Economics MCQs

Option A: Pakistan -owned firms no matter where they are located in the world

Option B: The domestic manufacturing sector only

Option C: The domestic service sector only

Option D: People and factories located within the borders of the Pakistan

Correct Answer: The domestic manufacturing sector only ✔

Option A: a haircut

Option B: the value of a lawyer’s services

Option C: a 2005 Honda made in Swindon

Option D: All of things mentioned in these answers should be counted in 2005 GDP.

Correct Answer: a haircut ✔

Option A: Profit

Option B: rent

Option C: unemployment benefits

Option D: government purchases

Correct Answer: unemployment benefits ✔

Option A: Is likely to want to decrease demand in the economy

Option B: Is likely to want to decrease demand in the economy

Option C: Is likely to want to stabilise demand in the economy

Option D: Is likely to want to increase supply in the economy

Correct Answer: Is likely to want to increase supply in the economy ✔

Option A: Add indirect taxes

Option B: Subtract subsidies

Option C: Deduct indirect taxes and subsidies

Option D: Deduct indirect taxes and add subsidies

Correct Answer: Subtract subsidies ✔

Option A: GNP

Option B: NNP

Option C: Depreciation

Option D: Real GDP

Correct Answer: GNP ✔

Option A: Unemployment is likely to be low

Option B: Prices are likely to increase

Option C: Growth is negative

Option D: Growth is slow

Correct Answer: Growth is slow ✔

Option A: Net National Product adjusted for inflation

Option B: Gross Domestic Product adjusted for inflation

Option C: Gross Domestic Product plus net property income from abroad

Option D: Net National Product plus net property income from abroad

Correct Answer: Gross Domestic Product adjusted for inflation ✔

Option A: capital increasingly replaces labor

Option B: technological change compensates for capital depletion

Option C: costs rise, leaving less capital for future investment

Option D: contingent valuation becomes critical

Correct Answer: costs rise, leaving less capital for future investment ✔

Option A: biological diversity is dominant in agricultural production

Option B: the globe’s water pollution affects plankton

Option C: the earth’s atmosphere traps infrared radiation

Option D: climatic changes occur naturally in the forest

Correct Answer: C. the earth’s atmosphere traps infrared radiation ✔

Option A: rivalry and exclusion in consumption

Option B: nonrivalry and nonexclusion in consumption

Option C: rivalry but nonexclusion in production

Option D: nonrivalry but exclusion in usage

Correct Answer: nonrivalry and nonexclusion in consumption ✔

Option A: population growth leads to rigid land rights

Option B: participants will organize their transactions

Option C: violence displacement erosion and poverty are minimized

Option D: individuals overuse of the biosphere is curtailed

Correct Answer: participants will organize their transactions ✔

Option A: I and III only

Option B: II and III only

Option C: I, II and III only

Option D: I, II , III only IV

Correct Answer: I, II , III only IV ✔

Option A: Russia

Option B: Saudi Arabia

Option C: Iraq

Option D: Venezuela

Correct Answer: Saudi Arabia ✔

Option A: examples of Coase’s theorem

Option B: internalization of negative spillover effects

Option C: marginal abatement cost

Option D: examples of a free rider

Correct Answer: internalization of negative spillover effects ✔

Option A: external economies

Option B: negative externalities

Option C: internal spillover

Option D: social distortion

Correct Answer: negative externalities ✔

Option A: capital accumulation

Option B: common property resources

Option C: non-producible

Option D: output

Correct Answer: non-producible ✔

Option A: also known as index of Sustainable Economic Welfare per capita

Option B: GDP plus resource depletion and environmental cost

Option C: resource depletion and environmental cost divided by GDP per capita

Option D: increasing from 1976 to 2000

Correct Answer: also known as index of Sustainable Economic Welfare per capita ✔

Option A: attains the global optimal level of common property resource

Option B: relies on internationally tradable emission permits

Option C: minimizes free riders of public goods

Option D: reduces ozone depletion through the cutting of chlorofluorocarbon production

Correct Answer: reduces ozone depletion through the cutting of chlorofluorocarbon production ✔

