Economics MCQs

Option A: -4

Option B: 0.25

Option C: 4

Option D: -0.25

Correct Answer: 0.25 ✔

Option A: elastic

Option B: perfectly elastic

Option C: unitarily elastic

Option D: inelastic.

Correct Answer: elastic ✔

Option A: ratio of the change in price to the change in quantity demanded.

Option B: ratio of the percentage change in quantity demanded to the percentage change in price.

Option C: ratio of the change in quantity demanded to the change in price.

Option D: ratio of the percentage change in price to the percentage change in quantity demanded.

Correct Answer: ratio of the percentage change in quantity demanded to the percentage change in price. ✔

Option A: quantity demanded equals quantity supplied

Option B: quantity demanded is less than quantity supplied

Option C: quantity supplied is greater than quantity demanded

Option D: quantity demanded is greater than quantity supplied

Correct Answer: quantity demanded equals quantity supplied ✔

Option A: a decrease in the quantity supplied of

Option B: a decrease in the supply of

Option C: an increase in the quantity supplied of

Option D: an increase in the supply of

Correct Answer: an increase in the supply of ✔

A. A change in wealth
B. A change in the price of compact discs
C. A change in income.
A change in the price of pre-recorded cassette tapes

Correct Answer: A change in the price of compact discs ✔

Option A: perfect substitutes

Option B: complements

Option C: unrelated goods.

Option D: substitutes.

Correct Answer: complements ✔

Option A: incomes, tastes, and the price of other goods.

Option B: income, tastes, and the price of the good.

Option C: income and tastes

Option D: tastes and the price of other goods

Correct Answer: incomes, tastes, and the price of other goods. ✔

Option A: The ceteris paribus effect

Option B: The diminishing marginal utility effect.

Option C: The substitution effect

Option D: The income effect

Correct Answer: The substitution effect ✔

Option A: as prices rise, demand decrease

Option B: as prices fall, quantity demanded increase

Option C: as prices fall demand increases

Option D: as prices rise, quantity demanded increases

Correct Answer: as prices fall, quantity demanded increase ✔

Option A: subsidies to encourage firms that moves

Option B: tax concessions for firms that move.

Option C: improved infrastructure

Option D: all of the above

Correct Answer: all of the above ✔

Option A: market-orientated economists

Option B: left-wing theorists

Option C: Keynesian.

Option D: new-Keynesian

Correct Answer: market-orientated economists ✔

Option A: publicly held stock to private individuals

Option B: corporately owned businesses to individuals

Option C: government businesses to the private sector.

Option D: privately owned businesses to the government sector

Correct Answer: government businesses to the private sector. ✔

Option A: the charities economy

Option B: the demand side of the economy

Option C: the underground economy

Option D: the supply side of the country

Correct Answer: the supply side of the country ✔

Option A: there is no income effect when tax rates are changed

Option B: the income effect of a wage change is greater than the substitution effect of a wage change.

Option C: there is no substitution effect when tax rates are changed

Option D: the substitution effect of a wage change is greater than the income effect of a wage change

Correct Answer: the substitution effect of a wage change is greater than the income effect of a wage change ✔

Option A: An increase in the minimum wage that would cause consumer spending to increase

Option B: investment tax credits for businesses to encourage investment

Option C: Restrictions placed on the amount that can be imported.

Option D: An increase in government spending that would lead to increased aggregate demand

Correct Answer: investment tax credits for businesses to encourage investment ✔

Option A: bureaucracy

Option B: bad luck

Option C: poor communications

Option D: the low level of government grants and by the fact that some projects would have gone ahead anyway

Correct Answer: the low level of government grants and by the fact that some projects would have gone ahead anyway ✔

Option A: New classical economists.

Option B: Left wing theorists

Option C: interventionist policies.

Option D: monetarists.

Correct Answer: interventionist policies. ✔

Option A: Technological change has made it possible for many industries to become more competitive

Option B: Because few real natural monopolies exist, there is rarely a reason for government regulation.

Option C: Many instances of government regulation have succeeded in reducing competition in industries where competition may be beneficial

Option D: All of the above

Correct Answer: All of the above ✔

Option A: reduce poverty

Option B: reduce unemployment

Option C: weaken the power of trade unions

Option D: help small businesses

Correct Answer: reduce unemployment ✔

Option A: initially increase and then decrease

Option B: decrease continuously.

Option C: rise continuously

Option D: initially decrease and then increase.

