Economics
Economics MCQs with Answers and Explanations
Economics MCQs with answers and detailed explanations for CSS, PMS, lecturer and GAT tests. Micro, macro and Pakistan economy questions fully explained. Take a scored quiz instead →
Deadweight loss resulting from monopoly power represents:
AThe loss in total economic surplus (consumer + producer surplus) due to underproduction
BThe profit earned by the monopolist
CThe tax revenue collected by the government
DThe increase in fixed costs
The concept of ‘Excess Capacity’ is a defining long-run characteristic of which market structure?
AMonopoly
BMonopolistic Competition
CPerfect Competition
DMonopsony
The cross-price elasticity of demand between two substitute goods is always:
APositive
BNegative
CZero
DEqual to negative infinity
An inferior good is defined as a good for which:
ADemand decreases as consumer income increases
BDemand increases as consumer income increases
CDemand decreases as its price decreases
DSupply decreases as its price increases
The slope of an indifference curve at any given point measures the:
AMarginal Rate of Technical Substitution (MRTS)
BPrice ratio of the two goods
CMarginal Rate of Substitution (MRS)
DMarginal Propensity to Consume (MPC)
The slope of the budget line is determined by:
AThe ratio of the prices of the two goods (Px / Py)
BTotal utility derived from both goods
CThe marginal cost of production
DConsumer income level alone
In production theory, Stage II of the short-run law of variable proportions ends where:
AMarginal product (MP) becomes maximum
BAverage product (AP) becomes zero
CMarginal product (MP) becomes zero and total product (TP) reaches maximum
DTotal product (TP) begins to decline rapidly
The expansion path in long-run production theory represents the locus of points of tangency between:
AIsoquants and isocost lines
BIndifference curves and budget lines
CDemand curves and supply curves
DAverage cost curves and marginal cost curves
Under perfect competition, a firm maximizes profit or minimizes loss in the short run by producing where:
AMarginal Revenue = Marginal Cost (MR = MC)
BTotal Revenue = Fixed Cost
CPrice = Average Total Cost
DPrice = Average Fixed Cost
A firm in a perfectly competitive market should shut down in the short run if market price falls below:
AAverage Variable Cost (AVC)
BAverage Fixed Cost (AFC)
CMarginal Cost (MC)
DAverage Total Cost (ATC)