Economics MCQs

Option A: it is doomed to being relatively poor forever

Option B: none of these answers

Option C: an increase in capital will likely have little impact on output

Option D: it has the potential to grow relatively quickly due to the “catch-up-effect”

Correct Answer: D. it has the potential to grow relatively quickly due to the “catch-up-effect” ✔

Option A: real GDP per person

Option B: nominal GDP per person.

Option C: Real GDP

Option D: The growth rate of nominal GDP per person

Correct Answer: real GDP per person ✔

Option A: will always increase the quantity of saving

Option B: will always decrease the quantity of saving

Option C: will increase the quantity of saving if the substitution effect outweighs the income effect

Option D: will increase the quantity of saving if the income effect outweighs the substitution effect

Correct Answer: will increase the quantity of saving if the substitution effect outweighs the income effect ✔

Option A: stay the same

Option B: rotate inward

Option C: shift outward in a parallel fashion

Option D: rotates outward

Correct Answer: stay the same ✔

Option A: an inferior effect

Option B: a Geffen good

Option C: a normal good

Option D: none of these answers

Correct Answer: a normal good ✔

Option A: Z to point X

Option B: X to point X

Option C: X to point Z

Option D: Y to point X

Correct Answer: Z to point X ✔

Option A: a substitute good

Option B: a normal good

Option C: a complementary good

Option D: an inferior good

Correct Answer: an inferior good ✔

Option A: rises

Option B: stays the same

Option C: could rise or fall depending on the relative prices of the two goods.

Option D: falls

Correct Answer: rises ✔

Option A: the budget constraint crosses the indifference curve

Option B: the two highest indifference curves cross

Option C: the consumer reaches the highest indifference curve subject to remaining on the budget constraint

Option D: the consumer has reached the highest indifference curve

Correct Answer: the consumer reaches the highest indifference curve subject to remaining on the budget constraint ✔

Option A: the marginal rate of substitution

Option B: the marginal rate of trade-off.

Option C: the trade-off rates

Option D: the marginal rate of indifference

Correct Answer: the marginal rate of substitution ✔

Option A: The marginal utility per dollar spent on each good is the same

Option B: The marginal rate of substitution between goods is equal to the ratio of the prices between goods

Option C: The consumer’s indifference curve is tangent to his budget constraint

Option D: The consumer has reached his highest indifference curve subject to his budget constraint

Correct Answer: The consumer is indifferent between any two points on his budget constraint ✔

Option A: right shoes and left shoes

Option B: petrol from BP and petrol from shell

Option C: kit-Kat chocolate snacks and Twix chocolate snacks

Option D: coke and Pepsi

Correct Answer: right shoes and left shoes ✔

Option A: will always increase the quantity of labor supplied

Option B: will increase the amount of labor supplied if the substitution effect outweighs the income effect

Option C: will increase the amount of labor supplied if the income effect outweighs the substitution effect

Option D: will always decrease the amount of labor supplied

Correct Answer: will increase the amount of labor supplied if the substitution effect outweighs the income effect ✔

Option A: inferior effect

Option B: normal effect

Option C: substitution effect

Option D: complementary effect

Correct Answer: substitution effect ✔

Option A: X to point Y

Option B: X to point Z

Option C: Y to point X

Option D: Z to point X

Correct Answer: X to point Y ✔

Option A: Z

Option B: X

Option C: Y

Option D: the optimal point cannot be determined from this graph

Correct Answer: Z ✔

Option A: a complementary good

Option B: an inferior good

Option C: a normal good

Option D: a substitute good

Correct Answer: a normal good ✔

Option A: the slope of the indifference curve equals the slope of the budget constraint

Option B: the indifference curve is tangent to the budget constraint

Option C: the relative prices of the two goods equals the marginal rate of substitution

