Economics MCQ Quiz Hub

1. Contraction of demand is the result of:
Decrease in the number of consumers
Increase in the price of the commodity concerned
Increase in the prices of other goods
Decrease in the income of purchasers

2. All but one of the following are assumed to remain the same while drawing an individuals demand curve for a commodity. Which one is it?
The preferences of the individual
His monetary income
The price of the commodity under consideration
The prices of other goods

3. Which of the following pairs of commodities is an example of substitutes?
Tea and sugar
Tea and coffee
Pen and ink
Shirt and trousers

4. In the case of a straight-line demand curve meeting the two axes the price-elasticity of demand at the mid-point of the line would be:
0
1
1.5
2

5. The Law of Demand assuming other things to remain constant establishes the relationship between:
Income of the consumer and the quantity of a commodity demanded by him
Price of a commodity and the quantity demanded
Price of a commodity and the demand for its substitute
Quantity demanded of a commodity and the relative prices of its complementary goods

6. Identify the factor which generally keeps the price-elasticity of demand for a commodity now:
Variety of uses for that commodity
Its low price
Close substitutes for that commodity

7. Identify the coefficient of price-elasticity of demand when the percentage increase in the quantity of a commodity demanded is smaller than the percentage fall in its price:
Equal to one
Greater than one
Small than one
Zero

8. In the case of an inferior good the income elasticity of demand is:
Positive
Zero
Negative
Infinite

9. In respect of which of the following category of goods is consumers surplus highest?
Giffen goods
Necessities
Luxuries
Prestige goods

10. Total utility is maximum when:
Marginal utility is zero
Marginal utility is at its highest point
Marginal utility is equal to average
Average utility is maximum

11. If the demand for a commodity is inelastic an increase in its price will cause the total expenditure of the consumers of the commodity to:
Remain the same
Increase
Decrease
Any of the above

12. If regardless of changes in its price the quantity demanded of a commodity remains unchanged then the demand curve for the commodity will be:
Horizontal
Vertical
Positively sloped
Negatively sloped

13. In the case of a Giffen good the demand curve will be:
Horizontal
Downward
Backward falling to the left
Upward-slopping to the right

14. The budget-line is also known as the:
Iso-utility curve
Production possibility line
Isoquant
Consumption possibility line

15. Which one is not a assumption of the theory of demand based on analysis of indifference curves?
Given scale of preferences as between different combinations of two goods
Diminishing marginal rate of substitution
Constant marginal utility of money
Consumers would always prefer more of a particular good to less of it other things remaining the same

16. The elasticity of substitution between two perfect substitutions is:
Zero
Greater than zero
Less than infinity
Infinity

17. The consumer is in equilibrium at a point where the budget line:
Is above an indifference curve
Is below an indifference curve
Is tangent to an indifference curve
Cuts an indifference curve

18. An indifference curve slopes down towards right since more of one commodity and less of another result in:
Same satisfaction
Greater satisfaction
Maximum satisfaction
Decreasing Expenditure

19. The Revealed Preference Theory deduces the inverse price-quantity relationship from:
Assumption of indifference
Postulate of utility maximization
Observed behaviour of the consumer
Introspection

20. Which of the following statements is incorrect?
An indifference curve must be downward sloping to the right
Convexity of a curve implies that the slope of the curve diminishes as one moves from left to right
The elasticity of substitution between two goods to a consumer is zero
The total effect of a change in the price of a good on its quantity demanded is called the price effect

21. Production is a function of:
Profits
Costs
Inputs
Price

22. An ISO-product curve slopes:
Downward to the left
Downward to the right
Upward to the left
Upward to the right

23. A vertical supply curve parallel to the price axis implies that the elasticity of supply is:
Zero
Indinity
Equal to one
Greater than zero but less than infinity

24. The supply of a commodity refers to:
Actual production of the commodity
Total existing stock of the commodity
Stock available for sale
Amount of the commodity offered for sale at a particular price per unit of time

25. Which cost increases continuously with the increase in production?
Average cost
Marginal cost
Fixed cost
Variable cost

26. Which of the following cost curves is never Un-shaped?
Average cost curve
Marginal cost curve
Average variable cost curve
Average fixed cost curve

27. Total costs in the short-term are classified into fixed costs and varibale costs. Which one of the following is a variable cost?
Cost of raw materials
Cost of equipment
Interest payment on past borrowing
Payment of rent on buildings

28. In the short term when the output of a firm increases its average fixed cost:
Increase
Decrease
Remains constant
First declines and then rises

29. A significant property of the Cobb - Douglas production function is that the elasticity of substitution between inputs is:
Equal to unity
More than unity
Less than unity
Zero

30. The production techniques are technically efficient:
Below the lower ridge line
Above the upper ridge line
Between the two ridge lines
On the upper ridge line

31. Which of the following is not a feature of iso-product curves? Iso-product curves:
Are downward sloping to the right
Show different input combination producing the same output
Intersect each other
Are convex to the origin

32. Some economists refer to iso-product curves as:
Engels curve
Production indifference curve
Budget line
Ridge line

33. Which one of the following is also known as plant curves?
Long-run average cost (LAC) curves
Short-run average cost (SAC) curves
Average variable cost (AVC) curves
Average total cost (ATC) curves

34. What is the shape of the average fixed cost (AFC) curve?
U-shape
Horizontal upto a point and then rising
Sloping down towards the right
Rectangular hyperbola

