180+ Basics of Economics Solved MCQs

1.

The economic problem arises since

A. wants are unlimited
B. resources are limited
C. resources are capable of alternative uses
D. all of the above
Answer» D. all of the above
2.

Economic problem arises in

A. planned economies
B. free market economies
C. mixed economies
D. all of the above
Answer» D. all of the above
3.

The resources are :

A. limited
B. unlimited
C. not only limited but are capable of alternative uses
D. none of the above
Answer» C. not only limited but are capable of alternative uses
4.

----- is not an example of free good

A. sunlight
B. car
C. petrol
D. computer
Answer» A. sunlight
5.

The term production refers to:

A. producing things which are capable of satisfying human wants
B. creation or addition of utilities
C. transformation of inputs into output
D. all of the above
Answer» D. all of the above
6.

The problem of allocation of resources is concerned with:

A. what to produce
B. how to produce
C. for whom to produce
D. all of the above
Answer» A. what to produce
7.

The distribution of national product among the members of the society is the problem of:

A. what to produce
B. how to produce
C. for whom to produce
D. all of the above
Answer» C. for whom to produce
8.

Which one of the following come under macro economics:

A. per capita income
B. study of a firm
C. individual income
D. theory of factor pricing
Answer» A. per capita income
9.

Which one of the following is not come under macro economics

A. national income
B. per capita income
C. disposable income
D. individual income
Answer» D. individual income
10.

Partial equilibrium analysis come under:

A. micro economics
B. macro economics
C. welfare economics
D. international economics
Answer» A. micro economics
11.

“The starting point of all economic activity is the existence of human wants” Who said this?

A. adam smith
B. selligman
C. ricardo
D. alfred marshall
Answer» B. selligman
12.

Production and consumption takes place simultaneously in the case of

A. goods
B. services
C. both in the case of goods and services
D. neither in the case of goods and services
Answer» B. services
13.

Economic growth can be achieved through

A. advanced technology
B. expansion of resources
C. both a & b
D. neither a & b
Answer» C. both a & b
14.

Micro economics doesn’t deal with:

A. the study of individual economic units
B. determination of factor prices
C. price determination of commodities
D. general equilibrium analysis
Answer» D. general equilibrium analysis
15.

Name the economist who analyses the subject matter of economics into two branches: micro economic analysis and macro economic analysis.

A. adam smith
B. alfred marshall
C. ragner frisc
D. p a samuelson
Answer» C. ragner frisc
16.

Transformation of inputs into outputs is known as

A. production
B. consumption
C. distribution
D. exchange
Answer» A. production
17.

----- is an example of secondary input

A. land
B. labour
C. capital
D. raw material
Answer» D. raw material
18.

Odd-man out from the following

A. steel
B. medicine
C. education
D. train
Answer» C. education
19.

The choice of techniques of production is related to the problem of

A. what to produce
B. how to produce
C. for whom to produce
D. none of the above
Answer» B. how to produce
20.

The functional relationship between inputs and outputs is called

A. production function
B. consumption function
C. investment function
D. saving function
Answer» A. production function
21.

Firms owned by one individual is known as

A. proprietorship
B. partnership
C. corporations
D. none of the above
Answer» A. proprietorship
22.

Firms owned by two or more individuals is known as

A. proprietorship
B. partnership
C. corporations
D. none of the above
Answer» B. partnership
23.

Firms owned by stock holders are known as

A. proprietorship
B. partnership
C. corporations
D. none of the above
Answer» C. corporations
24.

The major objective of a firm is

A. profit maximization
B. revenue maximization
C. sales maximization
D. none of the above
Answer» A. profit maximization
25.

Which one of the following is an example of fixed input

A. raw materials
B. casual workers
C. plant and equipments
D. all of the above
Answer» C. plant and equipments
26.

In short-run

A. all inputs are fixed
B. all inputs are variable
C. some inputs are fixed and some are variable
D. none of the above
Answer» C. some inputs are fixed and some are variable
27.

In long-run

A. all inputs are fixed
B. all inputs are variable
C. some inputs are fixed and some are variable
D. none of the above
Answer» B. all inputs are variable
28.

