Economics MCQs

Option A: Taiwan

Option B: North Korea

Option C: Singapore

Option D: Hong kong

Correct Answer: North Korea ✔

Option A: high population growth rates

Option B: large number of people living in poverty

Option C: very traditional methods of agricultural production

Option D: All of the above

Correct Answer: All of the above ✔

Option A: capitalism

Option B: physical quality of life index

Option C: socialism

Option D: communism

Correct Answer: physical quality of life index ✔

Option A: approximately 35%

Option B: approximately 80%

Option C: nearly 10 billion people

Option D: nearly 1 billion people

Correct Answer: approximately 80% ✔

Option A: population

Option B: two thirds

Option C: one third

Option D: 28 percent

Correct Answer: population ✔

Option A: china

Option B: Russia

Option C: Hungary

Option D: Mexico

Correct Answer: Mexico ✔

Option A: Latin America

Option B: Asia

Option C: Africa

Option D: Australia

Correct Answer: Australia ✔

Option A: has no impact on the human capital of workers?

Option B: increases human capital and the wages of workers

Option C: can make any worker into a superstar

Option D: only helps firms sort workers into high ability and low-ability workers.

Correct Answer: increases human capital and the wages of workers ✔

Option A: can make any worker into a superstar

Option B: increases human capital and the wages of workers

Option C: only helps firms sort workers into high ability and low-ability workers

Option D: reduces the wage gap between high-skill and low-skill workers.

Correct Answer: only helps firms sort workers into high ability and low-ability workers ✔

Option A: unpleasant

Option B: all these answers

Option C: safe

Option D: fun

Correct Answer: unpleasant ✔

Option A: Attractive people tend to earn less because attractive people are viewed as shallow and more self-absorbed and therefore, as less productive

Option B: Attractive people tend to earn more because they may actually have a larger value of marginal product

Option C: Attractive people tend to earn more because attractive people usually have greater human capital

Option D: Attractive people tend to earn less because attractive people usually have less human capital

Correct Answer: Attractive people tend to earn more because they may actually have a larger value of marginal product ✔

Option A: the best professor

Option B: the best writer

Option C: All of these answers participate in markets that could generate a superstar

Option D: The best accountant

Correct Answer: the best writer ✔

Option A: It must be involved in professional athletics

Option B: Every customer must be indifferent to the price they pay, and the seller must be a competitor in the market for the product

Option C: Every customer must be willing to pay an enormous amount for the product and the product must be a necessity

Option D: Every customer must want the good supplied by the best producer and the technology must exist for the best producer to supply every customer at low cost

Correct Answer: Every customer must want the good supplied by the best producer and the technology must exist for the best producer to supply every customer at low cost ✔

Option A: Increase labor market discrimination because some workers can charge more for their services than other workers in a competitive market

Option B: have no impact on labour market discrimination

Option C: reduce labour market discrimination because non-discrimination firms will employ cheaper labour earn more profits and drive discriminating firms out of the market

Option D: increase labour market discrimination because bigoted employers can charge any price they want in a competitive market to cover the cost of their discrimination

Correct Answer: reduce labour market discrimination because non-discrimination firms will employ cheaper labour earn more profits and drive discriminating firms out of the market ✔

