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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-8 section-1

Each section contains 100 MCQs on Economics .
71
In the case of a straight-line demand curve meeting the two axes, the price-elasticity of demand at the mid-point of the line would be
Discuss
Answer & Solution
Answer: Option B
Solution:
In the case of a straight-line demand curve meeting the two axes, the price-elasticity of demand at the mid-point of the line would be 1.
72
Which is the first-order condition for the profit of a firm to be maximum?
Discuss
Answer & Solution
Answer: Option B
Solution:
MC=MR is the first-order condition for the profit of a firm to be maximum. The Profit Maximization Rule states that if a firm chooses to maximize its profits, it must choose that level of output where Marginal Cost (MC) is equal to Marginal Revenue (MR) and the Marginal Cost curve is rising. In other words, it must produce at a level where MC = MR.
73
Which of the following is one of the assumptions of perfect competition?
Discuss
Answer & Solution
Answer: Option C
Solution:
Many buyers and many sellers is one of the assumptions of perfect competition. Yes, in a perfectly competitive market, there are many buyers and many sellers. As a consequence, they have no market power and cannot influence the market price. This is an assumption of the model of perfect competition.
74
Price and demand are positively correlated in case of
Discuss
Answer & Solution
Answer: Option C
Solution:
Price and demand are positively correlated in case of Giffen goods. A Giffen good is a product for which demand increases as the price increases and falls when the price decreases.
75
Identify the coefficient of price-elasticity of demand when the percentage increase in the quantity of a commodity demanded is smaller than the percentage fall in its price
Discuss
Answer & Solution
Answer: Option C
Solution:
The coefficient of price-elasticity of demand is smaller than one when the percentage increase in the quantity of a commodity demanded is smaller than the percentage fall in its price.
76
In which form of the market structure is the degree of control over the price of its product by a firm very large?
Discuss
Answer & Solution
Answer: Option A
Solution:
In Monopoly market structure the degree of control over the price of its product by a firm very large. In a monopoly type of market structure, there is only one seller, so a single firm will control the entire market. It can set any price it wishes since it has all the market power.
77
A firm under perfect competition is
Discuss
Answer & Solution
Answer: Option C
Solution:
A firm under perfect competition is Price taker. In perfect market conditions (also called perfect competition) a firm is a price taker because other firms can enter the market easily and produce a product that is indistinguishable from every other firm's product. This makes it impossible for any firm to set its own prices.
78
The elasticity of demand of durable goods is
Discuss
Answer & Solution
Answer: Option B
Solution:
The elasticity of demand of durable goods is greater than unity. Price elasticity of demand for durable goods is generally more elastic in short run than in long run. That is, quantity demanded is more sensitive to price changes of such durable goods in short run and not so much in the long run.
79
In the case of an inferior good, the income elasticity of demand is
Discuss
Answer & Solution
Answer: Option C
Solution:
In the case of an inferior good, the income elasticity of demand 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.
80
Which is the other name that is given to the average revenue curve?
Discuss
Answer & Solution
Answer: Option B
Solution:
Demand curve is the other name that is given to the average revenue curve. Average revenue curve is often called the demand curve due to its representation of the product's demand in the market.