Economics study desk with supply and demand curves, scales and an economic city model

Focused topic practice

introduction to economics MCQs

Practise focused introduction to economics questions with marked answers for exam preparation and subject revision.

introduction to economics Mcqs

1. Resources in an economy ?
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A. Are limited at any moment in time

B. Are always found

C. Can never decease

D. Always increase over time

2. If marginal benefit is greater than marginal cost, a rational choice involves ?
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A. more of the activity

B. no more of the activity.

C. less of the activity

D. more or less, depending on the benefits of other activities

3. The sacrifice involved when you choose a particular course of action is called the ?
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A. Alternative

B. Consumer cost

C. Producer cost

D. Opportunity cost

4. The opportunity cost of a good is______________?
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A. the loss of interest in using savings

B. the time lost in finding it

C. the expenditure on the good

D. the quantity of other goods sacrificed to get another unit of that good

5. Economics is the study of ?
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A. how society manages its unlimited resource

B. how to reduce our wants until we are satisfied.

C. how to avoid having to make trade-offs

D. how to fully satisfy our unlimited wants

6. In a command (planned) economy ?
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A. The public sector is large

B. Individual firms make decisions for themselves about what to produce and how to produce it

C. The price mechanism acts as an incentive

D. Resources are allocated by market forces

7. Unemployment means that ?
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A. at the going wage rate, there are people who want to work but cannot find work.

B. there are some people who will not work at the going wage rate.

C. people are not willing to work at the going wage rate.

D. there is excess demand in the labour market

8. A student chooses to study because the marginal benefit is greater than the ______________ cost?
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A. total

B. marginal

C. expected

D. average

9. In a free market?
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A. government intervenes

B. government interferes

C. Prices adjust to reconcile scarcity and desires

D. government plan production

10. If the diagram of a line shows that lower values on the vertical scale are associated with higher values on the horizontal scale this is an example of ?
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A. a negative linear relationship

B. a nonlinear relationship

C. a scatter diagrams

D. a positive linear relationship

11. The circular flow of goods and incomes shows the relationship between?
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A. Wages and salaries.

B. income and money

C. goods and services.

D. ms and households

12. If a price increase of good A increases the quantity demanded of good B, then good B is a________________?
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A. inferior good

B. substitute good

C. complementary good

D. bargain

13. Suppose you find Rs 20. If you choose to use the Rs 20 to go to a football match your opportunity cost of going to the game is ?
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A. nothing because you found the money.

B. Rs20 (because you could have used the Rs20 to buy other ghings)

C. Rs 20 (because you could have used the Rs 20 to buy other things) plus the value of your time spent at the game plus the cost of the dinner you purchased at the game.

D. Rs20 (because you found the money Rs 20 to buy other things) plus the value of your time spent at the game.

E. None of these

14. Opportunity cost is_________________?
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A. the additional benefit of buying an additional unit of a product

B. a cost that cannot be avoided. regardless of what is done in the future

C. that which we forgo, or give up, when we make a choice or a decision.

D. the cost incurred in the past before we make a decision about what to do in the future.

15. Workers in Western Europe enjoy a high standard of living because ?
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A. Unions in Western Europe keep the wage high

B. the countries of Western Europe have set high minimum wage rates.

C. none of these answers.

D. The countries of Western Europe have protected their industries from foreign corporation

E. Workers in the united states are highly productive

16. An increase in the price of beef providers information which ?
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A. provides no information because prices in a market system are managed by planning boards.

B. tells producers to produce more beef.

C. tells consumers to buy less pork

D. tells consumers to buy more beef.

17. You are planning to run a hot dog stand during a forthcoming fair. You originally estimated that you will generated sales revenue of Rs 2000 and you have already spent Rs 1000 building the hot dog stand. The hot dog stand is nearly completed but now you estimate total sales to be only Rs 800 because the fair clashes with a major music festival in a nearby location. You can complete the hot dog stand for another Rs 300 Your decision rule should be to complete the hot dog stand as long as the cost to complete the stand is less than ?
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A. Rs 800

B. Rs 500

C. Rs 1000

D. Rs 300

18. Normative economics Forms ________ based on ________?
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A. positive statements values

B. positive statements, facts

C. opinions personal facts

D. opinions facts

19. On a graph, a positive linear relationship___________________?
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A. moves up to the left

B. moves up to the right

C. moves down to the right

D. moves down to the left

20. Which of the following is not part of the opportunity cost of going on holiday ?
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A. The money you could have made if you had stayed at home and worked

B. The money you spent on a theater show

C. the money you spent on food

D. The money you spend on airline tickets

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