Economics MCQ Questions and Solutions with Explanations

Economics MCQ Questions and Solutions with Explanations | Commerce

Economics MCQ Questions and answers with easy and logical explanations. Commerce provides you all type of quantitative and competitive aptitude mcq questions with easy and logical explanations. Economics MCQ is important for exams like B.COM, M.COM, BBA, BBM, CA, CS, CMA, CPA, CFA, UPSC, NET, Banking and other commerce department exam. Page-10 section-4

Suppose a consumer buys only two goods A and B. When commodity A becomes cheaper with increase in consumer's income, it is seen that consumption of A has decreased and that of B has increased. This is because

A) Income effect has acquired the predominance of substitution effect B) The real income of the consumer has decreased C) The substitution effect has acquired the predominance of the income effect D) Afterall good B is not a complete replacement of good A

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Answer & Solution

Answer: Option C

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A consumer consuming two goods will be in equilibrium when the marginal utilities from both goods are

A) Zero B) Maximum possible positive C) Equal D) None of the above

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Answer: Option C

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If we assume that price decreases and total expenditures increase we may conclude that elasticity of demand is

A) greater than one B) equal to one C) less than one but more than zero D) equal to zero

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Answer: Option A

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A significant property of the Cobb-Douglas production function is that the elasticity of substitutes between input is

A) Equal to 1 B) More than 1 C) Less than 1 D) Zero

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Answer & Solution

Answer: Option A

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Goods 'A' and 'B' are substitutes in production either good A or good B, then A and B are

A) Substitutes in consumption B) Complements in consumption C) Complements in production D) Substitutes in production

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Answer: Option D

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The word demand should be used to mean the quantity demanded which is purchased at a fixed price

A) Prof. Penson B) Prof. J. S. Mill C) Prof. Benham D) Prof. Mayors

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Answer: Option B

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The example of Joint Demand is

A) Ink and Pen B) Newspaper and Magazines C) Bus and Train D) All of the above

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Answer: Option A

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Normally shaped indifference curves are bowed towards the origin of the graph. The reason for this shape is

A) The principle of diminishing marginal rate of relative price B) The diminishing marginal rate of substitution C) The marginal rate of substitution is constant along an indifference curve D) The indifference curves farther away from the origin represent higher levels of utility

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Answer & Solution

Answer: Option B

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Match the following.

List-I	List-II
a. Monopoly	1. Single buyer, single seller
b. Oligopoly	2. Single seller, many buyers
c. Monopsony	3. Single buyer, many sellers
d. Duopoly	4. Few sellers, many buyers
e. Bilateral monopoly	5. Two sellers, many buyers

A) a-1, b-2, c-3, d-4, e-5 B) a-1, b-3, c-5, d-2, e-4 C) a-2, b-4, c-3, d-5, e-1 D) a-2, b-4, c-1, d-3, e-5

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Answer: Option C

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100

Shutdown point referes to the state of loss in short run where a firm need to decide whether to continue with production activity or to suspend it. This point is decided under which condition?
1. AR = AVC
2. AR = MC
3. AR = TVC
4. AR = AC

A) Both 1 and 3 B) Both 2 and 4 C) Only 1 D) Only 4

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Answer & Solution

Answer: Option C

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