Correct Answer: initially increase and then decrease ✔

Option A: aggregate supply will increase will increase aggregate demand will decrease and the price level will decrease

Option B: aggregate supply will increase will increase aggregate output will increase and the price level will decrease

Option C: aggregate supply will increase will increase aggregate output will increase and the price level will increase

Option D: both aggregate supply and demand will increase will increase and the price level will increase

Correct Answer: aggregate supply will increase will increase aggregate output will increase and the price level will decrease ✔

Option A: Supply-side economics

Option B: neo-Keynesian economists

Option C: rational-expectations economists.

Option D: new classical economists.

Correct Answer: Supply-side economics ✔

Option A: maximize producer surplus

Option B: are efficient

Option C: are inefficient

Option D: are equitable

Correct Answer: are inefficient ✔

Option A: are equitable.

Option B: are efficient

Option C: maximize consumer surplus

Option D: are inefficient

Correct Answer: are inefficient ✔

Option A: free market solutions are efficient

Option B: free market solutions maximize total surplus

Option C: all of these answers

Option D: free market solutions are equitable

Correct Answer: free market solutions are efficient ✔

Option A: maximizes total surplus

Option B: generates equality among the members of society

Option C: minimizes total surplus

Option D: both maximizes total surplus and generates equality among the members of society

Correct Answer: maximizes total surplus ✔

Option A: Rs500

Option B: Rs300

Option C: Rs200

Option D: Rs400

Correct Answer: Rs300 ✔

Option A: none of these answers.

Option B: the minimum amount the seller is willing to accept for a good

Option C: the seller’s producer surplus

Option D: the maximum amount the seller is willing to accept for a good

Correct Answer: the minimum amount the seller is willing to accept for a good ✔

Option A: total surplus is maximized

Option B: the value placed on the last unit production by buyers exceeds the cost of production.

Option C: producer surplus is maximized

Option D: the cost of production on the last unit produced exceeds the value placed on it by buyers.

Correct Answer: the value placed on the last unit production by buyers exceeds the cost of production. ✔

Option A: below the supply curve and above the price

Option B: below the demand curve and above the supply curve

Option C: below the demand curve and above the price

Option D: above the demand curve and below the price

Correct Answer: above the demand curve and below the price ✔

Option A: improves the material welfare of the buyers.

Option B: decrease consumer surplus

Option C: improves market efficiency.

Option D: increase consumer surplus.

Correct Answer: decrease consumer surplus ✔

Option A: minimum amount they are willing to pay for a good

Option B: producer surplus.

Option C: consumer surplus

Option D: maximum amount they are willing to pay for a good

Correct Answer: maximum amount they are willing to pay for a good ✔

Option A: efficiency Saleem should receive the glove

Option B: Efficiency Jamil should receive the glove

Option C: equity Jamil should receive the glove

Option D: consumer surplus both should receive a glove

Correct Answer: Efficiency Jamil should receive the glove ✔

Option A: everyone has as much as they would like

Option B: the benefit buyers place on medical care is equal to the cost of producing it

Option C: buyers receive no benefit from another unit of medical care.

Option D: we must cut back on the consumption of other goods.

Correct Answer: the benefit buyers place on medical care is equal to the cost of producing it ✔

Option A: the market allocates buyers to the sellers who can produce the good at least cost

Option B: all these answers

Option C: none of these answers

Option D: the quantity produced in the market maximizes the sum of consumer and producer surplus

Correct Answer: all these answers ✔

Option A: choose a price below the market equilibrium price

Option B: allow the market to seek equilibrium on its own.

Option C: Choose any price the planner wants because the losses to the sellers (buyers) from any change in price are exactly offset by the gains to the buyers (sellers).

Option D: choose a price above the market equilibrium price

Correct Answer: allow the market to seek equilibrium on its own. ✔

Option A: increase producer surplus

Option B: does all the things describe in these answers

Option C: decrease producer surplus

Option D: improves market equity

Correct Answer: increase producer surplus ✔

Option A: above the supply curve and below the price

Option B: below the demand curve and above the price

Option C: below the demand curve and above the supply curve

Option D: below the supply curve and above the price

Correct Answer: below the demand curve and above the supply curve ✔

Option A: the value placed on the last unit of production by buyers exceeds the cost of production

Option B: the cost of production on the last unit produced exceeds the value placed on it by buyers.

