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-2 section-12

The rule of Equimarginal utility is given below also known by many other names. Which of the following is a mismatch

A) Law of utility and demand B) Rule of replacement C) Indifference rule D) Law of economy in expenditure

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Answer & Solution

Answer: Option A

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A firm learns that the own-price elasticity of a product it manufacturers is 3.5. What is the correct action for the firm to take to raise its total revenue?

A) Raises the price because the demand for the good is elastic B) Lowers the price because the demand for the good is elastic C) We need information on the firm's cost structure to answer D) Raise the price because demand is elastic

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Answer & Solution

Answer: Option B

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If P_x = P_y, then when the consumer maximises utility,

A) X must be equal to Y B) MU(X) must be equal to MU(Y) C) MU(X) may equal MU(Y), but it is necessarily so D) X and Y must be substitutes

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Answer & Solution

Answer: Option B

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Match the following.

List-I (Types of Market Structures)	List-II (Methods of Marketing)
a. Perfect competition	1. Market exchange
b. Monopolistic competition	2. Competitive advertising
c. Oligopoly	3. Quality
d. Monopoly	4. Promotional advertising

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

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Answer & Solution

Answer: Option A

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Which of the following statement is/are correct?
1. When the percentage change in demand is greater than that of price, then demand is relatively inelastic.
2. When the demand remains unchanged at all price variation, it is perfectly inelastic.
Select the correct answer

A) Only 1 B) Only 2 C) Both 1 and 2 D) Neither 1 nor 2

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Answer & Solution

Answer: Option B

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In an oligopoly market, the kinked demand curve explains

A) Collusion among rival firms B) Average variable cost curves C) Short-run average cost curves D) Long-run average cost curves

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Answer & Solution

Answer: Option A

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Higher indifference curve shows:

A) Minimum level of satisfaction B) The point of satisfaction C) Higher level of satisfaction D) Highest level of satisfaction

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Answer & Solution

Answer: Option C

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For inferior commodities, income effect is

A) zero B) negative C) infinite D) positive

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Answer & Solution

Answer: Option B

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Elasticity of demand for electricity is:

A) Inelastic B) Elastic C) Less elastic D) More elastic

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Answer & Solution

Answer: Option C

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A firm produces 2,00,000 units a year and sells all for Rs. 10 each. The explicit costs of production are Rs. 15,000 and the implicit costs of production are Rs. 3,00,000. The firm has an accounting profit of

A) Rs. 5,00,000 and an economic profit of Rs. 2,00,000 B) Rs. 4,00,000 and an economic profit of Rs. 2,00,000 C) Rs. 3,00,000 and an economic profit of Rs. 4,00,000 D) Rs. 2,00,000 and an economic profit of Rs. 5,00,000

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Answer & Solution

Answer: Option B

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