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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-1 section-4

Each section contains 100 MCQs on Economics .
1
For ____ goods, increase in income leads to increase in demand.
Discuss
Answer & Solution
Answer: Option B
Solution:
For normal goods, increase in income leads to increase in demand. Rising incomes lead to a rise in the number of goods demanded by consumers.
2
In the case of a Giffen good, the demand curve will be
Discuss
Answer & Solution
Answer: Option C
Solution:
In the case of a Giffen good, the demand curve will be Upward to the right. A Giffen good has an upward-sloping demand curve, which is contrary to the fundamental law of demand, which states that the quantity demanded for a product falls as the price increases, resulting in a downward slope for the demand curve.
3
The law of consumer surplus is based on
Discuss
Answer & Solution
Answer: Option D
Solution:
The law of consumer surplus is based on the law of diminishing marginal utility. The concept of consumer surplus is derived from the law of diminishing marginal utility. As per the law, as we purchase more of a commodity, its marginal utility reduces. Since the price is fixed, for all units of the goods we purchase, we get extra utility. This extra utility is consumer surplus.
4
An isoquant slopes
Discuss
Answer & Solution
Answer: Option B
Solution:
An isoquant slopes downward to the right. This implies that the Isoquant is a negatively sloped curve. This is because when the quantify of factor K (capital) is increased, the quantity of L (labor) must be reduced so as to keep the same level of output.
Economics mcq solution image
5
Demand for final consumption arises in
Discuss
Answer & Solution
Answer: Option C
Solution:
Demand for final consumption arises in both household and government sector. In the basic two- sector circular flow of income model, the economy consists of two sectors: (1) households and (2) firms.
6
When as a result of decrease in price of good, the total expenditure made on it decreases we say that price elasticity of demand is
Discuss
Answer & Solution
Answer: Option A
Solution:
When as a result of decrease in price of good, the total expenditure made on it decreases we say that price elasticity of demand is less than unity.
7
The structure of the cold drink industry in India is best described as
Discuss
Answer & Solution
Answer: Option D
Solution:
The structure of the cold drink industry in India is best described as monopolistically competitive. Monopolistic competition is a market structure in which there are many firms selling differentiated products.
8
Under which market structure, average revenue of a firm is equal to its marginal revenue
Discuss
Answer & Solution
Answer: Option C
Solution:
Under Perfect competition market structure, average revenue of a firm is equal to its marginal revenue. For a perfectly competitive firm, average revenue is not only equal to price, but more importantly, it is equal to marginal revenue, all of which are constant.
9
In economics, what a consumer is ready to pay minus what he actually pays, is termed as
Discuss
Answer & Solution
Answer: Option B
Solution:
In economics, what a consumer is ready to pay minus what he actually pays, is termed as Consumer's surplus. Consumer surplus is defined as the difference between the consumers' willingness to pay for a commodity and the actual price paid by them, or the equilibrium price.
10
The producer is in equilibrium at a point where the cost line is
Discuss
Answer & Solution
Answer: Option D
Solution:
The producer is in equilibrium at a point where the cost line is Tangent to isoquant.