The variable cost of a firm vary in direct proportion to the

A. volume of its output
B. extent of its profits
C. volume of its sale
D. all of the above
Answer» A. volume of its output
29.

Law of variable proportions is concerned with

A. long-run production function
B. laws of returns to scale
C. short-run production function
D. none of the above
Answer» C. short-run production function
30.

The ‘point of inflection’ come in which stage of the law of variable proportions

A. stage i
B. stage ii
C. stage iii
D. none of the above
Answer» A. stage i
31.

A rational producer will select his level of production in which stage of the law of variable proportions

A. stage i
B. stage ii
C. stage iii
D. either stage i or stage ii
Answer» B. stage ii
32.

Total product reaches at maximum when

A. mp is increasing
B. mp is maximum
C. mp = 0
D. mp is negative
Answer» C. mp = 0
33.

Returns to scale refers to the production function where

A. all factors are fixed
B. some factors are fixed and others are variable
C. all factors are variable
D. none of the above
Answer» C. all factors are variable
34.

In the case of diminishing returns to scale, a given proportionate increase in all factors causes

A. a more than proportionate increase in output
B. an equal proportionate increase in output
C. a less than proportionate increase in output
D. none of the above
Answer» C. a less than proportionate increase in output
35.

Increasing returns to scale occurs due to

A. division of labour
B. specialization
C. economies of scale
D. all of the above
Answer» D. all of the above
36.

The cause for diminishing returns to scale is:

A. improper proportion of factors of production
B. difficulty in the combination of certain factors
C. excess combination of certain factors
D. all of the above
Answer» D. all of the above
37.

The solution to diminishing returns to scale is :

A. technical progress
B. expansion of resources
C. proper combination or resources
D. all of the above
Answer» D. all of the above
38.

Which one of the following is not related to economies of scale:

A. scope for division of labour and specialization
B. scope for getting inputs at cheaper rates
C. difficulty faces by the managers to coordinate the business
D. scope for better storage facilities
Answer» C. difficulty faces by the managers to coordinate the business
39.

The law of Diminishing returns is applicable to:

A. agriculture only
B. industry only
C. in short-run only
D. universally
Answer» D. universally
40.

labourers are employed the firm produces 136 units of output. Then the marginal product is ---

A. 120
B. 136
C. 6
D. 16
Answer» C. 6
41.

Other things remaining the same, the quantity of a product demanded increases with ------------ in price.

A. increase
B. decrease
C. variation
D. none of the above
Answer» B. decrease
42.

When total utility is maximum, marginal utility is:

A. maximum
B. one
C. zero
D. infinite
Answer» C. zero
43.

For complementary goods, the cross elasticity of demand:

A. positive
B. negative
C. zero
D. none
Answer» B. negative
44.

Relation between price of a commodity and demand for another commodity is measured by:

A. price elasticity
B. income elasticity
C. cross elasticity
D. elasticity of substitution
Answer» C. cross elasticity
45.

When TU falls, MU is:

A. rises
B. zero
C. positive
D. negative
Answer» D. negative
46.

Demand varies ------------- with price.

A. directly
B. positively
C. inversely
D. none of the above
Answer» C. inversely
47.

When Q = f (P), the elasticity coefficient is measured by:

A. ∆q/∆p / p/q
B. ∆p/∆q * q/p
C. ∆q/∆p * p/q
D. ∆p/∆q / q/p
Answer» C. ∆q/∆p * p/q
48.

Income elasticity of demand for inferior good is:

A. negative
B. positive
C. zero
D. unity
Answer» A. negative
49.

In the case of luxury goods, the income elasticity of demand will be:

A. less than unity
B. unity
C. more than unity
D. all the above
Answer» C. more than unity
50.

Income elasticity is positive, but less than unity in the case of:

A. necessity
B. luxury
C. inferior
D. substitutes
Answer» A. necessity
51.

In drawing an individual demand curve for a commodity, all but which of the following are kept constant:

A. individual’s money income
B. the prices of the related commodity
C. price of the commodity under consideration
D. tastes of the consumer
Answer» C. price of the commodity under consideration
52.

