Economics MCQ Questions and Solutions with Explanations

11

Comparing the equilibrium position of a buyer with that of a producer in a pefectly competitive market, it is found that in perfect competition

A) The price of a buyer is higher and the output is relatively higher than that of the producer B) The price of a buyer is less than that of the producer and the output is relatively high C) The price of a buyer is less as compared to the producer and the output is also relatively less D) The price of a buyer is higher than that of the producer and the output is also relatively less

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Answer & Solution

Answer: Option D

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12

Suppose that there are two goods, X and Y, facing a consumer. The prices are P_x = Rs. 4 and P_y = Rs. 5. He has Rs. 110 to spend on these goods. Suppose, he is currently buying 15 units of good X (with marginal utility equal to 40) and 10 units of good Y (with marginal utility equal to 45).
In the above context, which one of the following statements is correct?

A) His total utility will increase if he reallocates his spending towards more of good X and less of good Y B) His total utility will increase if he spends more on good Y and less on good X C) His total utility will increase if he spends less on both the goods D) His total utility is being maximized subject to the budget constraint he is facing

Discuss

Answer & Solution

Answer: Option D

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13

The basic nature of average fixed cost is that it

A) increases as output increases B) remain same at all levels of output C) decreases with increase in output D) All of the above

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Answer & Solution

Answer: Option C

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14

Which of the following statement is incorrect?

A) The demand function specifies the relationship between quantity demanded and all the variables that determine demand B) The demand curve is that part of the demand function, that expresses the relation between price charged for a product and the quantity demanded ceteris paribus C) Elasticity can be measured in two different ways called point elasticity and arc elasticity D) Arc elasticity measures the average elasticity at a point on the arc of the demand curve

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Answer & Solution

Answer: Option D

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15

Which of the following is not the main objective of "Fiscal Policy of India"?

A) To increase liquidity in economy B) To promote price stability C) To minimize the in-equality in income and wealth D) To promote employment opportunities

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Answer & Solution

Answer: Option A

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16

A group of firms that gets together to make price and output decisions is called

A) a non-collusive oligopoly B) price leadership C) a cartel D) a concentrated industry

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Answer & Solution

Answer: Option C

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17

Which of the following is not the feature of monopolistic competition?

A) Fairly large number of firms B) Co-existence of efficient and inefficient firms C) Product homogenity D) Independent price output policy

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Answer & Solution

Answer: Option C

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18

The branch of Economics which focuses on 'what should be' is:

A) microeconomics B) macroeconomics C) normative economics D) positive economics

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Answer & Solution

Answer: Option C

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19

Match the following.

List-I	List-II
a. Total cost	1. TR ÷ Q
b. Average revenue	2. ∆TC ÷ ∆Q
c. Marginal cost	3. AR × Q
d. Total revenue	4. TFC + TVC

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

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Answer & Solution

Answer: Option D

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20

Consider the following statements.
1. Cartel is an informal agreement among the firms to avoid competition.
2. There is a free entry of firms in monopoly market.
3. There is a full control over price in perfect competition.
Which of the statement(s) given above is/are correct?

A) Only 1 B) Both 1 and 2 C) Only 2 D) All of the above

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Answer & Solution

Answer: Option D

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Economics MCQ Questions and Solutions with Explanations | Commerce