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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-9 section-1

Each section contains 100 MCQs on Economics .
81
Which of the following markets comes closest to perfect market?
Discuss
Answer & Solution
Answer: Option A
Solution:
Wheat market comes closest to perfect market. A perfectly competitive firm is called a price taker, because the pressure of competing firms forces them to accept the prevailing equilibrium price in the market. When a wheat grower wants to know what the going price of wheat is, he or she has to go to the computer or listen to the radio to check.
82
Mr. Raees Ahamd bought 50 litres of petrol when his monthly income was Rs.25000. Now his monthly income has risen to Rs.50,000 and he purchases 100 litres of petrol. His income elasticity of demand for petrol is
Discuss
Answer & Solution
Answer: Option A
Solution:
Mr. Raees Ahamd bought 50 litres of petrol when his monthly income was Rs.25000. Now his monthly income has risen to Rs.50,000 and he purchases 100 litres of petrol. His income elasticity of demand for petrol is 1.
83
Total utility is maximum when
Discuss
Answer & Solution
Answer: Option A
Solution:
Total utility is maximum when Marginal utility is zero. It is based in the law of diminishing marginal utility which says 'as more and more units of a good are consumed, MU i.e level of satisfaction derived from each successive unit goes on falling because desire for that commodity tend to fall.
84
Under which of the following forms of market structure does a firm have no control over the price of its product?
Discuss
Answer & Solution
Answer: Option D
Solution:
Under Perfect competition forms of market structure does a firm have no control over the price of its product. All goods in a perfectly competitive market are considered perfect substitutes, and the demand curve is perfectly elastic for each of the small, individual firms that participate in the market. These firms are price takers–if one firm tries to raise its price, there would be no demand for that firm's product
85
Which is a condition for existence of monopoly?
Discuss
Answer & Solution
Answer: Option D
Solution:
No close substitute is a condition for existence of monopoly. If a close substitute exists, then the monopoly cannot exist. Remember, a monopoly can only exist when the cross-elasticity of the product that the monopolist produces is zero.
86
When price elasticity of demand for normal goods is calculated, the value is always
Discuss
Answer & Solution
Answer: Option B
Solution:
When price elasticity of demand for normal goods is calculated, the value is always Negative. The PED is the percentage change in quantity demanded in response to a one percent change in price. The PED coefficient is usually negative, although economists often ignore the sign. Demand for a good is relatively inelastic if the PED coefficient is less than one (in absolute value).
87
If the demand for a commodity is inelastic, an increase in its pice will cause the total expenditure of the consumers of the commodity to
Discuss
Answer & Solution
Answer: Option B
Solution:
If the demand for a commodity is inelastic, an increase in its pice will cause the total expenditure of the consumers of the commodity to Increase. When demand is inelastic, a fall in the price of a commodity leads to fall in total expenditure on it. On the other hand, when price increases, total expenditure also increases.
88
Which one of the following is the condition of equilibrium for the monopolist?
Discuss
Answer & Solution
Answer: Option A
Solution:
MR=MC is the condition of equilibrium for the monopolist. The conditions for Equilibrium in Monopoly are the same as those under perfect competition. The marginal cost (MC) is equal to the marginal revenue (MR).
89
In case of monopoly
Discuss
Answer & Solution
Answer: Option D
Solution:
In case of monopoly, Marginal revenue is always less than average revenue. A monopolist's marginal revenue is always less than or equal to the price of the good. Marginal revenue is the amount of revenue the firm receives for each additional unit of output.
90
Income elasticity of demand for normal goods is always
Discuss
Answer & Solution
Answer: Option D
Solution:
Income elasticity of demand for normal goods is always Positive. A positive income elasticity of demand is associated with normal goods; an increase in income will lead to a rise in demand.