When an individual’s income rises, when everything else remains the same, his demand for normal goods:

A. rises
B. falls
C. remains the same
D. any of the above is possible
Answer» A. rises
53.

When an individual’s income falls, when everything else remains the same, his demand for inferior goods:

A. increases
B. decreases
C. remains unchanged
D. cannot say
Answer» A. increases
54.

When the price of the substitute commodity of X falls, the demand for X:

A. rises
B. falls
C. remains unchanged
D. all of the above is possible
Answer» B. falls
55.

If the quantity demanded remains unchanged as the price of the commodity falls, the coefficient of price elasticity of demand is:

A. greater than
B. one equal to one
C. smaller than one
D. zero
Answer» D. zero
56.

If the income elasticity of demand is greater than one, then the commodity is:

A. necessity
B. luxury
C. inferior
D. non-related commodity
Answer» A. necessity
57.

Which of the following is an exception to the law of demand?

A. giffen good
B. normal good
C. superior good
D. all of the above
Answer» A. giffen good
58.

The law of diminishing marginal utility was popularized by:

A. keynes
B. marshall
C. smith
D. samuelson
Answer» B. marshall
59.

If the income elasticity of demand for a commodity is found to be 0.4, then the commodity concerned is:

A. luxury
B. necessity
C. giffen’s goods
D. independent good
Answer» B. necessity
60.

Cross elasticity of demand in the case of substitutes:

A. zero
B. negative
C. positive
D. infinity
Answer» C. positive
61.

If a small change in price leads to infinitely large change in quantity demanded, then the demand is:

A. perfectly elastic
B. perfectly inelastic
C. elastic
D. inelastic
Answer» A. perfectly elastic
62.

Net addition to total utility when one more unit is consumed is:

A. au
B. mu
C. mc
D. tu
Answer» B. mu
63.

Most important determinant of demand is :

A. income
B. wealth
C. price
D. advertisement
Answer» C. price
64.

Which of the following is the reason for law of demand:

A. price effect
B. backlash effect
C. income effect
D. real balance effect
Answer» C. income effect
65.

Net addition to total cost is called:

A. marginal cost
B. average cost
C. fixed cost
D. variable cost
Answer» A. marginal cost
66.

The market equilibrium for a commodity is determined by :

A. market demand
B. market supply
C. balancing of the forces of demand and supply
D. any of the above
Answer» C. balancing of the forces of demand and supply
67.

When there are only few sellers of the commodity, the market is called:

A. monopoly
B. duopoly
C. oligopoly
D. monopsony
Answer» C. oligopoly
68.

If the supply curve of the commodity is having a positive slope, a rise in the price of the commodity, results in:

A. increase in supply
B. increase in quantity supplied
C. decrease in supply
D. decrease in quantity supplied
Answer» B. increase in quantity supplied
69.

From the position of stable equilibrium, the market supply of a commodity decreases, while the market demand remains unchanged, then:

A. equilibrium price falls
B. equilibrium quantity rises
C. both equilibrium price and equilibrium quantity decreases
D. equilibrium price rises, but equilibrium quantity falls
Answer» D. equilibrium price rises, but equilibrium quantity falls
70.

Elasticity of supply for a positively sloped straight line supply curve that intersects the price axis is:

A. equal to zero
B. equal to one
C. greater than one
D. constant
Answer» C. greater than one
71.

In which of the following market, advertisement is absent:

A. monopolistic competition
B. perfect competition
C. oligopoly
D. none of the above
Answer» C. oligopoly
72.

-------------- cost can never become zero.

A. variable cost
B. fixed cost
C. marginal cost
D. average cost
Answer» B. fixed cost
73.

If a positively sloped linear supply curve crosses the quantity axis, the elasticity of supply is:

A. inelastic
B. elastic
C. unitary elastic
D. perfectly elastic
Answer» A. inelastic
74.

If a positively sloped linear supply curve passes through the origin, the elasticity of supply is

A. inelastic
B. elastic
C. unitary elastic
D. perfectly elastic
Answer» C. unitary elastic
75.

Average cost is the sum of AVC and

A. mc
B. tc
C. afc
D. atc
Answer» C. afc
76.

The horizontal supply curve parallel to quantity axis represents

A. elastic supply
B. inelastic supply
C. perfectly elastic supply
D. perfectly inelastic supply
Answer» C. perfectly elastic supply
77.

