1. An increase in supply _____ the price and _____ the quantity demanded.

(A) lowers, raises

(B) raises, lowers
(C) lowers, lowers
(D) raises, raises

2. A businessman opportunity should be accepted if it has _____ net present value.

(A) zero
(B) positive
(C) negative
(D) constant

3. In a monopolistic competition, a business obtains its maximum-profit position where

(A) MR > MC
(B) MR < MC
(C) MR = MC
(D) MR + MC = 1

ANSWER: ECONOMICS MCQ

1. (A) lowers, raises
2. (B) positive
3. (C) MR = MC. See below ↓ for regular economics questions. Answers to these economics
quiz are given after the 5th economic MCQ.

1. The fundamental concept of Economics about resources is that the resources are
(A) equally distributed
(B) unequally distributed
(C) scarce
(D) unlimited

2. Consider a world without scarcity of resources. Then what would be the consequences?
(A) All prices would be zero
(B) Markets would be unnecessary
(C) Economics would no longer be a useful subject
(D) All of the above
3. Who is considered the founder of Microeconomics?
(A) Adam Smith
(B) John Keynes
(C) Friedrich Hayek
(D) Milton Friedman

4. Who is considered the founder of modern Macroeconomics?

(A) Adam Smith
(B) John Keynes
(C) Friedrich Hayek
(D) Milton Friedman

5. When analyzing the impact of a variable on the economic system, the other things
(A) must be kept constant
(B) must also be analyzed
(C) must not be taken into consideration
(D) none of these

ANSWERS: ECONOMICS MCQS

1. (C) scarce
2. (D) All of the above
3. (A) Adam Smith
4. (B) John Keynes

6. Inputs are combined with technology to produce outputs. The fundamental inputs (also called
factors of production) are
(A) land and capital
(B) land and labor
(C) land, labor, and capital
(D) land, labor, capital, and investment

7. Goods produced to produce yet other goods is called

(A) final goods
(B) capital
(C) investment
(D) resources
8. Which economic term is used to represent inequality in income distribution?
(A) GDP
(B) GNP
(C) Gini
(D) HDI

9. The value of the good or service forgone by choosing another investment is called
(A) opportunity cost
(B) purchasing power parity
(C) disposable income
(D) consumer price index

10. The central role of markets is to determine the

(A) quality of goods
(B) quantity of goods
(C) level of income
(D) price of goods

ANSWERS: ECONOMICS MCQ

6. (C) land, labor, and capital
7. (B) capital
8. (C) Gini
9. (A) opportunity cost
10. (D) price of goods

1. What is the function of a central bank (or a state bank)?

(A) taking deposits from the people
(B) implementing monetary policy
(C) lending to businesses
(D) determining inflation and tax rates

ANSWER: ECONOMICS QUIZ

1. (B) implementing monetary policy

11. The branch of economics concerned with overall performance of the economy is known as
(A) Microeconomics
(B) Macroeconomics
(C) Econometrics
(D) Keynesian Economics

12. The branch of economics concerned with the use of statistical methods to obtain empirical
results for economic relations is known as
(A) Microeconomics
(B) Macroeconomics
(C) Econometrics
(D) Keynesian Economics

13. The branch of economics concerned with the behavior of markets, firms, and households is known
as
(A) Microeconomics
(B) Macroeconomics
(C) Econometrics
(D) Bayesian Economics

14. An economy is producing efficiently when no individual’s economic welfare can be

improved unless
(A) supply is increased
(B) demand is increased
(C) someone else is improved
(D) someone else is made worse off

15. Taxes are used to discourage __________ of a commodity.

(A) consumption
(B) production
(C) saving
(D) inflation

ANSWERS: ECONOMICS QUIZ

11. (B) Macroeconomics
12. (C) Econometrics
13. (A) Microeconomics
14. (D) someone else is made worse off
15. (A) consumption
16. Subsidies are used to encourage __________ of a commodity.
(A) consumption
(B) production
(C) saving
(D) inflation

17. Which from the following economic resources cannot be converted into commodity?
(A) Land
(B) Labour
(C) Capital
(D) All of these can be converted into commodity

18. Which from the following are features of a modern economy?

(A) Specialization
(B) Division of Labor
(C) Financial Markets
(D) All of the above

19. When no firm or consumer is large enough to affect the market price, the market is assumed to have
(A) perfect competition
(B) imperfect competition
(C) no competition
(D) none of these

20. Which from the following are the results of imperfect competition in the markets?
(A) Monopolies
(B) Externalities
(C) Public goods
(D) All of the above