Option A: minimum-wage laws

Option B: efficiency wages

Option C: unions

Option D: beauty

Correct Answer: beauty ✔

Option A: Men have more human capital than women

Option B: Employers in competitive markets are bigots

Option C: Men have more job experience than women

Option D: None of the above

Correct Answer: Employers in competitive markets are bigots ✔

Option A: marginal revenue, marginal cost

Option B: long run marginal revenue, long run marginal cost

Option C: labor output ratio, capital output ratio

Option D: marginal cost of labor, marginal revenue product

Correct Answer: marginal cost of labor, marginal revenue product ✔

Option A: footballers give more entertainment

Option B: lecturers are lazy

Option C: the labor markets are imperfect

Option D: top footballers are relatively scarce in relation to lecturers

Correct Answer: top footballers are relatively scarce in relation to lecturers ✔

Option A: there are too few teachers

Option B: too few student places in higher education

Option C: it is costly to acquire human capital

Option D: teachers’ salaries are too low

Correct Answer: it is costly to acquire human capital ✔

Option A: increase the wage, increase employment

Option B: maintain the wage, increase employment

Option C: increase the wage, lower employment

Option D: maintain the wage, lower employment

Correct Answer: increase the wage, lower employment ✔

Option A: will not work at the offered wage

Option B: would work at the going wage but can’t find jobs

Option C: will not work because the hours are anti-social

Option D: Are not prepared to move house to get the job

Correct Answer: B. would work at the going wage but can’t find jobs ✔

Option A: depreciation of the existing capital stock

Option B: productive investment

Option C: dwellings

Option D: inventories

Correct Answer: depreciation of the existing capital stock ✔

Option A: its scrap values

Option B: its depreciation

Option C: the present value of the future stream of income it can earn

Option D: the cost of loans

Correct Answer: the present value of the future stream of income it can earn ✔

Option A: encourage the use of more capital in the long run, reduce demand for all inputs

Option B: encourage the use of more capital increase demand for all inputs

Option C: encourage the use of less capital reduce demand for all inputs

Option D: encourage the use of less capital, reduce demand for all inputs

Correct Answer: encourage the use of less capital reduce demand for all inputs ✔

Option A: wage differentials, skill levels

Option B: technology, the ease of factor substitution

Option C: government grants, international competition

Option D: patents, skill shortages

Correct Answer: technology, the ease of factor substitution ✔

Option A: employees

Option B: the population

Option C: the factors of production

Option D: the working population

Correct Answer: the factors of production ✔

Option A: housing gets priority

Option B: industry gets priority

Option C: farming gets priority

Option D: the equilibrium rental rate equilibrium total demand with supply

Correct Answer: the equilibrium rental rate equilibrium total demand with supply ✔

Option A: variable, technology

Option B: fixed, expectations

Option C: fixed, rental rate of capital

Option D: variable, interest rates

Correct Answer: fixed, rental rate of capital ✔

Option A: change in a company’s balance sheet when it acquires new plant

Option B: additional value of output from using more capital

Option C: change in company’s share price

Option D: changing value of the capital stock

Correct Answer: additional value of output from using more capital ✔

Option A: wage rate of capital

Option B: interest charges

Option C: marginal capital cost

Option D: rental rate for capital

Correct Answer: rental rate for capital ✔

Option A: low wages, employment

Option B: high wages, labor supply

Option C: high wages, productivity

Option D: high wages, employment

Correct Answer: high wages, productivity ✔

Option A: they tend to work in relatively unskilled jobs

Option B: educational disadvantage

Option C: firms are reluctant to invest in training

Option D: all of the above

Correct Answer: all of the above ✔

Option A: regional variation

Option B: unionization

Option C: relative danger

Option D: skills

Correct Answer: skills ✔

Option A: inelastic the demand for labour, they can restrict the supply of labour

Option B: members they have, aggressive they behave

Option C: the economy is growing, people prefer leisure

Option D: the productivity is growing vacancies exist

Correct Answer: inelastic the demand for labour, they can restrict the supply of labour ✔

Option A: course fees

Option B: course fees and living expenses

Option C: the earnings foregone

Option D: Course fees living expenses and textbook

Correct Answer: the earnings foregone ✔

Option A: the tools used by workers to enhance productivity

Option B: a person inherited ability

Option C: the stock of expertise accumulated by a worker

Option D: education

Correct Answer: the stock of expertise accumulated by a worker ✔

Option A: higher real wages

Option B: lower fixed costs of working

Option C: lower non-labour income

Option D: changes in tastes between leisure and work

Correct Answer: all of the above ✔

A. Supply of labor
B. Short-run demand curve for labor
C. marginal cost of labour
marginal revenue product of labor

Correct Answer: Short-run demand curve for labor ✔

Option A: increase; increase

Option B: increase; reduce

Option C: reduce; reduce

Option D: reduce; increase

Correct Answer: reduce; reduce ✔

Option A: One employee is more attractive than another

Option B: One employee is more educated than another

Option C: All of these answers generated

Option D: One employee works harder than another

Correct Answer: One employee is willing to work the nightshift while another is not. ✔