When output is zero, variable cost is --------

A. maximum
B. minimum
C. infinity
D. zero
Answer» D. zero
78.

Change in quantity supplied of a product can result from

A. changes in own price
B. changes in cost of production
C. change in technology
D. change in price of related products
Answer» A. changes in own price
79.

At prices above the equilibrium price

A. quantity supplied exceeds quantity demanded
B. quantity demanded exceeds quantity supplied
C. there is shortage
D. all of the above is possible
Answer» A. quantity supplied exceeds quantity demanded
80.

When MC cuts AC, AC is at its ------------

A. maximum
B. minimum
C. zero
D. negative
Answer» B. minimum
81.

Cost function relates cost to

A. input
B. output
C. raw material
D. machines
Answer» B. output
82.

An increase in market demand, supply remaining the same results in

A. decrease in equilibrium price
B. decrease in equilibrium quantity
C. decrease in equilibrium price and increase in equilibrium quantity
D. both equilibrium price and quantity rises
Answer» D. both equilibrium price and quantity rises
83.

There is no distinction between firm and industry in

A. perfect competition
B. monopoly
C. monopolistic competition
D. oligopoly
Answer» B. monopoly
84.

A fall in the market demand, supply remaining the same results in

A. increase in equilibrium price
B. increase in equilibrium quantity
C. increase in equilibrium price and decrease in equilibrium quantity
D. both equilibrium price and quantity falls
Answer» D. both equilibrium price and quantity falls
85.

The cost of next best alternative is called

A. marginal cost
B. average cost
C. opportunity cost
D. direct cost
Answer» C. opportunity cost
86.

When MC is greater than AC, AC

A. rises
B. falls
C. maximum
D. minimum
Answer» A. rises
87.

There is ------- relationship between price and quantity supplied

A. positive
B. negative
C. constant
D. inverse
Answer» A. positive
88.

Supply curve represents -------- relationship between quantity and price

A. direct
B. inverse
C. either direct or inverse
D. none of the above
Answer» A. direct
89.

National Income means:

A. gnp at factor cost
B. gnp at market price
C. nnp at factor cost
D. nnp at market price
Answer» C. nnp at factor cost
90.

The difference between GDP and NDP equals:

A. transfer payments
B. net indirect taxes
C. net factor income from abroad
D. depreciation
Answer» D. depreciation
91.

Which of the following is true?

A. gnp + depreciation = nnp
B. gnp = gdp + net factor income from abroad
C. ndp = gnp minus net indirect taxes
D. nnp = dgp minus depreciation
Answer» B. gnp = gdp + net factor income from abroad
92.

NNP is equal to:

A. gnp plus depreciation
B. gnp minus depreciation
C. gnp minus exports
D. gnp plus exports
Answer» B. gnp minus depreciation
93.

Which of the following is not a method of national income estimation?

A. matrix method
B. income method
C. expenditure method
D. product method
Answer» A. matrix method
94.

An accounting year in India is:

A. calendar year
B. academic year
C. fiscal year
D. none of these
Answer» C. fiscal year
95.

Increase in real National Income (NI) means increase in:

A. ni at current prices
B. ni at constant prices
C. both
D. none of these
Answer» B. ni at constant prices
96.

Net indirect taxes means:

A. indirect taxes plus subsidies
B. income minus taxes
C. indirect taxes minus subsidies
D. exports minus imports
Answer» C. indirect taxes minus subsidies
97.

Net factor income from abroad shows the difference between:

A. gdp and ndp
B. nnp and ndp
C. gnp and gdp
D. gnp and nnp
Answer» C. gnp and gdp
98.

Per capita income is equal to:

A. population/national income
B. national income/population
C. national income/gdp
D. nnp/gnp
Answer» B. national income/population
99.

National income in India is estimated by:

A. rbi
B. nsso
C. cso
D. world bank
Answer» C. cso
100.

The first estimate of National income in India was done by:

A. k.n. raj
B. v.k.r.v. rao
C. dadabai naoroji
D. p.c. mahalanobis
Answer» C. dadabai naoroji
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