Option A: includes genetic species ecosystem and functional diversities

Option B: refers to diversifying earth’s nonrenewable resource

Option C: refers to reconstruction of tropical rainforests

Option D: refers to biological effects on commercial plantation

Correct Answer: includes genetic species ecosystem and functional diversities ✔

Option A: natural resource that cannot be reproduced in the future if we fail to preserve them now

Option B: obtaining intellectual property rights for products

Option C: natural extinction of various species in DCs

Option D: industrialization replacing agriculture in LDCs

Correct Answer: natural resource that cannot be reproduced in the future if we fail to preserve them now ✔

Option A: I and II only

Option B: III and IV only

Option C: I, II and III only

Option D: I, II , III and IV only

Correct Answer: I, II and III only ✔

Option A: markets distortions

Option B: defective economic policies

Option C: inadequate property

Option D: the expansion of capitalism

Correct Answer: the expansion of capitalism ✔

Option A: Trade deficit

Option B: Blind river disease

Option C: Dutch disease

Option D: Economic turmoil

Correct Answer: Dutch disease ✔

Option A: external diseconomies

Option B: marginal damage

Option C: public goods

Option D: resource curse

Correct Answer: external diseconomies ✔

Option A: over fishing

Option B: smoking in a public place

Option C: excessive rain

Option D: common use of public toilets

Correct Answer: over fishing ✔

Option A: monopoly

Option B: entropy

Option C: industry

Option D: cartel

Correct Answer: cartel ✔

Option A: the tragedy of commons

Option B: sustainable development

Option C: net primary productivity (NPP)

Option D: the impossibility theorem

Correct Answer: sustainable development ✔

Option A: General Motors, the manufacturer of automobiles

Option B: Tennessee Mining Co. an iron-ore mining company

Option C: Caterpillar Corp the producer of earth moving equipment

Option D: Sneva Construction Co. The builder of skyscrapers

Correct Answer: Tennessee Mining Co. an iron-ore mining company ✔

Option A: import quota

Option B: export quota

Option C: selective quota

Option D: global quota

Correct Answer: selective quota ✔

Option A: average total cost

Option B: average variable cost

Option C: average fixed cost

Option D: marginal cost

Correct Answer: average total cost ✔

Option A: predatory dumping

Option B: sporadic dumping

Option C: persistent dumping

Option D: yearend dumping

Correct Answer: predatory dumping ✔

Option A: domestic subsidy

Option B: voluntary restraint agreement

Option C: domestic content requirement

Option D: tariff-rate quota

Correct Answer: domestic content requirement ✔

Option A: does not require government taxes to finance it

Option B: yields the same deadweight welfare loss as an import tariff or import quota

Option C: has only a consumption effect deadweight loss

Option D: has only a protective effect deadweight loss

Correct Answer: has only a protective effect deadweight loss ✔

Option A: selling goods to foreigners at a price below that charged domestic consumers

Option B: selling goods to foreigners at a price below the cost of production

Option C: antidumping duties being levied on the imported, dumped goods

Option D: All of the above

Correct Answer: All of the above ✔

Option A: never

Option B: seldom

Option C: often

Option D: always

Correct Answer: seldom ✔

Option A: quota license

Option B: quota rents

Option C: quota prices

Option D: None of the above

Correct Answer: quota rents ✔

Option A: higher prices and reduced imports

Option B: increased government revenue

Option C: increased consumer surplus

Option D: decrease producer surplus

Correct Answer: higher prices and reduced imports ✔

Option A: prices

Option B: quantity

Option C: revenue

Option D: costs

Correct Answer: quantity ✔

Option A: U.S oil companies and workers deserved higher incomes

Option B: U.S oil was of superior quality and merited higher prices

Option C: one should not be too dependent on foreign suppliers of crucial resources

Option D: The U.S government needed the quota revenue to balance its budget

Correct Answer: one should not be too dependent on foreign suppliers of crucial resources ✔

Option A: Capture the entire subsidy in the form of higher profits

Option B: Increase their level of production

Option C: reduce wages paid to domestic workers

Option D: consider the subsidy as a increase in production cost

Correct Answer: Increase their level of production ✔

Option A: is a limit on the number of tariffs that a country can place on imports?

Option B: uses a single tariff along with import quotas to restrict import

Option C: is designed to avoid the the price increases caused by simple tariffs

Option D: is a two-tier tariff system intended to restrict imports?

