economics Mcqs
1. the national economy2. profit maximizing under perfect competition and monopoly3. application of economics4. the aggregate demand aggregate supply model5. surplus6. money interest rates and output7. average and total cost8. stabilization adjustment reform and privatization9. risks and diversification efficient market hypothesis10. the phillips curve11. supply and demand12. capital formation investment choice information technology and technical progress13. aggregate supply unemployment and inflation14. elasticity15. comparative gdp16. roots of modern macroeconomics17. production factors18. poverty malnutrition and income inequality19. trade regulations and industrial policies20. monetary union21. exchange rate systems and currency crises22. economic development in historical perspective23. exchange rate determination24. monopoly competition25. the balance of payments26. inflation productivity27. macroeconomic issues and analysis28. employment migration and urbanization29. macroeconomic policy tools30. supply side policies31. exchange rate adjustments and the balance of32. miscellaneous33. taxation34. trade policies for the developing nations35. markets efficiency and the public interest36. the external debt and financial crises37. budget deficits and the trade balance38. alternative theories of the firm39. public goods40. the meaning and measurement of economic development41. characteristics and institutions of developing countries42. agriculture irrigation system of pakistan43. education health and human capital44. economic problems of developing countries45. theories of economic development46. basic of economics47. consumer theory vs real consumers48. applied microeconomics49. long term economic growth50. externality internality51. fiscal and monetary policy52. prices wages taxes53. balance of payments aid and foreign investment54. international factor movements and multinational corporations55. entrepreneurship organization and innovation56. the international economy and globalization57. population and development58. non tariff trade barriers59. foundations of modern trade theory60. global economic development61. market62. rural poverty and agricultural transformation63. regional trading arrangements64. foreign exchange65. introduction to economics66. world economy miscellaneous67. sources of comparative advantage68. natural resources and the environment toward sustainable development69. monopoly70. asymmetric information71. income inequality72. labour market73. tariffs74. development planning and policy making the state and the market75. oligopoly76. industrial development77. costs supply and perfect competition78. human capital79. monetary fiscal and incomes policy and inflation80. stocks
4601. According to the classical economists, the only gainers from growth would be ?
comments icon0

A. politicians

B. landlords

C. peasants

D. The army

4602. An index of prices of all domestically produced goods in the economy is the ?
comments icon0

A. wholesale price index (WPI)

B. Producer price index (PPI)

C. GDP deflator

D. Consumer price index (CPI)

4603. Injection into the circular flow are ______ and __________?
comments icon0
A. investment government expenditure exports

B. investment exports transfer payments

C. consumption investment exports

D. taxes exports, transfer payments

4604. If a result of households wish to save more there is a change in equilibrium income and no change in equilibrium saving this is an example of ?
comments icon0

A. market failure

B. the paradox of thrift

C. market imperfection

D. the law of diminishing returns

4605. In the economy when a steel producer sells steel to car producer it is regarded as ?
comments icon0
A. an intermediate good

B. a leakage

C. an injection

D. a final good

4606. Indicate below what is NOT a main macroeconomic goal ?
comments icon0

A. Reducing inflation

B. Reducing unemployment

C. Increasing North Sea oil production

D. Achieving a sustainable rate of economic growth

4607. The total multiplier for the economy will reflect ?
comments icon0

A. MPC and MPZ

B. MPT and MPZ

C. MPC and MPT

D. MPC, MPT and MPZ
4608. Higher export demand __________ output and a higher MPZ __________ output?
comments icon0
A. increase, reduces

B. increases, increases

C. reduces, increase

D. reduces, reduces

4609. Aggregate demand includes only ?
comments icon0

A. sumer expenditure and investment

B. consumer expenditure government expenditure and investment

C. consumer expenditure investment government expenditure and exports less imports

D. consumer debt investment debt and government debt

4610. Real GNP measures income ?
comments icon0

A. including tax evasion

B. including externalities

C. including non-market activities

D. adjusted for inflation
4611. Two of the major factors contributing to growth are ?
comments icon0

A. resources and a good climate

B. money and luck

C. money and efficiency

D. resources and efficiency
4612. The percentage of the labor force that is unemployed is the ?
comments icon0

A. unemployment population ratio

B. employment rate

C. unemployment rate

D. labor force rate

4613. The multiplier tells us how much __________ changes after a shift in ____________?
comments icon0

A. savings investment

B. consumption income

C. investment output

D. output aggregate demand
4614. If the MPC is 0.5 the multiplier is ?
comments icon0

A. 0.2

B. 2-Jan

C. 20

D. 2
4615. Aggregate demand in an economy trading internationally with a government sector can be written as ?
comments icon0

