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 →
Which concept refers to a state where no individual actor can be made better off without making at least one individual worse off?
ANash Equilibrium
BKaldor-Hicks Efficiency
CEdgeworth Box Balance
DPareto Efficiency (Pareto Optimality)
The Compensation Principle in welfare economics was formulated by:
AVilfredo Pareto
BNicholas Kaldor and John Hicks
CKenneth Arrow
DPaul Samuelson
The substitution effect of a price change is always:
ANegative (acts in the opposite direction of the price change)
BPositive
CZero
DEqual to the income effect
For a normal good, the income effect and substitution effect of a price fall work:
AIn opposite directions
BIn the same direction to increase quantity demanded
CTo decrease total consumption
DTo leave utility unchanged
The Price Consumption Curve (PCC) for two goods that are independent of each other is:
AVertical
BUpward sloping
CHorizontal
DDownward sloping
The elasticity of substitution between two perfectly complementary goods is equal to:
AOne
BInfinity
CNegative one
DZero
An isocost line represents all combinations of inputs that:
AYield the same total output
BCost the firm the same total outlay
CYield maximum total revenue
DHave equal marginal products
In the long run, a firm experiences economies of scale when its long-run average cost (LRAC) curve is:
AUpward sloping
BDownward sloping
CHorizontal
DU-shaped at its minimum point
Under monopolistic competition, individual firms face a demand curve that is:
AHighly elastic and downward sloping
BPerfectly inelastic (vertical)
CPerfectly elastic (horizontal)
DUnit elastic throughout
A natural monopoly exists primarily because of:
AExtensive economies of scale relative to market size
BOwnership of rare natural resources
CIllegal predatory pricing tactics
DGovernment patents and copyrights