Option D: none of these answers are true

Correct Answer: all of these answers are true ✔

Option A: Indifference curves are downward sloping

Option B: indifference curves are bowed outward

Option C: Indifference curves do not cross each other

Option D: Higher indifference curve is preferred to lower ones

Correct Answer: indifference curves are bowed outward ✔

Option A: 2

Option B: 10

Option C: 1/2

Option D: 5

Correct Answer: 2 ✔

Option A: right angles

Option B: bowed outward

Option C: straight lines

Option D: nonexistent

Correct Answer: straight lines ✔

Option A: an indifference curve

Option B: the budget constraint

Option C: the marginal rate of substitution

Option D: the consumption limits

Correct Answer: the budget constraint ✔

Option A: SMC, LMC

Option B: SMC above SAVC, LMC above LAC

Option C: SMC below SAVC, LMC above LAC

Option D: SMC below SAVC, LMC bellow LAC

Correct Answer: SMC above SAVC, LMC above LAC ✔

Option A: price is greater than short run average total cost

Option B: price is between short run average total cost and short run average variable cost

Option C: price is less than short run average variable cost

Option D: profit is zero

Correct Answer: price is less than short run average variable cost ✔

Option A: Short run opportunity costs, profit

Option B: Short run variable costs, profit

Option C: Short run average variable costs, profit

Option D: Short run average variable costs, profit run average fixed costs

Correct Answer: Short run average variable costs, profit ✔

Option A: greater than average cost, greater than average cost

Option B: less than average cost, greater than average cost

Option C: less than average cost, less than average cost

Option D: greater than average cost, less than average cost

Correct Answer: less than average cost, greater than average cost ✔

Option A: increasing returns to scale

Option B: decreasing returns to scale

Option C: constant returns to scale

Option D: the minimum efficient scale

Correct Answer: increasing returns to scale ✔

Option A: There are few sellers

Option B: There are few buyers

Option C: There is one seller

Option D: There are many sellers

Correct Answer: There is one seller ✔

Option A: Buyer power is higher

Option B: Supplier power is higher

Option C: Substitute threat is higher

Option D: Rivalry is lower

Correct Answer: Supplier power is higher ✔

Option A: The marginal cost will shift outwards

Option B: the demand curve will shift inwards

Option C: The average cost will shift downwards

Option D: The average variable cost will increase

Correct Answer: The marginal cost will shift outwards ✔

Option A: Product

Option B: Price

Option C: Place

Option D: Presence

Correct Answer: Product ✔

Option A: Demand is perfectly elastic

Option B: Products are homogeneous

Option C: Marginal revenue = price

Option D: The marginal revenue is below the demand curve and diverges

Correct Answer: The marginal revenue is below the demand curve and diverges ✔

Option A: the minimum of their average-total-cost curves

Option B: all of these answers are correct

Option C: their efficient scale

Option D: zero economic profit

Correct Answer: all of these answers are correct ✔

Option A: perfectly inelastic

Option B: perfectly elastic

Option C: upward sloping

Option D: downward sloping

Correct Answer: upward sloping ✔

Option A: marginal revenue

Option B: marginal cost

Option C: average total cost

Option D: average revenue

Correct Answer: average total cost ✔

Option A: variable costs of staying open are less than the total revenue due to staying open.

Option B: total costs of staying open are less than the total revenue due to staying open

Option C: variable costs of staying open are greater than the total revenue due to staying open

Option D: total costs of staying open are greater than the total revenue due to staying open

Correct Answer: variable costs of staying open are greater than the total revenue due to staying open ✔

Option A: Upward-sloping portion of the average total cost curve

Option B: upward-sloping portion of the average variable cost curve

Option C: portion of the marginal cost curve that lies above the average total cost curve.

Option D: entire marginal cost curve.

Correct Answer: portion of the marginal-cost curve that lies above the average variable cost curve ✔

Option A: price equals average variable cost

Option B: marginal revenue equals average revenue

Option C: marginal cost equals total revenue

Option D: marginal cost equals marginal revenue

Correct Answer: marginal cost equals marginal revenue ✔

Option A: doubles.

Option B: more than double

Option C: less than doubles.

Option D: cannot be determined because the price of the good may rise or fall

Correct Answer: doubles. ✔

Option A: All of these answers are characteristic of a competitive market

Option B: The are many buyers and sellers in the market

Option C: The goods offered for sale are largely the same.

