Economics MCQ Questions and Solutions with Explanations

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-4

Effective demand depends upon

A) Desire for the commodity B) Means to purchase C) Willingness to use those means for that purchase D) All of the above

Discuss

Answer & Solution

Answer: Option D

Solution:

Effective demand depends upon Desire for the commodity, Means to purchase and Willingness to use those means for that purchase.

Quantity demanded is a

A) Flow concept B) Stock concept C) Both 'a' and 'b' D) None of the above

Discuss

Answer & Solution

Answer: Option A

Solution:

Quantity demanded is a Flow concept. The quantity of the current production of a commodity which moves from a factory to the market is called flow. The aggregates of macroeconomics are of two kinds some are stocks, typically the stock of capital 'k' which is a timeless concept.

At shut down point

A) Price is equal to AVC B) Total revenue is equal to TVC C) Total loss of the firm is equal to TFC D) All of the above

Discuss

Answer & Solution

Answer: Option D

Solution:

At shut down point Price is equal to AVC, Total revenue is equal to TVC and Total loss of the firm is equal to TFC.

The LAC curve

A) Falls when the LMC curve falls B) Rises when the LMC curve rises C) Goes through the lowest point of the LMC curve D) Falls when LMCLAC

Discuss

Answer & Solution

Answer: Option D

No explanation is given for this question. Let's Discuss on Board

The other name of Budget line is

A) Demand line B) Price line C) Supply line D) None of the above

Discuss

Answer & Solution

Answer: Option B

Solution:

The other name of Budget line is Price line. "A budget line or price line represents the various combinations of two goods which can be purchased with a given money income and assumed prices of goods".

Normal goods have

A) Positive income elasticity B) Negative income elasticity C) Fluctuating income elasticity D) Zero income elasticity

Discuss

Answer & Solution

Answer: Option A

Solution:

Normal goods have Positive income elasticity. A positive income elasticity of demand is associated with normal goods; an increase in income will lead to a rise in demand. If income elasticity of demand of a commodity is less than 1, it is a necessity good. If the elasticity of demand is greater than 1, it is a luxury good or a superior good.

If the goods are complementary like car and petrol, their cross elasticity is

A) Negative B) Positive C) Zero D) Infinite

Discuss

Answer & Solution

Answer: Option A

Solution:

If the goods are complementary like car and petrol, their cross elasticity is Negative. A negative cross elasticity denotes two products that are complements, while a positive cross elasticity denotes two substitute products.

Identify the factor which generally keeps the price-elasticity of demand for a good high.

A) Its very high price B) Its very low price C) Large number of substitutes D) None of the above

Discuss

Answer & Solution

Answer: Option C

Solution:

Large number of substitutes keeps the price-elasticity of demand for a good high.

The slope of indifference curve indicates

A) Price ratio between two commodities B) Marginal rate of substitution C) Factor substitution D) Level of indifference

Discuss

Answer & Solution

Answer: Option B

Solution:

The slope of indifference curve indicates Marginal rate of substitution. The marginal rate of substitution (MRS) is the amount of a good that a consumer is willing to give up for another good, as long as the new good is equally satisfying.

The total area under the demand curve of good measures

A) Marginal utility B) Total utility C) Consumers surplus D) Producer surplus

Discuss

Answer & Solution

Answer: Option B

Solution:

The total area under the demand curve of good measures total utility. The demand curve itself shows the utility each consumer will get from buying the good, and the price paid is the cost for getting that utility.