Option A: different preferences for the type of work they are willing to do

Option B: different levels of job experience

Option C: all of these answers are correct

Option D: different levels of education

Correct Answer: all of these answers are correct ✔

Option A: The existence of a wage differential among groups is strong evidence of discrimination in the labour market

Option B: Discrimination can only persist in a competitive labour market it customers are willing to pay to maintain the discriminatory practice or the government requires discrimination

Option C: Bigoted employers are the main source of a persistent discriminatory wage differential in a competitive market

Option D: Discrimination cannot exist in a competitive labor market

Correct Answer: Discrimination can only persist in a competitive labour market it customers are willing to pay to maintain the discriminatory practice or the government requires discrimination ✔

Option A: productivity

Option B: age

Option C: sex

Option D: race

Correct Answer: productivity ✔

Option A: decrease in the demand for unskilled workers because of increases in technology and increases in international trade

Option B: increase in the number of unskilled workers available due to immigration into the UK.

Option C: decrease in the demand for unskilled workers are more poorly educated

Option D: increase in the number of unskilled workers available because workers are more poorly educated

Correct Answer: decrease in the demand for unskilled workers because of increases in technology and increases in international trade ✔

Option A: women obtaining less human capital because they don’t plan to work continuously to the age of retirement

Option B: Women entering and leaving the labour force to care for children

Option C: customers preferring to deal with men

Option D: women preferring to work in pleasant clean safe work places

Correct Answer: all of these answers ✔

Option A: All of these answers could be source of a persistent discriminatory wage differential

Option B: the customer

Option C: the government

Option D: the employer

Correct Answer: the employer ✔

Option A: Working the night shift

Option B: working harder

Option C: more education

Option D: having a greater amount of natural ability

Correct Answer: doing a job that is fun ✔

Option A: education

Option B: experience

Option C: all of these answers are parts of a worker’s human capital

Option D: effort

Correct Answer: effort ✔

Option A: coal miners must have greater human capital than others

Option B: we have observed a compensating differential

Option C: coal miners must be more attractive than other workers

Option D: we have evidence of discrimination against workers outside the coal mine

Correct Answer: we have observed a compensating differential ✔

Option A: a benefit in kind.

Option B: a means tested cash benefit

Option C: a universal (social insurance based) benefit

Option D: none of the above

Correct Answer: a benefit in kind. ✔

Option A: specific

Option B: Direct

Option C: Ad valorem

Option D: Excise duty

Correct Answer: Ad valorem ✔

Option A: whether there is perfect or imperfect information

Option B: who is legally obliged to pay the tax

Option C: elasticities of demand and supply

Option D: how many producers there are:

Correct Answer: elasticities of demand and supply ✔

Option A: structure of the tax.

Option B: ultimate distribution of a tax’s burden

Option C: behaviour of shifting the tax to another party

Option D: measure of the impact the tax has on employment and output

Correct Answer: B. ultimate distribution of a tax’s burden ✔

Option A: a higher percentage of their income in taxes then low income people

Option B: a lower percentage of their income in taxes than low income people

Option C: the same percentage of their income in taxes as low income people all the taxes in the economy.

Option D: all the taxes in the economy

Correct Answer: a higher percentage of their income in taxes then low income people ✔

Option A: the tax rate you pay on any additional income that you earn.

Option B: the total amount of tax you pay divided by your total income

Option C: the additional tax you pay divided by your total income

Option D: your total income divided by the total amount of tax you pay.

Correct Answer: the tax rate you pay on any additional income that you earn. ✔

Option A: those will equal ability to pay should bear equal tax burdens.

Option B: those who benefit the most from government service should bear the higher tax burden

Option C: those with equal ability to pay should bear unequal burdens

Option D: those with greater ability to pay should pay more

Correct Answer: those with greater ability to pay should pay more ✔

Option A: the income is split equally between the top 20% and the rest of the distribution

Option B: one person has all the income and every one else has nothing

Option C: all the income is received by the top 20% of the income distribution

Option D: income is equally distributed

Correct Answer: all the income is received by the top 20% of the income distribution ✔

Option A: will be perfectly inelastic in the long run. but upward sloping in the short run

Option B: is perfectly inelastic since there is a fixed amount of land

Option C: is perfectly elastic since there is fixed amount of land

Option D: will be upward sloping because as land becomes more valuable in once use, the amount of land made available for that use will increase