ANSWERS: ECONOMICS MULTIPLE CHOICE QUESTIONS

16. (B) production
17. (B) Labour
18. (D) All of the above
19. (A) perfect competition
20. (D) All of the above
21. When one event occurred before another event, the fallacy in economic reasoning that the
first event caused the second event is called
(A) the post hoc fallacy
(B) failure to hold other things constant
(C) the fallacy of composition
(D) normative fallacy

22. When we assume that what is true for the part is also true for the whole, we are committing
(A) the post hoc fallacy
(B) failure to hold other things constant
(C) the fallacy of composition
(D) normative fallacy

23. The three fundamental economic problems every human society must confront and resolve
are
(A) what, how and when
(B) what, where and when
(C) what, how, and for whom
(D) how, where, and for whom

24. The three fundamental economic problems of what, how, and for whom are solved by
(A) supply
(B) demand
(C) consumption
(D) markets

25. Fiscal policy consists of government’s

(A) revenue and taxation
(B) taxation and credit control
(C) expenditure and investment
(D) expenditure and taxation

ANSWERS: ECONOMICS QUIZZES

21. (A) the post hoc fallacy
22. (C) the fallacy of composition
23. (C) what, how, and for whom
24. (D) markets
25. (D) expenditure and taxation

26. The maximum quantity of goods that can be efficiently produced by an economy using its
scarce resources and available technology is called
(A) the supply curve
(B) the demand curve
(C) production-possibility frontier
(D) the supply-demand equilibrium

27. Which economic term is used to measure the overall performance of an economy?
(A) GDP
(B) GNP
(C) Gini
(D) HDI

28. Productive efficiency occurs when an economy cannot produce _____ of one good without
producing _____ of another good.
(A) more, more
(B) more, less
(C) less, less
(D) none of these

29. The concept of invisible hand in the organization of supply and demand in a well-functioning market
mechanism refers to the
(A) self-regulating economy
(B) government-controlled economy
(C) command economy
(D) socialism

30. The increase in economic integration among nations is termed as

(A) specialization
(B) market economy
(C) globalization
(D) equilibrium condition
ANSWERS: ECONOMICS MCQS TEST
26. (C) production-possibility frontier
27. (A) GDP
28. (B) more, less
29. (A) self-regulating economy
30. (C) globalization

31. The price elasticity of demand is the percentage change in _____ demanded divided by the
percentage change in _____.
(A) supply, price
(B) quantity, price
(C) price, supply
(D) price, quantity

32. When price of a commodity increased by 3%, the quantity demanded decreased by 5%. The
quantity is said to have
(A) price-elastic demand
(B) price-elastic supply
(C) price-inelastic demand
(D) price-inelastic supply

33. When price of a commodity increased by 5%, the quantity demanded decreased by 3%. The
quantity is said to have
(A) price-elastic demand
(B) price-elastic supply
(C) price-inelastic demand
(D) price-inelastic supply

34. When price of a commodity decreased by 4%, the quantity demanded increased by 4%. The
quantity is said to have
(A) unit-elastic demand
(B) unit-elastic supply
(C) price equilibrium
(D) supply-demand equilibrium
35. The term “recession” refers to the
(A) high employment
(B) high unemployment
(C) high supply and demand
(D) low supply and demand

ANSWERS: ECONOMICS QUESTIONS

31. (B) quantity, price
32. (A) price-elastic demand
33. (C) price-inelastic demand
34. (A) unit-elastic demand
35. (B) high unemployment

36. What from the following measures a government can take to reduce inequality in the
distribution of income?
(A) Progressive taxation
(B) Transfer payments
(C) Subsidize consumption of low-income groups
(D) All of the above

37. Capital is one of the three fundamental inputs called factors of production which is a
produced and durable input and is itself an output of an economy. Which from the
following is NOT among capital?
(A) Clothing
(B) Machines
(C) Highways
(D) Buildings

38. The economic term used to rank countries according to human development is
(A) GDP Per Capita
(B) GNP
(C) Gini
(D) HDI

39. The ultimate goal of economic science is to

(A) improve the living standard of people
(B) obtain the highest possible GDP
(C) minimize the unemployment
(D) obtain equilibrium between inflation and employment

40. In which from the following questions, we can only examine the likely consequences of
alternative policies, and the answer can be resolved only by discussions?
(A) Do higher interest rates slow the economy?
(B) Do higher interest rates lower inflation?
(C) Should a country lower tariff on imports?
(D) Does higher employment raise the inflation?