Option D: Firms generate small but positive economic profits in the long run

Correct Answer: Firms generate small but positive economic profits in the long run ✔

Option A: price = average cost = marginal cost

Option B: price = average cost = total cost

Option C: price = marginal cost = total cost

Option D: Total revenue = Total variable cost

Correct Answer: price = average cost = marginal cost ✔

Option A: A few firms dominate the industry

Option B: Firms are price makers

Option C: There are many buyers but few sellers

Option D: There are many buyers and sellers

Correct Answer: There are many buyers and sellers ✔

Option A: Short run abnormal profits are completed away by firms leaving the industry

Option B: Short run abnormal profits are competed away by firms entering the industry

Option C: Short run abnormal profits are competed away by the government

Option D: Short run abnormal profits are competed away by greater advertising

Correct Answer: Short run abnormal profits are competed away by firms entering the industry ✔

Option A: The products firm offer is very similar

Option B: Products are heavily differentiated

Option C: A few firms dominate the market

Option D: Consumer have limited information

Correct Answer: The products firm offer is very similar ✔

Option A: The price equals the marginal revenue

Option B: the price equals the average variable cost

Option C: the fixed cost equals the variable costs

Option D: the price equals the total cost

Correct Answer: The price equals the marginal revenue ✔

Option A: Price is greater than marginal cost

Option B: price equals marginal cost

Option C: price is less than marginal cost

Option D: None of the above

Correct Answer: price equals marginal cost ✔

Option A: Horizontal

Option B: vertical

Option C: downward sloping

Option D: elastic

Correct Answer: Horizontal ✔

Option A: many buyers and sellers

Option B: a standard product

Option C: free entry and exit

Option D: perfect information

Correct Answer: all of the above ✔

Option A: is a price taker

Option B: Producer different products

Option C: Believes that can influence price

Option D: Prevents the entry of competitors

Correct Answer: is a price taker ✔

Option A: decreasing returns to scale

Option B: The law of diminishing returns

Option C: constant returns to scale

Option D: an inefficient production technique

Correct Answer: The law of diminishing returns ✔

Option A: At their lowest points

Option B: When they are declining

Option C: When they are increasing

Option D: When marginal revenue is zero

Correct Answer: At their lowest points ✔

Option A: long run average cost is lowest

Option B: marginal revenue equals output

Option C: marginal revenue equals long run marginal cost

Option D: marginal cost equals output

Correct Answer: marginal revenue equals long run marginal cost ✔

Option A: Efficient scale

Option B: Average efficient scale

Option C: Maximum efficient scale

Option D: Minimum efficient scale

Correct Answer: Minimum efficient scale ✔

Option A: Short run marginal cost rises, output rises

Option B: long run marginal cost rises, output rises

Option C: Short run average cost rises, output rises

Option D: long run average cost rises, output rises

Correct Answer: long run average cost rises, output rises ✔

Option A: output is maximized

Option B: inputs are minimized

Option C: there is no way to make a given output using less of one input and no more of the other inputs

Option D: Costs are minimized

Correct Answer: there is no way to make a given output using less of one input and no more of the other inputs ✔

Option A: Unique Selling Proposition

Option B: Underlying Sales Proposition

Option C: Unit Sales Point

Option D: Under Sales Procedure

Correct Answer: Unique Selling Proposition ✔

Option A: Buyer power is high

Option B: Supplier power is high

Option C: Entry threat is low

Option D: Substitute threat is high

Correct Answer: Substitute threat is high ✔

Option A: Demand more price inelastic

Option B: Supply more price inelastic

Option C: Demand more income elastic

Option D: Supply more income elastic

Correct Answer: Supply more income elastic ✔

Option A: Marginal revenue = Average revenue

Option B: Marginal revenue = Marginal cost

Option C: Marginal revenue = Average cost

Option D: Marginal revenue = Total cost

Correct Answer: Marginal revenue = Average cost ✔

Option A: Firms face a perfectly elastic demand curve

Option B: All products are homogeneous

Option C: Firms make normal profits in the long run

Option D: There are barriers to entry to prevent entry

Correct Answer: There are barriers to entry to prevent entry ✔

Option A: an increase in the number of firms in the market but no increase in the price of the good

Option B: an increase the price of the good and an increase in the number of firms in the market

Option C: an increase the price of the good but no increase in the number of firms in the market

Option D: no impact on either the price of the good or the number of firms in the market

Correct Answer: an increase in the number of firms in the market but no increase in the price of the good ✔

Option A: downward sloping

Option B: perfectly inelastic

Option C: upward sloping

Option D: perfectly elastic

Correct Answer: perfectly elastic ✔

Option A: is always more elastic than the short-run market supply curve.