Option C: consumer surplus is maximized

Option D: total surplus is maximized

Correct Answer: the cost of production on the last unit produced exceeds the value placed on it by buyers. ✔

Option A: Three vases will be sold, and consumer surplus is Rs80

Option B: One vase will be sold, and consumer surplus is Rs5.

Option C: One vase will be sold, and consumer surplus is Rs30.

Option D: Three vases will be sold, and consumer surplus is Rs0.

Correct Answer: Two vases will be sold, and consumer surplus is Rs5. ✔

Option A: Rs18,000

Option B: Rs20,000

Option C: Rs2,000

Option D: Rs0.

Correct Answer: Rs2,000 ✔

Option A: below the demand curve and above the price.

Option B: above the supply curve and below the price.

Option C: above the demand curve and below the price.

Option D: below the supply curve and above the price.

Correct Answer: below the demand curve and above the price. ✔

Option A: $100,000 units

Option B: $400,000 units

Option C: $600,000 units

Option D: $800,000 units

Correct Answer: $400,000 units ✔

Option A: Progressive and thus bear down on the wealthy

Option B: regressive and thus bear down on the poor

Option C: proportional and thus bear down on all consumers in the same manner

Option D: deflationary and thus result in reductions in the price of imports

Correct Answer: regressive and thus bear down on the poor ✔

Option A: economic downturn and recession generally result in greater protectionism

Option B: because domestic consumers outnumber domestic producer’s policy markers usually enact Free-trade policies to satisfy the consumer majority:

Option C: When domestic exporting companies are organized, policy tends to favor freer trade

Option D: Policy tends to favor freer trade in countries whose imports are inputs into critical industries

Correct Answer: because domestic consumers outnumber domestic producer’s policy markers usually enact Free-trade policies to satisfy the consumer majority: ✔

Option A: be less than 12 percent and can be negative

Option B: be less than 12 percent but must be greater than zero

Option C: equal 6 percent

Option D: exceed 30 percent

Correct Answer: be less than 12 percent and can be negative ✔

Option A: specific tariff

Option B: ad valorem tariff

Option C: compound tariff

Option D: effective tariff

Correct Answer: compound tariff ✔

Option A: 5 percent

Option B: 10 percent

Option C: 15 percent

Option D: 20 percent

Correct Answer: 10 percent ✔

Option A: only on imports

Option B: only on exports

Option C: on both imports and exports

Option D: on imports exports and nontraded goods

Correct Answer: only on imports ✔

Option A: $50,000

Option B: $75,000

Option C: $120,000

Option D: $150,000

Correct Answer: $75,000 ✔

Option A: $75,000

Option B: $100,000

Option C: $125,000

Option D: $150,000

Correct Answer: $100,000 ✔

Option A: 5 percent

Option B: 10 percent

Option C: 15 percent

Option D: 20 percent

Correct Answer: 20 percent ✔

Option A: never

Option B: sometimes

Option C: always

Option D: None of these

Correct Answer: sometimes ✔

Option A: the domestic price of the product will increase by more than the tariff itself

Option B: The domestic price of the product will increase by the same amount as the tariff

Option C: The domestic price of the product will increase by less than the tariff

Option D: None of the above

Correct Answer: The domestic price of the product will increase by less than the tariff ✔

Option A: scientific tariff argument

Option B: infant industry argument

Option C: beggar they neighbor argument

Option D: foreign dumping argument

Correct Answer: infant industry argument ✔

Option A: a revenue effect and redistribution effect

Option B: revenue effect and protection effect

Option C: consumption effect and protection effect

Option D: redistribution effect and consumption effect

Correct Answer: consumption effect and protection effect ✔

Option A: distinguishes between tariffs that are effective and those that are ineffective

Option B: is the minimum level at Which a tariff becomes effective in limiting imports?

Option C: shows how effective a tariff is in raising revenue for the government

Option D: shows the increase in value added for domestic production that a particular tariff structure makes possible, in percentage terms

Correct Answer: shows the increase in value added for domestic production that a particular tariff structure makes possible, in percentage terms ✔

Option A: fixed amount of money per unit traded

Option B: a percentage of money per unit traded

Option C: a percentage of the quantity of imports

Option D: All of the above

Correct Answer: fixed amount of money per unit traded ✔

Option A: valid for stereos, but nor for most products imported by Pakistan

Option B: valid for most products imported by Pakistan but not for stereos

Option C: deceiving since Koreans eventually spend the dollars on Pakistani goods

Option D: deceiving since the dollars spent on a stereo built in the Pakistan eventually wind up overseas