Correct Answer: is a two-tier tariff system intended to restrict imports? ✔

Option A: domestic subsidy

Option B: export subsidy

Option C: import quota

Option D: export quota

Correct Answer: import quota ✔

Option A: lower the welfare of all Pakistanis

Option B: lead to increases in Pakistani consumer surplus

Option C: encourage Pakistan’s production of competing goods

Option D: encourage Pakistani workers to demand higher wages

Correct Answer: lead to increases in Pakistani consumer surplus ✔

Option A: 20 calculators increase

Option B: 25 calculators decrease

Option C: 25 calculators increase

Option D: 30 calculators increase

Correct Answer: 30 calculators increase ✔

Option A: more elastic in Japan, more substitutes are available from other nations

Option B: more elastic in Japan, fewer substitutes are available from other; nations

Option C: more inelastic in Japan; more substitutes are available from other; nations

Option D: more inelastic in Japan; fewer substitutes are available from other nations

Correct Answer: more elastic in Japan, more substitutes are available from other nations ✔

Option A: help more than they hurt

Option B: hurt more then they help

Option C: are equivalent to an import quota

Option D: are equivalent to an export quota

Correct Answer: help more than they hurt ✔

Option A: 1,600 computers, decrease, increase

Option B: 1,600 computers, increase, decrease

Option C: 1,200 computers, decrease, increase

Option D: 1,200 computers, increase, decrease

Correct Answer: 1,600 computers, increase, decrease ✔

Option A: $160,000

Option B: $420,000

Option C: $540,000

Option D: $660,000

Correct Answer: $660,000 ✔

Option A: an import tariffs

Option B: a tariff rate quota

Option C: a selective quota

Option D: a global quota

Correct Answer: a global quota ✔

Option A: The within-quota tariff rate exceeds the over-quota tariff rate

Option B: the over-quota tariff rate exceeds the with-quota tariff rate

Option C: The within-quota tariff rate equals the over-quota tariff rate

Option D: The within-quota tariff rate plus over-quota tariff rate equal 100 percent

Correct Answer: the over-quota tariff rate exceeds the with-quota tariff rate ✔

Option A: 200, $2,000, 100 $1,000

Option B: 300, $1,800, 800 $800

Option C: 300, $1,800, 400 $800

Option D: 500, $1,400, 400 $800

Correct Answer: 500, $1,400, 400 $800 ✔

Option A: result in government purchase policies favoring domestic over foreign producers

Option B: result in government purchase policies favoring foreign over domestic producers

Option C: attempt to restrict the number of tourists leaving a nation

Option D: are intended to publicize the advantage of the most efficient domestic companies

Correct Answer: result in government purchase policies favoring domestic over foreign producers ✔

Option A: export quotas imposed by the Japanese government

Option B: export tariffs imposed by the Japanese’s government

Option C: import quotas imposed by the U.S government

Option D: domestic subsidies granted by the U.S government

Correct Answer: export quotas imposed by the Japanese government ✔

Option A: sporadic dumping

Option B: predatory dumping

Option C: persistent dumping

Option D: foreign dumping

Correct Answer: sporadic dumping ✔

Option A: Predatory dumping

Option B: sporadic dumping

Option C: persistent dumping

Option D: year end dumping

Correct Answer: sporadic dumping ✔

Option A: two tier tariff applied to a country’s imports

Option B: three-tier tariff applied to a country’s imports

Option C: two tier quota applied to a county’s exports

Option D: three tier quota applied to a country’s exports

Correct Answer: A. two tier tariff applied to a country’s imports ✔

Option A: domestic content laws

Option B: government procurement policies

Option C: health, safety, and environmental standards

Option D: antidumping/countervailing duties applied to imports

Correct Answer: antidumping/countervailing duties applied to imports ✔

Option A: export quota

Option B: embargo

Option C: auction quota

Option D: tariff quota

Correct Answer: export quota ✔

Option A: quota licenses are given to foreign exporting companies

Option B: quota licenses are auctioned to the highest bidding importing company

Option C: if quota licenses are given to domestic consumers of the good

Option D: Both A and C

Correct Answer: quota licenses are auctioned to the highest bidding importing company ✔