Correct Answer: will be upward sloping because as land becomes more valuable in once use, the amount of land made available for that use will increase ✔

Option A: training investment

Option B: skill capital

Option C: skill-building investment

Option D: human capital

Correct Answer: human capital ✔

Option A: encourage people to quit their jobs

Option B: reduce the cost of job search

Option C: enable people to quit searching for work

Option D: reduce the benefits of additional job searching

Correct Answer: reduce the cost of job search ✔

Option A: total variable cost curve

Option B: marginal cost curve

Option C: total product of labour curve

Option D: marginal product of labour curve

Correct Answer: marginal product of labour curve ✔

Option A: the marginal product of capital times the price of labour.

Option B: the additional revenue a firm earns by employing on additional unit of labour

Option C: the additional profit a firms earns by employing one additional unit of labour

Option D: the additional revenue the firm makes by selling one unit of labour.

Correct Answer: the additional revenue the firm makes by selling one unit of labour. ✔

Option A: the demand curve for accountants to shift to the right, since the productivity of accountants has increased

Option B: firms to move up their demand curves for accountants

Option C: the demand curve for accountants to shift to the left, since it requires fewer accountants than it did before to do the same amount of work.

Option D: firms to move down their demand curves for accountants

Correct Answer: the demand curve for accountants to shift to the right, since the productivity of accountants has increased ✔

Option A: remains constant

Option B: increases since the cost of forgoing one hour of work increases

Option C: decreases since the customer now has more income to spend

Option D: may increase of decrease depending on the individual’s preferences.

Correct Answer: increases since the cost of forgoing one hour of work increases ✔

Option A: income effect is zero

Option B: substitution effect outweighs the income effect

Option C: income effect outweighs the substitution effect

Option D: income effect and the substitution effects are equal

Correct Answer: income effect outweighs the substitution effect ✔

Option A: will have no effect on labour supply

Option B: will decreases labour supply

Option C: could cause either an increases or a decrease in labour supply

Option D: will increase labour supply.

Correct Answer: will decreases labour supply ✔

Option A: making spending decision but not labour-supply decision.

Option B: making both spending and labour-supply decisions

Option C: considered to be ‘poor’ but not for those who are considered to be ‘rich’

Option D: making labour-supply decisions but not spending decisions.

Correct Answer: making both spending and labour-supply decisions ✔

Option A: generates a smaller disincentive to work than most alternative anti-poverty policies.

Option B: reduces the cost to the government of fighting poverty

Option C: would not provide benefits to lazy people

Option D: ensures that the poor actually receive what the government thinks they need does all these answers.

Correct Answer: generates a smaller disincentive to work than most alternative anti-poverty policies. ✔

Option A: unskilled workers if the demand for labour is relatively inelastic

Option B: unskilled workers if the demand for labour is relatively elastic

Option C: skilled workers if the demand for labour is relatively elastic

Option D: skilled workers if the demand for labour is relatively inelastic

Correct Answer: unskilled workers if the demand for labour is relatively elastic ✔

Option A: the idea that people should consider policy as if behind a veil of ignorance as to what their circumstances might be in society, and the idea that as long as there is no theft then there is no need for governments to intervene and redistribute income.

Option B: the idea that people should consider policy as if behind a veil of ignorance as to what their circumstances might be in society, and the idea that people will then be particularly concerned about the possibility that they might find themselves at the bottom of the income distribution

Option C: the idea that people a veil of ignorance as policy as if behind a veil of ignorance as to what their circumstances might be in society, and the ignorant people should be looked after

Option D: the idea that everyone in society should have an equal income

Correct Answer: the idea that people should consider policy as if behind a veil of ignorance as to what their circumstances might be in society, and the idea that people will then be particularly concerned about the possibility that they might find themselves at the bottom of the income distribution ✔

Option A: utilitarianism, liberalism, libertarianism

Option B: All three political philosophies argue for similar degree of income redistribution

Option C: liberalism, libertarianism, utilitarianism

Option D: libertarianism liberalism, utilarianism

Correct Answer: libertariansim, utilitarianism, libertarianism ✔

Option A: all of these answers

Option B: libertarianism

Option C: utilitarianism

Option D: none of these answers

Correct Answer: libertarianism ✔

Option A: exaggerate the inequality of living standards

Option B: could exaggerate or understate the inequality of living standards depending on whether the transitory shocks are positive or negative