ANSWERS: ECONOMICS MCQS QUESTIONS WITH ANSWERS

36. (D) All of the above
37. (A) Clothing
38. (D) HDI
39. (A) improve the living standard of people
40. (C) Should a country lower tariff on imports?

What is meant by entrepôt trade?

(A) Trade among three countries
(B) Importing duty-free goods only
(C) Re-importing goods previously exported
(D) Re-exporting goods previously imported

41. The conflict of interest between owners of a company and the management of the company is
termed as
(A) company dilemma (B) company trade-off (C) owner-manager problem
(D) principal-agent problem

42. The term “oligopoly” means

(A) monopoly
(B) few sellers
(C) socialism
(D) many sellers

43. In a monopolistic competition, a business finds its maximum-profit position where

(A) MR > MC
(B) MR < MC
(C) MR = MC
(D) MR + MC = 1

44. In a perfect competition, maximum profit occurs where marginal revenue equals
(A) price
(B) cost
(C) marginal cost
(D) marginal profit

45. A businessman or a company should accept investments that have _____ net present values.
(A) positive
(B) negative
(C) zero
(D) constant

ANSWERS: MANAGERIAL ECONOMICS MCQS

41. (D) principal-agent problem
42. (B) few sellers
43. (C) MR = MC
44. (A) price
45. (A) positive

Which of the following characteristic can exist both in perfect competition and in monopoly?
(A) ease of entry
(B) many sellers
(C) many buyers
(D) perfectly elastic supply curve

46. A businessman or a company should accept investments that offer rates of return _____ their
opportunity costs of capital.
(A) equal to
(B) greater than
(C) less than
(D) related to

47. When price rises, the quantity demanded generally tends to fall because of:
I. income effect
II. substitution effect
(A) I only
(B) II only
(C) I or II
(D) I and II

48. If there are changes in factors other than a product’s own price that affect the quantity
purchased, the phenomena is termed as
(A) Law of upward-sloping demand
(B) Law of downward-sloping demand
(C) shifts in demand
(D) In-equilibrium of supply and demand

49. An increase in supply generally _____ price and _____ quantity demanded.
(A) lowers, raises
(B) raises, lowers
(C) lowers, lowers
(D) raises, raises

50. Marginal revenue (MR) is _____ when demand is elastic, _____ when demand is unit-elastic,
and _____ when demand is inelastic.
(A) zero, positive, negative
(B) zero, negative, positive
(C) positive, negative, zero
(D) positive, zero, negative

ANSWERS: MANAGERIAL ECONOMICS QUIZ

46. (B) greater than
47. (D) I and II
48. (C) shifts in demand
49. (A) lowers, raises
50. (D) positive, zero, negative

Special Audit of a registered person may be conducted under section: (A) 31

(B) 32 (C) 32A
(D) 28 The answer is: (C) 32A
The impact and incidence of sales tax is

(A) on the consumer (ANS)

(B) on the seller
(C) on the producer
(D) none of these

The largest indirect Tax revenue collection is through

(A) Income Tax

(B) GST (ANS)
(C) Customs duty
(D) Wealth tax
(E) None of these

Basket of main currencies is

(A) reference rate

(B) currency peg
(C) exchange rate
(D) special drawing rights (ANS)

The direct exchange of goods and services for other goods and services is known as

(A) Primitive trade

(B) Barter (ANS)
(C) Non market trade

“Poverty line” is determined by

(A) Per capita calories intake

(B) Income of the family (ANS)
(C) Housing and clothing facilities

Which one of the following tax systems will move in the direction of reduction of economic
disparities?

(A) Flat rate tax

(B) Progressive tax (ANS)
(C) Regressive tax
In Keynesian theory equality between saving and investment is brought about by changes
in the

(A) level of income (ANS)

(B) rate of interest
(C) supply of money

For the Cobb-Douglas Production Function

(A) The law of diminishing returns to scale holds

(B) The law of constant returns to scale holds (ANS)
(C) The law of increasing returns to scale holds

The assumption which makes the “Indifference Curve” convex to the origin is

(A) A diminishing Marginal Rate of substitution (ANS)

(B) Originality of utility
(C) Cardinality of utility

One of the following is included in Personal Income, but excluded from National Income,
which one is that?

(A) Dividends
(B) Wages
(C) Interest on Public Debt (ANS)

An isoquant is convex to the origin because of

(A) law of diminishing returns

(B) diminishing marginal rate of substitution between factors (ANS)
(C) law of increasing returns

The answer is: (B) diminishing marginal rate of substitution between factors

The relationship between price and quantity bought at that price is called

(A) demand curve (ANS)

(B) supply curve (C) law of one price
(D) equilibrium position