Option A: who has the quota license

Option B: the size of the quota

Option C: elasticities of domestic demand and supply

Option D: All of the above

Correct Answer: All of the above ✔

Option A: embargoes

Option B: voluntary export restraints

Option C: nontariff barriers

Option D: orderly marketing agreements

Correct Answer: embargoes ✔

Option A: Orderly marketing

Option B: trigger pricing

Option C: domestic content pricing

Option D: dumping

Correct Answer: dumping ✔

Option A: always

Option B: often

Option C: seldom

Option D: never

Correct Answer: seldom ✔

Option A: Koreans are selling DVDs in the U.S below their production cost

Option B: Koreans are selling DVDs is the U.s above their productions cost

Option C: The cost of manufacturing DVDs in Korea is lower in Korea than in the U.S since wages are lower in Korea

Option D: The cost of manufacturing DVDs in Korea is higher in Korea than in the U.S since wages are higher in Korea

Correct Answer: Koreans are selling DVDs in the U.S below their production cost ✔

Option A: domestic producers of the imported good being harmed

Option B: domestic consumers of the imported good being harmed

Option C: Prices increasing in the importing country

Option D: Prices falling in the exporting country

Correct Answer: domestic producers of the imported good being harmed ✔

Option A: foreign corporations

Option B: foreign workers

Option C: domestic corporations

Option D: The domestic government

Correct Answer: The domestic government ✔

Option A: 20 calculator, $50

Option B: 20 calculator, $100

Option C: 25 calculator, $50

Option D: 25 calculator, $100

Correct Answer: 20 calculator, $50 ✔

Option A: $65 and 40 calculators

Option B: $55 and 20 calculators

Option C: $45 and 25 calculators

Option D: $30 and 40 calculators

Correct Answer: $45 and 25 calculators ✔

Option A: is less restrictive on a country’s imports than a tariff

Option B: Is more restrictive on a country’s imports than a tariff

Option C: has the same restrictive effect on a country’s imports as a tariff

Option D: will always generate increased tax revenue for the government

Correct Answer: B. Is more restrictive on a country’s imports than a tariff ✔

Option A: increase, increase

Option B: increase, decrease

Option C: decrease, increase

Option D: decrease, decrease

Correct Answer: decrease, increase ✔

Option A: $1,500 and 2,800 computers

Option B: $2,000 and 1,600 computers

Option C: $2,500 and 2,000 computers

Option D: $3,500 and 2,000 computers

Correct Answer: $2,500 and 2,000 computers ✔

Option A: offset the margin of dumping

Option B: punish domestic consumers for buying high-priced imported goods

Option C: discourage foreign governments from subsidizing their exporters

Option D: reduce the tariff revenue of the domestic government

Correct Answer: offset the margin of dumping ✔

Option A: The quota results in efficiency reductions but the tariff does not

Option B: The tariff results in efficiency reductions but the quota does not

Option C: They have identical impact on how much is produced and consumed

Option D: They have identical impact on how income is distributed

Correct Answer: They have identical impact on how much is produced and consumed ✔

Option A: the quota results in efficiency reductions but the tariff does not

Option B: The tariff results in efficiency reductions but the quota does not

Option C: They have different impacts on how much is produced and consumed

Option D: They have different impacts on how income is distributed

Correct Answer: They have different impacts on how income is distributed ✔

Option A: Prisoner’s Dilemma

Option B: Monopoly Cell

Option C: Jailhouses Sentences

Option D: Jury Box

Correct Answer: A. Prisoner’s Dilemma ✔

Option A: Rs 85

Option B: Rs 75

Option C: Rs 80

Option D: Rs 60

Correct Answer: Rs 75 ✔

Option A: has a legitimate purpose of stopping discount retailers from free riding on the services provided by full services retailers?

Option B: is price fixing and, therefore is prohibited by law

Option C: is price fixing and therefore, is prohibited by law and enhances the market power of the producer

Option D: enhances the market power of the producer

Correct Answer: has a legitimate purpose of stopping discount retailers from free riding on the services provided by full services retailers? ✔

Option A: output in the market tends to fall because each firm must cut back on production

Option B: the price in the market moves further from marginal cost

Option C: collusion is more likely to occur because a larger number of firms can place pressure on any firm that defects

Option D: The price in the market moves closer to marginal cost

Correct Answer: The price in the market moves closer to marginal cost ✔

Option A: more than the level produced by a monopoly and less than the level produced by a competitive market

Option B: less than the level produced by a monopoly and more than the level produced by a competitive market

Option C: less than the level produce by either monopoly or a competitive market

Option D: more than the level produced by either monopoly or a competitive market

Correct Answer: more than the level produced by a monopoly and less than the level produced by a competitive market ✔

Option A: Should produce more units

Option B: has maximized profits.