A. AD = C + I + G + X + Z

B. AD = C + I + G

C. AD = C + I

D. AD = C + I + G + X Z
4616. when the level of income _________ there will be a tendency for the trade balance to improve as imports?
comments icon0
A. falls, fall

B. increase, increase

C. falls, increase

D. increase, fall

4617. If a firm has some degree of market power, then output price ?
comments icon0

A. is determined by the actions of other firms in the industry

B. no longer influences the amount demand of the firms product

C. becomes a decision variable for the firm

D. is guaranteed to be above a firms average cost.

4618. In monopolistic competition firms achieve some degree of market power ?
comments icon0

A. because of barriers to entry into the industry

B. by producing differentiated products

C. because of barriers to exit from the industry

D. by virtue of size alone

4619. Maximum profit can be shown on a diagram using ?
comments icon0

A. the AC and MC curves

B. the MR and AR curves

C. the AC and AR curves

D. the MR and MC curves

4620. The slope of marginal revenue curve is ?
comments icon0

A. the same as the slope of the demand curve

B. twice as steep as the demand curve

C. always equal to one.

D. half as steep as the demand curve

4621. Assume that firms in an oligopoly are currently colluding to set price and output to maximise total industry profit. If the oligopolists are forced to stop colluding, the price charged by the oligopolists will _________ and the total output produced will __________?
comments icon0

A. increase; decrease

B. increase; increase

C. decrease; increase

D. decrease; decrease

4622. If the ABC Typing Service is earning a rate of return greater than the return necessary for the business to continue operations, then ?
comments icon0

A. total costs exceed normal profit

B. the firm is earning are economic profit

C. normal profit is zero

D. total costs exceed total revenue

4623. The kinked demand curve model of oligopoly assumes the elasticity of demand ?
comments icon0

A. is perfectly elastic if price increases and perfectly inelastic if price decreases

B. is constant regardless of whether price increase of decrease.

C. in response to a price increases is more elastic than the elasticity of demand in response to a price decrease

D. in response to a price increase is less elastic than the elasticity of demand in response to a price decrease

4624. The formula for average variable cost (AVC) is ?
comments icon0

A. Dq/DTVC

B. TVC/q

C. q/TVC

D. DTVC/Dq

4625. Which of the following statements is False ?
comments icon0

A. participants in a contestable market are continuously faced with competition or the threat of competition because entry is cheap

B. In a contestable market forces will guarantee that the firms produce efficiently or be driven out of business

C. In a contestable market, economic profits cannot persist in the long run.

D. For a market to be contestable, the product must be produced with a labor-intensive technology
4626. If you were running a firm in a perfectly competitive industry, you would be spending your time making decisions on ?
comments icon0

A. none of these

B. how much of each input to use?

C. how much to spend on advertising?

D. What price to charge

4627. Monopolistic competition differs from perfect competition primarily because ?
comments icon0

A. in monopolistic competition entry into the industry is blocked

B. in monopolistic competition, firms can differentiate their products

C. in perfect competition firms can differentiate their products

D. in monopolistic competition there are relatively few barriers to entry.

4628. A firm will shut down in the short run if ?
comments icon0
A. variable costs exceed revenues

B. it is suffering a loss.

C. fixed costs exceed revenues.

D. total costs exceed revenues

4629. In a monopoly, marginal revenue is ?
comments icon0

A. always greater than price

B. always equal to price

C. less than price at low levels of output and greater than price at high levels of output

D. lower than price for all units other than the first
4630. Which of the following statements best describes the outcome under monopolistic competition ?
comments icon0
A. It is not efficient because too little output is produced and the output that is produced is produced at a cost above minimum average total cost

B. It is not efficient because too little output is produced but is efficient in that the output produced is produced at minimum average total cost.