Option B: is always perfectly elastic

Option C: has the same elasticity as the short run market supply curve

Option D: is always less elastic than the short-run market supply curve

Correct Answer: is always more elastic than the short-run market supply curve. ✔

Option A: entire marginal cost curve

Option B: upward-sloping portion of the average total cost curve

Option C: portion of the marginal cost curve that lies above the average total cost curve

Option D: upward-sloping portion of the average variable cost curve

Correct Answer: portion of the marginal cost curve that lies above the average total cost curve ✔

Option A: decreased production

Option B: maintained production at the current level

Option C: temporarily shut down.

Option D: increased production

Correct Answer: increased production ✔

Option A: total revenue divided by the quantity sold

Option B: equal to the quantity of the good sold

Option C: average revenue divided by the quantity sold

Option D: equal to the price of the good sold

Correct Answer: equal to the price of the good sold ✔

Option A: electricity

Option B: cable television

Option C: cola

Option D: milk

Correct Answer: milk ✔

Option A: Price equals marginal revenue

Option B: price is greater than marginal revenue

Option C: price equals total revenue

Option D: price equals total cost

Correct Answer: Price equals marginal revenue ✔

Option A: The price covers average variable cost

Option B: The price covers variable cost

Option C: The price covers average fixed cost

Option D: The price covers fixed costs

Correct Answer: The price covers average variable cost ✔

Option A: The price equals the total revenue

Option B: Firms are allocatively inefficient

Option C: Firms are productively efficient

Option D: The price equals total cost

Correct Answer: Firms are productively efficient ✔

Option A: Total revenue is maximized

Option B: Marginal revenue equals zero

Option C: Marginal revenue equals marginal cost

Option D: Marginal revenue equals average cost

Correct Answer: Marginal revenue equals marginal cost ✔

Option A: perfectly elastic demand curve

Option B: perfectly inelastic demand curve

Option C: perfectly elastic supply curve

Option D: perfectly inelastic supply curve

Correct Answer: perfectly elastic demand curve ✔

Option A: Keeping balanced budget, a price target

Option B: slow economic growth under colonial capitalism

Option C: minimizing public spending in the rural areas

Option D: western countries, nation-state ideology

Correct Answer: slow economic growth under colonial capitalism ✔

Option A: I and II only

Option B: I, II, III only

Option C: I, II, IV only

Option D: I, II, III and IV

Correct Answer: I, II, III and IV ✔

Option A: has failed

Option B: works well in Utopia

Option C: is widely used in sub Saharan Africa

Option D: is the only way to eradicate poverty?

Correct Answer: has failed ✔

Option A: market socialism

Option B: capitalism

Option C: mixed economy

Option D: monopoly

Correct Answer: market socialism ✔

Option A: but falls short of authorization

Option B: with immediate implementation

Option C: of the central bank

Option D: of implementation through foreign aid

Correct Answer: but falls short of authorization ✔

Option A: Yugoslavia

Option B: Chile

Option C: Vietnam

Option D: Japan

Correct Answer: Yugoslavia ✔

Option A: the inputs to each industry from other industries and sectors

Option B: development planning and the required information on national income growth

Option C: the planned public capital divided by feasible actual industrial projects public capital

Option D: how the output of each industry is distributed within the sectors of the economy