Option C: is in a Nash equilibrium

Option D: Should produce fewer units

Correct Answer: Should produce more units ✔

Option A: monopolistic competition

Option B: monopoly

Option C: perfect competition

Option D: oligopoly

Correct Answer: monopolistic competition ✔

Option A: Firms compete against each other

Option B: Price wars are common

Option C: Firms use price to win market share from competitors

Option D: Firms collude

Correct Answer: Firms collude ✔

Option A: There is a kink in the marginal cost curve

Option B: Demand is price inelastic

Option C: Demand is price elastic

Option D: non-price competition is likely

Correct Answer: non-price competition is likely ✔

Option A: Firms cooperate

Option B: Firms act as part of cartel

Option C: Firms are competitive

Option D: Firms are not profit maximisers

Correct Answer: Firms are competitive ✔

Option A: Limit

Option B: Factor

Option C: Quota

Option D: Quotient

Correct Answer: Quota ✔

Option A: antimonopoly laws

Option B: all of these answers

Option C: anti-collusion laws

Option D: pro-competition laws

Correct Answer: antitrust laws ✔

Option A: Rs 60

Option B: Rs 90

Option C: Rs 85

Option D: Rs 75

Correct Answer: Rs 85 ✔

Option A: all of these answers

Option B: if additional firms enter of the oligopoly

Option C: because antitrust laws (also known as competition laws) make collusion illegal

Option D: because, in the case of oligopoly self-interest is in conflict with cooperation.

Correct Answer: all of these answers ✔

Option A: Nash equilibrium

Option B: dominant strategy.

Option C: cartel

Option D: collusion solution

Correct Answer: Nash equilibrium ✔

Option A: more than the price charged by either monopoly or a competitive market

Option B: less than the price charged by either monopoly or a competitive market

Option C: more than the price charged by a monopoly and less then the price charged by a competitive market

Option D: less than the price charged by a monopoly and more than the price charged by a competitive market

Correct Answer: less than the price charged by a monopoly and more than the price charged by a competitive market ✔

Option A: monopoly

Option B: a competitive market

Option C: monopolistic competition

Option D: a collusion solution

Correct Answer: a competitive market ✔

Option A: the same as if it were served by competitive firms.

Option B: efficient because cooperation improves efficiency

Option C: the same as if it were served by a monopoly.

Option D: known as a Nash equilibrium

Correct Answer: the same as if it were served by a monopoly. ✔

Option A: monopolistically competitive

Option B: a monopoly

Option C: an oligopoly

Option D: competitive

Correct Answer: an oligopoly ✔

Option A: Each individual firm profit maximizes

Option B: There may be an incentive to cheat

Option C: The industry as a whole is loss making

Option D: There is no need to police agreements

Correct Answer: There may be an incentive to cheat ✔

Option A: Invest heavily in branding

Option B: Act independently of other firms

Option C: Try to differentiate its products

Option D: Try to be a price maker

Correct Answer: Try to be a price maker ✔

Option A: Firms are assumed to act independently

Option B: Firms are assumed to cooperate with each other

Option C: Firms collude as part of cartel

Option D: Firms consider the actions of others before deciding what to do

Correct Answer: Firms consider the actions of others before deciding what to do ✔

Option A: An increase in price by the firm is not followed by others

Option B: An increase in price by the firm is followed by others

Option C: A decrease in price by the firm is followed by others

Option D: Firms collude to fix the price

Correct Answer: An increase in price by the firm is not followed by others ✔

Option A: monopolistic competition

Option B: Competitively monopolistic

Option C: Duopoly

Option D: Oligopoly

Correct Answer: Oligopoly ✔

Option A: 7.1 persons

Option B: 11 persons

Option C: 13 persons

Option D: 14 persons

Correct Answer: 7.1 persons ✔