C. It is efficient because entry is free and economic profits are eliminated in the long run.

D. It is efficient because the right amount of output is produced, but not efficient in that the output produced is produced at a cost above minimum average total cost

4631. Diminishing marginal return implies ?
comments icon0

A. decreasing average fixed costs.

B. decreasing average variable costs.

C. decreasing marginal costs.

D. increasing marginal costs.
4632. An industry that has a relatively small number of firms that dominate the market is called ?
comments icon0

A. a natural monopoly

B. a merged industry

C. a concentrated industry

D. a colluding industry

4633. A group of firms that gets together to make price and output decisions is called ?
comments icon0

A. price leadership

B. a concentrated industry.

C. a cartel

D. an oligopoly.

4634. A market is defined as perfectly contestable if ?
comments icon0
A. entry to it and exit from it are both costless

B. entry to it and exit from it are both costly

C. entry to it costless, but exit from it is costless

D. entry to it is costly, but exit from it is costless

4635. A major weakness of the kinked demand curve model of oligopoly is that ?
comments icon0

A. The model cannot be tested empirically.

B. it fails to explain how a firm arrived at its price and output decision initially

C. Real-world pricing strategies are more simple than those assumed in this model

D. it assumes that firms believe that their rivals will not respond to any price change they initiate

4636. A normal rate of profit ?
comments icon0
A. is the rate that is just sufficient to keep owners or investors satisfied.

B. Is the rate of return on investments over the interest rate on risk-free government bonds.

C. is zero in a perfectly competitive industry.

D. is the difference between total revenue and total costs

4637. Most empirical studies show that firms cost curves ?
comments icon0
A. slope down to the right and then level off.

B. slope up to the right

C. are U-shaped

D. slope down to the right

4638. Which of the following is a correct statement about the relationship between average product (AP) and marginal product (MP) ?
comments icon0

A. If TP is declining, then AP is negative

B. If AP is at a maximum, then MP is also,

C. If AP exceeds MP then AP is falling

D. If AP = MP, then total product is at a maximum.

4639. A firm in perfectly competitive industry is producing 50 units, its profit-maximising quantity. Industry price is 2 and total fixed costs and total variable cost are 25 and 40 respectively. The firms economic profit is ?
comments icon0

A. 15

B. 35

C. 30

D. 60

4640. A firm in a monopolistically competitive industry ?
comments icon0

A. sells a fixed amount of output regardless of price.

B. must lower price to sell more output.

C. can sell an infinite amount of output at the market-determined price

D. must raise price to sell more output

4641. In contestable markets, large oligopolistic firms, end up behaving like ?
comments icon0

A. a cartel

B. a monopoly

C. perfectly competitive firms

D. monopolistically competitive firms.
4642. In the long run ?
comments icon0

A. all firms must make economic profits.

B. there are no fixed factors of production

C. a firm can vary all inputs, but it cannot change the mix of inputs it uses.

D. a firm can shut down, but it cannot exit the industry

4643. Which statement is False ?
comments icon0

A. There are no fixed costs in the long run

B. Fixed costs are zero if the firms is producing nothing.

C. Fixed costs are the difference between total costs and total variable costs

D. Fixed costs do not depend on the firms level of output

4644. When one firm in the breakfast cereal market started an advertising campaign that stressed the nutritional value of its cereals, all other cereal manufacturers started similar advertising campaign This suggests that the breakfast cereal market is ?
comments icon0

A. monopolistically competitive

B. indeterminate from this information

C. oligopolistic

D. perfectly competitive

4645. Relative to a competitively organized industry a monopoly ?
comments icon0

A. Produces less output, charges lower prices and earns only a normal profit

B. Produces less output, charges higher prices and earns economic profits.

C. produces less output, charges lower prices and earns economic profits

D. produces more output, charges higher prices and earns economics profits

4646. The normal rate of profit for relatively risk-free firms will be _________ the interest rate on risk-free government bonds?
comments icon0

A. approximately one-half

B. smaller than

C. approximately equal to

D. larger than

4647. Which of the following statements best describes the outcome under monopolistic competition ?
comments icon0

A. In monopolistic competition, there are too many firms and each firm produce a slightly different product at a scale that is less than optimal

B. In monopolistic competition there are too few firms and each firm produce a slightly different product at scale that is greater than optimal

C. in monopolistic competition there is the correct number of firm and each firm produces a slightly different product at an optimal scale.

D. In monopolistic competition there are too many firms and each firm produce a slightly different product at the optimal scale

4648. If firms can neither enter nor leaves an industry, the relevant time period is the ?
comments icon0

A. immediate run

B. short run

C. intermediate run

D. long run

4649. A monopolistically competitive firm that is incurring a loss will produce as long as the price that the firm charges is sufficient to cover ?
comments icon0

A. advertising costs

B. fixed costs

C. marginal costs

D. variable costs
4650. A graph showing all the combinations capital and labor available for a given total cost is the ?
comments icon0
A. isocost line.

B. expenditure set

C. isoquant

D. budget constraint