35. An increase in the supply of a commodity is caused by:
Improvements in its technology
Fall in the prices of other commodities
Fall in the prices of factors of production
All of the above

36. Elasticity of supply refers to the degree of responsiveness of supply of a commodity to changes in its:
Demand
Price
Costs of production
State of technology

37. The cost of one thing in terms of the alternative given up is known as:
Production cost
Physical cost
Real cost
Opportunity cost

38. According to current thinking the law of diminishing returns applies to:
All fields of production
Agriculture
Mining
Manufacturing

39. Identify the correct statement:
The average product is at its maximum when the marginal product is equal to the average product
The law of increasing returns relates to the effect of changes in factor proportions
Economies of scale arise only because of indivisibilities of factors of production
The production possibility curve and the transformation curve are different curves

40. With which of the following is the concept of marginal cost closely related?
Variable cost
Fixed cost
Implicit cost
Explicit cost

41. According to M. Kalecki the true measure of the degree of monopoly power is the:
Ratio between price and marginal cost
Extent of monopolistic profit enjoyed by the monopolist
Cross-elasticity of demand for the product of the monopolist
Price charged by the monopoliist minus marginal cost of production

42. A monopolist is able to maximize his profit when:
His output is maximum
He charges a high price
His average cost is minimum
His maginal revenue is equal to marginal cost

43. Which of the following is not an essential condition of pure competition?
Large number of buyers and sellers
Homogeneous product
Freedom of entry
Absence of transport cost

44. What is the shape of the demand curve faced by a firm under perfect competition?
Horizontal
Vertical
Positively sloped
Negatively sloped

45. Which is the first-order condition for the profit of a firm to be maximum?
AC = MR
MC = MR
MR = AR
AC = AR

46. In which form of the market structure in the degree of control over the price of its product by a firm very large?
Monopoly
Imperfect competition
Oligopoly
Perfect competition

47. Which is the other name that is given to the average revenue curve?
Profit curve
Demand curve
Average cost curve
Indifference curve

48. Under which of the following forms of market structure does a firm have no control over the price of its product?
Monopoly
Monopolistic competition
Oligopoly
Perfect competition

49. Which one of the following is the condition of equilibrium for the monopolist?
MR = MC
MC = AR
MR = MC = Price
AC = AR

50. The situation of monopolistic competition is created by:
Small number of producers of a commodity
Lack of homogeneity of the product produced by different firms
Imperfection of the market for that product
All of the above

51. Discriminating monopoly implies that the monopolist charges different prices for his commodity:
From different groups of consumers
For different uses
At different places
Any of the above

52. Price discrimination will be profitable only if the elasticity of demand in different markets into which the total market has been divided is:
Uniform
Different
Less
Zero

53. Which of the following oligopoly models is concerned with the maximization of joint profits?
Price leadership model
Bertrands model
Collusive model
Edge worths model

54. The Kinky demand curve hypothesis is designed to explain in the context of oligopoly:
Price and output determination
Price rigidity
Price leadership
Collusion among rivals

55. Which form of market structure is characterised by interdependence in decision-making as between the different competing firms?None of the above
Oligopoly
Perfect competition
Imperfect competition
None of the above

56. Which one of the following is not the assumption of the Marginal Productivity Theory of Distribution?
Homogeneity of a factor
Perfect competition in the factor market
All factors except one are variable
Given stock of each factor and full employment

57. With which of the theories of wages is the name of John Stuart Mill associated?
Marginal productivity theory of wages
Wages-fund theory
Subsistence theory of wages
Iron law of wages

58. Under monophony in the labour market the supply curve of labour facing the firm will be:
Upward-sloping to the right
Downward-sloping to the right
Backward-sloping to the left
Horizontal

59. Economic rent can accrue to:
Land only
Capital only
Specialised technical personnel only
Any of the factors of production

60. Which of the following statements is incorrect?
Quasi-rent is a purely short-term phenomenon
Rent is exclusively demand determined
Rent can accrue to land alone
Rent is the excess of actual earnings over transfer earnings

61. In the context of the firm as a whole quasi-rent is defined as the excess of the total receipts over the total:
Fixed cost
Average cost
Fixed and variable cost
Variable cost

62. A factor of production whose supply is fixed in the short run may get additional earnings. These earnings are generally referred to as:
Surplus value
Quasi-rent
Transfer earnings
Supernormal profit

63. Which of the following factors forms the basis of the Loan able Funds Theory of Interest?
Monetary factors
Psychological factors
Technical factors
Monetary and non monetary factors

64. Which of the following purposes normally does not give rise to the demand for loan able funds?
Consumption
Saving
Investment
Hoarding

65. On which of the following does the demand for money for speculative motive mainly depend?
Income
Profits
Rate of interest
General price level

66. The demand for liquidity preference is governed by:
Transaction motives
Precautionary motives
Speculative motives
All of these

67. Identify the neo-classical theory of the rate of interest:
Liquidity-preference theory
Time preference theory
Abstinence theory
Loan able funds theory

68. The classical theory explained interest as a reward for:
Parting with liquidity
Abstinence
Saving
Inconvenience

69. According to Joseph Schumpeter profit is the reward for:
Innovation
Uncertainty-bearing
Risk-taking
Management

70. The term normal profit as used in the analysis of equilibrium of the firm under perfect competition refers to:
Earnings of management
Reward for enterprise
Reward for innovation
Residual income of a business