Option C: understate the inequality of living standards

Option D: accurately represent the true inequality of living standards

Correct Answer: exaggerate the inequality of living standards ✔

Option A: Social Security income of the elderly and disabled

Option B: none of these answers

Option C: wages fixed by a union or other labour contract

Option D: equal to the minimum wage

Correct Answer: E. a person’s normal or average income ✔

Option A: poor people are excluded from most leisure and social activities

Option B: the Pakistan benefit system makes being poor vary degrading

Option C: if poor people earn more their benefits fall, making them no better off.

Option D: in the Pakistan poor people are heavily taxed

Correct Answer: if poor people earn more their benefits fall, making them no better off. ✔

Option A: a means tested cash benefit

Option B: a universal (social insurance based) benefit

Option C: a benefit in kind

Option D: none of the above

Correct Answer: a means tested cash benefit ✔

Option A: income tax

Option B: VAT

Option C: a tax on profits.

Option D: inheritance tax

Correct Answer: VAT ✔

Option A: is the way in which a tax is structured

Option B: occurs when households can alter their behaviour and do something to avoid paying tax

Option C: occurs when taxes cause prices to increase but wages to fall.

Option D: is the ultimate distribution of a tax’s burden

Correct Answer: occurs when households can alter their behaviour and do something to avoid paying tax ✔

Option A: benefits received tax

Option B: progressive tax

Option C: regressive tax

Option D: proportional tax

Correct Answer: regressive tax ✔

Option A: an equal tax

Option B: a proportional tax

Option C: a progressive tax

Option D: a regressive tax

Correct Answer: a proportional tax ✔

Option A: average tax rate

Option B: marginal tax rate

Option C: proportional tax rate

Option D: total tax rate

Correct Answer: total tax rate ✔

Option A: those with equal ability to pay should bear unequal tax burdends.

Option B: those who benefits the most from government services should bear the higher tax burden.

Option C: those who benefit the most from government services should have the greatest voice in determining what gets produced

Option D: those with equal ability to pay should bear equal tax burdens.

Correct Answer: those with equal ability to pay should bear equal tax burdens. ✔

Option A: all the income is received by the top 20% of the income distribution

Option B: income is distributed equally

Option C: the income is split equally between the top 20% and the rest of the distribution.

Option D: one family has all the income and every one else has nothing.

Correct Answer: one family has all the income and every one else has nothing. ✔

Option A: the ratio of the percentage of total income received by the top 20% of families to the percentage of total income received by by the bottom 20% of families

Option B: the most common way of representing the income distribution graphically

Option C: a commonly used measure of the degree of inequality in an income distribution

Option D: a commonly used measure of the degree of inequity in an income distribution

Correct Answer: the ratio of the percentage of total income received by the top 20% of families to the percentage of total income received by by the bottom 20% of families ✔

Option A: the return to any factor of production that is in fixed supply

Option B: the profit earned by the owner of any housing unit.

Option C: the amount paid each year by a tenant for an apartment

Option D: any profit earned by stockholders when they sell their stock

Correct Answer: the return to any factor of production that is in fixed supply ✔

Option A: wages of men will be higher but the marginal productivity of men will be lower than it otherwise would be

Option B: the wages of men will be lower but the marginal productivity of men will be higher than it otherwise would be

Option C: both the wages and the marginal productivity of men will be lower than they otherwise would be

Option D: both the wages and the marginal productivity of men will be higher than they otherwise would be

Correct Answer: both the wages and the marginal productivity of men will be higher than they otherwise would be ✔

Option A: the Rs500 weekly salary that he has forgone to search for another job

Option B: The Rs500 weekly salary that he has forgone and the monetary costs incurred by continuing to search

Option C: Rs difference between the weekly salary he finally accepts and the Rs500 weekly salary that he has forgone

Option D: Rs0, since he is currently unemployed

Correct Answer: The Rs500 weekly salary that he has forgone and the monetary costs incurred by continuing to search ✔

Option A: MPL + PX

Option B: (MPL) (PX)

Option C: PX/MPL

Option D: MPL/PX

Correct Answer: PX/MPL ✔

Option A: total labour cost

Option B: the marginal product

Option C: the price of the product

Option D: the wage rate

Correct Answer: the marginal product ✔

Option A: occupational differentials

Option B: search differentials

Option C: job differentials.

