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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-3 section-4

Each section contains 100 MCQs on Economics .
21
A firm's average fixed cost is Rs.20 at 6 units of output. What will it be at 4 units of output?
Discuss
Answer & Solution
Answer: Option B
Solution:
Average fixed cost per unit is Rs. 20 when 6 units of product produced. Total fixed cost = 6 X 20 = Rs. 120. Therefore fixed cost per unit when production is 4 units = 120/4 = Rs.30
22
If the price of good A increases relative to the price of substitutes B and C, the demand for
Discuss
Answer & Solution
Answer: Option C
Solution:
If the price of good A increases relative to the price of substitutes B and C, the demand for Both B and C will increase.
23
If income elasticity for a good is 2, then it is a
Discuss
Answer & Solution
Answer: Option C
Solution:
If income elasticity for a good is 2, then it is a Luxury item. A positive income elasticity of demand is associated with normal goods; an increase in income will lead to a rise in demand.
24
Lesser production of ____ would lead to lesser production in future.
Discuss
Answer & Solution
Answer: Option C
Solution:
Lesser production of Capital goods would lead to lesser production in future. Production of both capital and consumer goods is essential for the economy. Capital goods (like plant and machinery) are needed for further production and future growth. Consumer goods are needed for present consumption.
25
In perfect competition, the firm's _____ above AVC has the identical shape of the firm's supply curve
Discuss
Answer & Solution
Answer: Option B
Solution:
In perfect competition, the firm's Marginal cost curve above AVC has the identical shape of the firm's supply curve. Under perfect competition average revenue is equal to marginal revenue, so the firm will produce up to that point where marginal revenue and marginal cost are equal. Short run supply curve of a perfectly competitive firm is that portion of marginal cost curve which is above average variable cost curve.
26
Suppose the total cost of producing commodity X is Rs.125000. Out of this cost, implicit cost is Rs.35000 and normal profit is Rs.25000. What will be the explicit cost of commodity X?
Discuss
Answer & Solution
Answer: Option B
Solution:
125000-25000-35000 = 65000 = explicit cost.
Total cost = implicit cost + explicit cost.
27
When indifference curve is L shaped, then two goods will be
Discuss
Answer & Solution
Answer: Option C
Solution:
If two goods are perfect complements then the indifference curves will be L-shaped.
28
One characteristic not typical of oligopolistic industry is
Discuss
Answer & Solution
Answer: Option C
Solution:
One characteristic not typical of oligopolistic industry is Horizontal demand curve. The horizontal demand curve indicates that the elasticity of demand for the good is perfectly elastic. This means that if any individual firm charged a price slightly above market price, it would not sell any products.
29
In case of inferior goods, the income elasticity is
Discuss
Answer & Solution
Answer: Option C
Solution:
In case of inferior goods, the income elasticity is Negative. A negative income elasticity of demand is associated with inferior goods; an increase in income will lead to a fall in the demand and may lead to changes to more luxurious substitutes.
30
If all inputs are trebled and the resultant output is doubled, this is a case of
Discuss
Answer & Solution
Answer: Option C
Solution:
If all inputs are trebled and the resultant output is doubled, this is a case of Diminishing returns to scale.