Correct Answer: the inputs to each industry from other industries and sectors ✔

Option A: III and IV only

Option B: II and III only

Option C: I, II and III only

Option D: I, II, III and IV

Correct Answer: I, II, III and IV ✔

Option A: monetary policy, fiscal policy

Option B: elections; economics policies

Option C: economic policies; political policies

Option D: tax collection, tax implementation

Correct Answer: elections; economics policies ✔

Option A: governments depend primarily on their colonial masters

Option B: excessive controls are used in the private sector

Option C: the brain drains cost government substantially

Option D: monopolies dominate in the agricultural sector

Correct Answer: excessive controls are used in the private sector ✔

Option A: Investigating development potential through scientific and market research and natural resources surveys

Option B: Providing adequate infrastructure for public and private agencies

Option C: Creating markets, including commodity markets, security exchanges, banks credit facilities and insurance companies

Option D: Increasing market monopolies and oligopolies to help producers

Correct Answer: Increasing market monopolies and oligopolies to help producers ✔

Option A: most resource lack freedom to move to their highest value uses

Option B: resources are free to move to their lowest cost uses

Option C: resources owned by private entities moves to efficient use but not those owned publicly

Option D: resources are privately owned by capitalists

Correct Answer: most resource lack freedom to move to their highest value uses ✔

Option A: indicative plan

Option B: central bank policies

Option C: central planning

Option D: instrument variables

Correct Answer: instrument variables ✔

Option A: achieved only through socialism

Option B: target variables

Option C: bound by soft budget

Option D: recurrent expenditures

Correct Answer: target variables ✔

Option A: instrument variable

Option B: seasonal expenditure

Option C: rolling plan

Option D: perspective plan

Correct Answer: rolling plan ✔

Option A: The monopoly profit maximization rule applies

Option B: Product price equals marginal cost

Option C: marginal revenue equals average cost

Option D: total revenue equals total cost

Correct Answer: Product price equals marginal cost ✔

Option A: commanding heights

Option B: entrepreneurial programs

Option C: public physical policy

Option D: development planning

Correct Answer: development planning ✔

Option A: dirigiste

Option B: Keynesian

Option C: Commanding heights

Option D: soft budget

Correct Answer: dirigiste ✔

Option A: Russia, Pakistan Bangladesh and Nigeria

Option B: China, India, Indonesia, and Brazil

Option C: Russia, China, India, and South Africa

Option D: China, Russia, Mexico, and Indonesia

Correct Answer: China, India, Indonesia, and Brazil ✔

Option A: Association of South East Argo Nations

Option B: Association of South East Asian Nations

Option C: Alliance of South East Asian Neighbors

Option D: Alliance of South Eastern African Nations

Correct Answer: Association of South East Asian Nations ✔

Option A: Ghana and Nigeria

Option B: Poland and Germany

Option C: Cuba and North Korea

Option D: China and Hong Kong

Correct Answer: Cuba and North Korea ✔

Option A: Ghana and Mexico

Option B: Canada and the United States

Option C: Sierra Leone and Nigeria

Option D: Taiwan and South Korea

Correct Answer: Taiwan and South Korea ✔

Option A: a strong Catholic church intervention in the economic decisions

Option B: an emphasis on trade restrictions

Option C: the use of the medieval economy

Option D: the rise of capitalism

Correct Answer: the rise of capitalism ✔

Option A: China

Option B: United States

Option C: Russia

Option D: Europe

Correct Answer: China ✔

Option A: zaibatsu

Option B: chaebol

Option C: laissez faire

Option D: bourgeoisie

Correct Answer: chaebol ✔

Option A: groups of affiliated companies loosely organized around a large bank

Option B: horizontal manufacturing groups consisting of a core company and its partners

Option C: State-assisted entrepreneurs

Option D: financial cliques

Correct Answer: groups of affiliated companies loosely organized around a large bank ✔

Option A: Japan

Option B: The four tigers

Option C: Vietnam

Option D: Thailand

Correct Answer: Vietnam ✔

Option A: income per capita is the same regardless of poor or rich countries

Option B: income per capita in poor countries grows faster than in rich countries

Option C: income per capita in rich countries grows faster than in poor countries

Option D: income per capita in poor countries grows conditional upon foreign aid

Correct Answer: income per capita in poor countries grows faster than in rich countries ✔