of supply less than one | |
| 43. |
The price of burgers increase by 22% and the quantity of burgers demanded falls by 25% This indicates that demand for burgers is ? |
| A. | elastic |
| B. | perfectly elastic |
| C. | unitarily elastic |
| D. | inelastic |
| Answer» B. perfectly elastic | |
| 44. |
The price of apples falls by 5% and quantity demanded increases by 6% This means that demand is ? |
| A. | zero elastic |
| B. | elastic |
| C. | perfectly elastic |
| D. | inelastic |
| Answer» C. perfectly elastic | |
| 45. |
An increase in aggregate demand if aggregate supply is totally inelastic will ? |
| A. | increase price but not output |
| B. | increase output but not price |
| C. | increase output and price |
| D. | decrease output and price |
| Answer» B. increase output but not price | |
| 46. |
When excess demand occurs in an unregulated market, there is a tendency for ? |
| A. | price to fall |
| B. | quantity supplied to decrease |
| C. | price to rise |
| D. | quantity demanded to increase |
| Answer» D. quantity demanded to increase | |
| 47. |
The quantity demanded of Pepsi has decreased. The best explanation for this is that ? |
| A. | Pepsi’s advertising is not as effective as in the past |
| B. | The price of Coca Cola has increased |
| C. | Pepsi consumers had an increase in income |
| D. | The price of Pepsi increased |
| Answer» E. | |
| 48. |
When the decrease in the price of one good causes the demand for another good to decrease, the goods are_________? |
| A. | complements |
| B. | substitutes |
| C. | inferior |
| D. | nromal |
| Answer» C. inferior | |
| 49. |
if demand is price inelastic ? |
| A. | An increase in price must raise profits |
| B. | An increase in price decrease revenue |
| C. | An increase in price increase revenue |
| D. | A decrease in price reduces sales |
| Answer» D. A decrease in price reduces sales | |
| 50. |
If the cross-price elasticity of demand between two goods is negative, then the two goods are ? |
| A. | normal goods |
| B. | unrelated goods |
| C. | Substitutes |
| D. | Complements |
| Answer» E. | |