Economics MCQ Questions with Answer

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Economics MCQ Questions with Answer

Quiz-1Quiz-2

Q11. The problem of Economics arises from-

(a) Plenty

(b) Scarcity of goods

(c) More wants and fewer goods

(d) All of the above

Answer: (b)

Explanation: Economics problem is all about choosing alternative among finite resources available that means a scarcity of resources.

Q12.Hire and Fire’ is the policy of-

(a) Capitalism

(b) Socialism

(c) Mixed economy

(d) Traditional economy

Answer: (a)

Explanation: Capitalism is a theory that believes in profit maximization and regulation by demand and supplies itself only. Therefore there is no regulation on what to hire and whom to fire.

Q13. Which of the following does not determine the supply of labor?

(a) Size and age-structure of the population

(b) Nature of work

(c) Marginal productivity of labor

(d) Work-leisure ratio

Answer: (c)

Explanation: Marginal productivity of labor is a change in output resulting from employing one more unit of labor. It does not play any role in the supply of labor.

Q14. If the price of an article decreases from Rs. 100 to Rs. 80, when quantity demanded increases from Q1 units to 4600 units, and if point elasticity of demand is -0.75. Q1 =?

(a) 5000 units

(b) 4000 units

(c) 3000 units

(d) 2000 units

Answer: (b)

Explanation: Point Elasticity is finding elasticity at the point on the demand curve.

Elasticity = $\frac{\%\Delta \mathrm{Q}}{\%\Delta \mathrm{P}}\,\,$

By putting value we will receive 4000 units as the answer.

Q15. A fall in demand or rise in the supply of a commodity–

(a)Increases the price of that commodity

(b)Decreases the price of that commodity

(c)Neutralizes the changes in the price

(d)Determines the price elasticity

Answer: (b)

Explanation: Fall in demand and rise in the supply of the commodity will create excessive ‘Buffer stock. So to sell the product there will be a decrease in the price of that commodity so that sell could occur.

Q16. The difference between the price the consumer is prepared to pay for a commodity and the price which he actually pays is called

(a) Consumer’s Surplus

(b) Producer’s Surplus

(c) Landlord’s Surplus

(d) Worker’s Surplus

Answer: (a)

Explanation: Consumer surplus is an extra amount that the consumer realizes when he is willing to pay more than the seller’s selling price.

Or simply consumer surplus = Expected payment-Actual payment.

Q17. Economic rent refers to-

(a) Payment made for the use of land

(b) Profit

(c) Producer’s surplus

(d) Consumer’s surplus

Answer: (a)

Explanation: Economic Rent only includes income or payment that arises due to the use of land only.

Q18.Marginal efficiency of capitals

(a) Expected rate of return of new investment

(b) Expected rate of return of existing investment

(c) Difference between the rate of profit and rate of interest

(d) Value of output per unit of capital invested

Answer: (a)

Explanation: Marginal efficiency of capital displays the expected rate of return. ‘’J.M. Keynes described marginal efficiency as the rate of discount which would make the present value of the series of annuities given by the returns expected from the capital asset during its life just equal to its supply price’’.

Q19. When Average Cost Production (ACP) falls, the marginal cost of production must be-

(a) Rising

(b) Falling

(c) Greater than the average cost

(d) Less than the average cost

Answer: (d)

Explanation: Average cost is the cost per unit of output. Marginal cost is an addition to total cost by producing one more unit. So marginal cost of production lies below-average cost when the average cost falls.

Q20. Economic Survey in India is published officially, every year by the:

(a) Reserve Bank of India

(b) Planning Commission of India

(c) Ministry of Finance, Govt. of India

(d) Ministry of Industries, Govt. of India

Answer: (c)

Explanation: Economy Survey in India is published officially, every year by the Ministry of Finance, Govt. of India, and issued before the annual budget. It reviews the development in the Indian economy over the previous 12 months.

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