Option D: compensating differentials

Correct Answer: compensating differentials ✔

Option A: reduce the supply of labour.

Option B: increase the demand for labour

Option C: increase the supply of labour

Option D: have no effect on the supply of labour

Correct Answer: increase the supply of labour ✔

Option A: leisure becomes less expensive and households buy more of it

Option B: leisure becomes more expensive and households buy more of it

Option C: leisure becomes more expensive and households buy less of it

Option D: leisure becomes less expensive and households buy less of it.

Correct Answer: leisure becomes more expensive and households buy less of it ✔

Option A: output demand

Option B: indirect demand

Option C: derived demand

Option D: the value of the marginal product of auto workers.

Correct Answer: derived demand ✔

Option A: a situation in which those receiving state benefits may be almost no better off if they choose to work more to earn more income for themselves and their families because doing so will mean they have to pay back the benefits they have previously received

Option B: a situation in which workers are unable to find jobs.

Option C: a situation in which those receiving state benefits may be almost no better off if they choose to work more to earn more because doing so will reduce the amount of benefit income to which they are entitled and increase the amount to tax

Option D: a situation in which those receiving state benefits are discriminated against by employers and so find it more difficult to find jobs.

Correct Answer: a situation in which those receiving state benefits may be almost no better off if they choose to work more to earn more because doing so will reduce the amount of benefit income to which they are entitled and increase the amount to tax ✔

Option A: benefits are reduced at such a high rate when recipients earn more income that there is little or no incentive to work once one is receiving benefits.

Option B: in order to be eligible for benefits a recipient cannot have a job

Option C: they make recipients more comfortable than most middle-class citizens.

Option D: anti-poverty programs attract naturally lazy people to begin with.

Correct Answer: benefits are reduced at such a high rate when recipients earn more income that there is little or no incentive to work once one is receiving benefits. ✔

Option A: Such redistribution would mean that those who worked hard were no better off than those who were lazy and this would be unfair.

Option B: such redistribution would not maximize the total income of all members of society

Option C: Such redistribution would remove the incentive to work hard, so society’s total income would fall, and so the least well off person would be worse off than they could be under a system in which there was some inequality income.

Option D: such redistribution would amount to confiscation of honestly earned income from higher earners and so would be unjust.

Correct Answer: C. Such redistribution would remove the incentive to work hard, so society’s total income would fall, and so the least well off person would be worse off than they could be under a system in which there was some inequality income. ✔

A. redistributing income from rich to poor because this is what the members of society would choose to do if they were behind a veil of ignorance
B. redistributing income from rich to poor because due to the diminishing marginal utility of income, taking a pound from the rich reduces their utility by less than the gain in utility generated by giving a pound to the poor
C. allowing each individual to maximize their own utility without interference from the government
redistributing income from rich to poor because this would maximize the well-being of the worst-off person in society

Correct Answer: redistributing income from rich to poor because due to the diminishing marginal utility of income, taking a pound from the rich reduces their utility by less than the gain in utility generated by giving a pound to the poor ✔

Option A: Maximize the total utility of society

Option B: Maximize the well-being of the worst-off person in society

Option C: minimize the difference between the rich and poor

Option D: maximize the economic freedom of individuals by minimizing government interference in private decision making

Correct Answer: Maximize the well-being of the worst-off person in society ✔

Option A: transitory income is a good measure of the distribution of living standards

Option B: none of these answers

Option C: permanent income is a good measure of the distribution of living standards.

Option D: life-cycle income is a good measure of the distribution of living standards.

Correct Answer: permanent income is a good measure of the distribution of living standards. ✔

Option A: increase a worker’s current income and permanent income

Option B: reduce a worker’s current income but not necessarily their permanent income

Option C: affect neither the current nor the permanent income of a worker

Option D: reduce a worker’s permanent income but not their current income

Correct Answer: B. reduce a worker’s current income but not necessarily their permanent income ✔