Correct Answer: deceiving since Koreans eventually spend the dollars on Pakistani goods ✔

Option A: equals to tariffs on imported manufactured goods

Option B: lower than tariffs on imported manufactured goods

Option C: higher than tariffs on imported manufactured goods

Option D: The highest of all tariffs

Correct Answer: lower than tariffs on imported manufactured goods ✔

Option A: Ad valorem tariff

Option B: Specific tariff

Option C: Effective tariff

Option D: Compound tariff

Correct Answer: Ad valorem tariff ✔

Option A: The purpose is to maintain protection for an indefinite time period

Option B: The industry is characterized by increasing returns to scale

Option C: The economy operates during a recession

Option D: The protected industry provides invaluable goods during periods of war

Correct Answer: The protected industry provides invaluable goods during periods of war ✔

Option A: nominal tariff rate on the final product equals the effective tariff rate on the product

Option B: nominal tariff rate on the final product is greater than the effective rate on the product

Option C: nominal tariff rate on the final product is less than the effective tariff rate on the final product

Option D: None of the above

Correct Answer: nominal tariff rate on the final product equals the effective tariff rate on the product ✔

Option A: cause foreign assemblers of computers to use more computer components that are supplied by countries other than the United States

Option B: Increase the Price of computers to consumers in the United States

Option C: Increase the Production of computers in the United States

Option D: Increase the production of computer components in the United States

Correct Answer: Increase the production of computer components in the United States ✔

Option A: will always

Option B: will never

Option C: can sometimes

Option D: None of the above

Correct Answer: can sometimes ✔

Option A: the country is a small country rather than a larger country

Option B: its terms of trade improve enough

Option C: The tariff enhances the welfare of its trading partners

Option D: Its government’s tax revenue increases because of the tariff

Correct Answer: its terms of trade improve enough ✔

Option A: improve

Option B: worsen

Option C: not change

Option D: any of these

Correct Answer: not change ✔

Option A: $10

Option B: $15

Option C: $20

Option D: $25

Correct Answer: $15 ✔

Option A: $10,000

Option B: $25,000

Option C: $50,000

Option D: $75,000

Correct Answer: $50,000 ✔

Option A: 12,000 units

Option B: 20,000 units

Option C: 30,000 units

Option D: 42,000 units

Correct Answer: 20,000 units ✔

Option A: 10,000 units

Option B: 40,000 units

Option C: 42,000 units

Option D: 50,000 units

Correct Answer: 40,000 units ✔

Option A: highest of all

Option B: higher than on manufactured goods

Option C: equal to tariffs on manufactured goods

Option D: lower than on manufactured goods

Correct Answer: lower than on manufactured goods ✔

Option A: consumer surplus

Option B: producer surplus

Option C: deadweight costs

Option D: deadweight surplus

Correct Answer: consumer surplus ✔

Option A: producer surplus

Option B: deadweight surplus

Option C: government surplus

Option D: consumer surplus

Correct Answer: consumer surplus ✔

Option A: The price of autos within the nation will rise by 10 percent

Option B: The price of autos within the nation will rise by less than 10 percent

Option C: The price of autos within the nation will rise by more than 10 percent

Option D: The price of autos will not rise because of internal competition

Correct Answer: The price of autos within the nation will rise by 10 percent ✔

Option A: a regional area within which trade with foreign nations is allowed

Option B: a free trade agreement among several nations

Option C: designed to limit exports of manufactured goods by placing export taxes on goods made within the zone

Option D: designed to promote exports by deferring imports duties on intermediate inputs and waving such duties if the final product is re-exported rather than sold domestically

Correct Answer: designed to promote exports by deferring imports duties on intermediate inputs and waving such duties if the final product is re-exported rather than sold domestically ✔

Option A: only revenue effects

Option B: only protective effects

Option C: Both protective and revenue effects

Option D: neither protective or revenue effects

Correct Answer: Both protective and revenue effects ✔

Option A: fixed amounts of money per unit traded

Option B: a percentage of the price of the product

Option C: a percentage of the quantity of imports

Option D: All of the above

Correct Answer: a percentage of the price of the product ✔

Option A: In the interest of the U.S as a whole but not in the interest of the state of Pennsylvania where steel mills are located

Option B: In the interest of the U.S as a whole and in the interest of the state of Pennsylvania

Option C: Not in the interest of the U.S as a whole, but it might be in the interest of the state of Pennsylvania

Option D: Not in the interest of the U.S as a whole, nor in the interest of the state of Pennsylvania

Correct Answer: Not in the interest of the U.S as a whole, but it might be in the interest of the state of Pennsylvania ✔

Option A: Compound tariff

Option B: Effective tariff

Option C: Ad valorem tariff

Option D: Specific tariff

Correct Answer: Specific tariff ✔

Option A: marginal tax rates are high.

