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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-4

Each section contains 100 MCQs on Economics .
61
Product differentiation is the most important feature of
Discuss
Answer & Solution
Answer: Option A
Solution:
Product differentiation is the most important feature of Monopolistic competition. Monopolistic Competition refers to a market situation in which there are large numbers of firms which sell closely related but differentiated products.
62
A monopolist is able to maximize his profits when
Discuss
Answer & Solution
Answer: Option D
Solution:
A monopolist is able to maximize his profits when his marginal cost is equal to marginal revenue. The profit-maximizing choice for the monopoly will be to produce at the quantity where marginal revenue is equal to marginal cost: that is, MR = MC.
63
In imperfect competition
Discuss
Answer & Solution
Answer: Option A
Solution:
In imperfect competition excess capacity always exists. Excess capacity is a characteristic of natural monopoly or monopolistic competition.
64
The shape of PPC is concave due to
Discuss
Answer & Solution
Answer: Option B
Solution:
The shape of PPC is concave due to rising opportunity cost between two goods. Most of the PPF curves are concave due to the inadaptability of the resources. The law of increasing opportunity cost states: as the production of one good rises, the opportunity cost of producing that good increases.
65
Which of the following is not the name of LAC curve?
Discuss
Answer & Solution
Answer: Option C
Solution:
Round curve is not the name of LAC curve.
66
A frim has variable cost of Rs.1000 at 5 units of output. If fixed costs are Rs.400, what will be the average total cost at 5 units of output?
Discuss
Answer & Solution
Answer: Option B
Solution:
Total costs (TC) = FC + TVC. Average Fixed Costs (AFC) = FC/Q. TC = 400+1000 = 1400. AFC = 1400/5 = 280.
67
If marginal opportunity cost is falling, the PPF would be
Discuss
Answer & Solution
Answer: Option D
Solution:
If marginal opportunity cost is falling, the PPF would be convex. Pay Per Click curve can be convex to the origin when the opportunity cost decreases. This can happen only when less and less units are foregone of first commodity for the introduction of additional unit of another commodity. Due to increasing marginal opportunity cost. PPC becomes concave to origin.
68
Calculate the income elasticity for a household when the income of this household rises by 5% and the demand for buttons does not change at all.
Discuss
Answer & Solution
Answer: Option C
Solution:
The income elasticity for a household is Zero when the income of this household rises by 5% and the demand for buttons does not change at all.
69
MC curve cuts ______ curves at their minimum points
Discuss
Answer & Solution
Answer: Option A
Solution:
MC curve cuts AVC and AC curves at their minimum points. As long as MC is less than ATC, ATC will go down with each extra unit made. At some point, MC rises to the point that it equals ATC and the curves intersect.
70
In perfect competition, in the long run, there will be
Discuss
Answer & Solution
Answer: Option A
Solution:
In perfect competition, in the long run, there will be Normal profits. Perfect Competition Long Run equilibrium results in all firms receiving normal profits or zero economic profits.