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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-7 section-3

Each section contains 100 MCQs on Economics .
61
A horizontal supply curve parallel to the quantity axis implies that the elasticity of supply is
Discuss
Answer & Solution
Answer: Option B
Solution:
A horizontal supply curve parallel to the quantity axis implies that the elasticity of supply is Infinite. The horizontal supply curve shows another extreme case, i.e., that of perfectly inelastic supply. The implication of such a supply curve is that a little price cut will cause the quantity supplied to fall to zero while a slightest increase in price will induce purchasers to offer an infinitely large quantity.
62
When ______, we know that the firms are earning just normal profits.
Discuss
Answer & Solution
Answer: Option A
Solution:
When AC = AR, we know that the firms are earning just normal profits.
63
The economic analysis expects the consumer to behave in a manner which is
Discuss
Answer & Solution
Answer: Option A
Solution:
The economic analysis expects the consumer to behave in a manner which is Rational. The assumption of rational behavior implies that people would rather be better off than worse off. Most conventional economic theories are based on the assumption that all individuals taking part in an action or activity are behaving rationally.
64
Consumer surplus is highest in case of
Discuss
Answer & Solution
Answer: Option A
Solution:
Consumer surplus is highest in case of necessities. Consumer surplus happens when the price that consumers pay for a product or service is less than the price they're willing to pay.
65
The vertical difference between TVC and TC is equal to
Discuss
Answer & Solution
Answer: Option C
Solution:
The vertical difference between TVC and TC is equal to TFC.
66
The AR curve and industry demand curve are same in case of
Discuss
Answer & Solution
Answer: Option A
Solution:
The AR curve and industry demand curve are same in case of Monopoly. In a monopoly, the price is set above marginal cost and the firm earns a positive economic profit. Perfect competition produces an equilibrium in which the price and quantity of a good is economically efficient.
67
When the price of a substitute of X commodity falls, the demand for X
Discuss
Answer & Solution
Answer: Option B
Solution:
When the price of a substitute of X commodity falls, the demand for X Falls.
68
The law of variable proportions come into being when
Discuss
Answer & Solution
Answer: Option B
Solution:
The law of variable proportions come into being when there is a fixed factor and a variable factor. The law of variable proportions states that as the quantity of one factor is increased, keeping the other factors fixed, the marginal product of that factor will eventually decline.
69
_____ is an implicit cost of production
Discuss
Answer & Solution
Answer: Option C
Solution:
Interest on owned money capital is an implicit cost of production. The costs in which there is no cash outlay, is known as Implicit Cost.
70
Excess capacity is not found under
Discuss
Answer & Solution
Answer: Option C
Solution:
Excess capacity is not found under Perfect competition. Under perfect competition, each firm produces at the minimum point on its LAC curve and its horizontal demand curve is tangent to it at that point. Its output is ideal and there is no excess capacity in the long-run.