Option B: higher income taxpayers pay more taxes than do lower income taxpayers.

Option C: marginal tax rates are low.

Option D: higher income taxpayers pay a greater percentage of their income in taxes than do lower income taxpayers.

Correct Answer: higher income taxpayers pay a greater percentage of their income in taxes than do lower income taxpayers. ✔

Option A: marginal tax rate

Option B: average tax rate

Option C: horizontal tax rate

Option D: proportional tax rate

Correct Answer: average tax rate ✔

Option A: minimizes the administrative burden form the tax

Option B: does all the things describe in these answers

Option C: raises revenue at the smallest possible cost to taxpayers.

Option D: minimize the deadweight loss from the tax.

Correct Answer: does all the things describe in these answers ✔

Option A: the deadweight has demonstrated

Option B: the ability-to-pay principle

Option C: the benefits principle

Option D: horizontal equity

Correct Answer: the deadweight has demonstrated ✔

Option A: caused a deadweight loss

Option B: decreased equity

Option C: generated no tax revenue

Option D: increased efficiency

Correct Answer: caused a deadweight loss ✔

Option A: doubles

Option B: stays the same

Option C: increase by a factor of four.

Option D: could rise or fall

Correct Answer: increase by a factor of four. ✔

Option A: will fall

Option B: will rise

Option C: will first rise and then fall

Option D: will first fall and then rise

Correct Answer: will first rise and then fall ✔

Option A: a small deadweight loss and the burden of the tax would fall on the renter

Option B: a large deadweight loss and the burden of the tax would fall on the landlora

Option C: a large deadweight loss and the burden of the tax would fall on the renter.

Option D: a small deadweight loss and the burden of the tax would fall on the landlord

Correct Answer: a small deadweight loss and the burden of the tax would fall on the landlord ✔

Option A: generate a deadweight loss that is unaffected by the time period over which it is measured

Option B: cause a greater deadweight loss in the long run when compared to the short run

Option C: None of these answers

Option D: cause a greater deadweight loss in the short run when compared to the long run.

Correct Answer: cause a greater deadweight loss in the long run when compared to the short run ✔

Option A: The buyers pay a larger portion of the tax because demand is more inelastic than supply

Option B: The sellers pay a larger portion of the tax because supply is more elastic than demand

Option C: The buyers pay a larger portion of the tax because demand is more elastic then supply

Option D: The sellers pay a larger portion of the tax because supply is more inelastic than demand

Correct Answer: The sellers pay a larger portion of the tax because supply is more inelastic than demand ✔

Option A: A + B + C + D+ E +F

Option B: A + B + C + D

Option C: A + D

Option D: B + C + E + F

Correct Answer: A + B + C + D ✔

Option A: C + F

Option B: A

Option C: B

Option D: C

Correct Answer: C ✔

Option A: A + B + E

Option B: A + B + C + D

Option C: A

Option D: D

Correct Answer: D ✔

Option A: A + B + E

Option B: D

Option C: C + F

Option D: C + D + F

Correct Answer: D ✔

Option A: All these answers can be supported by the benefits principle of taxation

Option B: Progressive income taxes used to pay for national defense

Option C: Petrol taxes used to pay for roads

Option D: property taxes used to pay for policies and the court system

Correct Answer: All these answers can be supported by the benefits principle of taxation ✔

Option A: all taxpayers pay the same amount of tax

Option B: taxes on all goods are levied at the same rate

Option C: taxes are as low as possible

Option D: the system comprises only lump sum taxes

Correct Answer: taxpayers with similar abilities to pay taxes pay the same amount ✔

Option A: Proportional tax rate

Option B: average tax rate

Option C: marginal tax rate

Option D: vertical tax rate

Correct Answer: marginal tax rate ✔

Option A: efficient

Option B: progressive

Option C: regressive

Option D: proportional

Correct Answer: progressive ✔

Option A: total taxes paid divided by total income

Option B: the extra taxes paid on an additional dollar or income.

Option C: the taxes paid by the marginal worker

Option D: total income divided by total taxes paid

Correct Answer: total taxes paid divided by total income ✔