ExamVeda
Login
Home

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-1 section-2

Each section contains 100 MCQs on Economics .
1
Marginal revenue is always less than price at all levels of output in
Discuss
Answer & Solution
Answer: Option B
Solution:
Marginal revenue is always less than price at all levels of output in Monopoly. 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.
2
What does price elasticity of demand measure?
Discuss
Answer & Solution
Answer: Option C
Solution:
The price elasticity of demand measures the responsiveness of the quantity demanded to changes in the price. Demand is inelastic if it does not respond much to price changes, and elastic if demand changes a lot when the price changes. Necessities tend to have inelastic demand.
3
The elasticity of substitution between two perfect substitutions is
Discuss
Answer & Solution
Answer: Option D
Solution:
The elasticity of substitution between two perfect substitutions is Infinity. Elasticity of factor substitution can take any value from zero to infinity, always being positive.
4
Which of the following is NOT a characteristic of perfect competition?
Discuss
Answer & Solution
Answer: Option D
Solution:
An individual firm can influence the price is not a characteristic of perfect competition. 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.
5
When marginal revenue is zero, total revenue is
Discuss
Answer & Solution
Answer: Option A
Solution:
When marginal revenue is zero, total revenue is Maximum. The profit maximizing quantity and price can be determined by setting marginal revenue equal to zero, which occurs at the maximal level of output. Marginal revenue equals zero when the total revenue curve has reached its maximum value.
6
Which one is increasing function of price?
Discuss
Answer & Solution
Answer: Option C
Solution:
Supply is increasing function of price. The higher the price of a good, the more a firm is willing to produce and offer, hence, the supply function is upward sloping. In fact, in the perfect competition market, the supply curve is the marginal cost curve. Increasing production is only profitable if the good can be sold at a higher price.
7
The consumer is in equilibrium at a point where the budget line
Discuss
Answer & Solution
Answer: Option C
Solution:
The consumer is in equilibrium at a point where the budget line is tangent to an indifference curve. It means that marginal substitution rate between X and Y (MRSXY) should be diminishing.
8
Which of the following oligopoly models is concerned with the maximization of joint profits?
Discuss
Answer & Solution
Answer: Option C
Solution:
Collusive models is concerned with the maximization of joint profits. Firms join together and work for the joint profit maximization.
9
A firm decides to exit the industry when
Discuss
Answer & Solution
Answer: Option C
Solution:
A firm decides to exit the industry when Price is less than LAC. LAC at the efficient scale of production is thus the minimum average cost.
10
It describes the law of supply
Discuss
Answer & Solution
Answer: Option D
Solution:
Supply curve, Supply schedule and Supply equation describes the law of supply.